Page 61 - Paulisms: Gold Nuggets for Small Business

Financial
3.1 Accounting
3.1.1 End of Month – The line in the sand
The end of the month is so important for a business’s success, but often it is not understood, particularly in the early stages of business start-up. One of the first things I say to a business owner is, ‘Do you do a Profit and Loss (P&L) at the end of every month?’ Sometimes eyes glaze over and they’ll look at me funny: ‘What is a Profit & Loss?’
I remember running blind for many years in my business and asking my first accountant, ‘How come all of these other people are getting a thing called a P&L every month, and why can’t I get one?’ He said, ‘Ah, don’t worry about it. Just carry on. You’re OK.’ I look back now at how stupid it was to not know how much money I was making or losing every month. It was my first business and I lost a lot of money. So, every month, within a few days after the end of the month, you’ve got to know where you are at. You need to know how much money you’ve made or lost. You need good data to make good decisions. If you are not getting this information, put systems in place to get it. Financial systems start with your accountant. If they won’t get you sorted, sort them! Move on. Everyone has a good accountant until they move on. To clarify this, an accountant is an important and influential part of your success, and someone you look up to and get financial advice from. Often, however, we don’t have the experience to know if we are getting good advice and strong accounting. I
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