“I’m afraid of numbers”
I’d been chatting to a client, Dominic, (not their real name) for 45 minutes when he dropped that bombshell into the conversation.
At the end of a client meeting or call I often drop in the “Anything else to declare?” question, which is a form of AOB. I’ve been working with Dom for over 5 years and I wasn’t expecting that response.
He explained that, although he ran a successful business, he felt like he was bluffing when he said he understood what phrases like net profit, shareholders funds and fixed costs all meant.
He didn’t want to look at his Xero reports because he had “Imposter Syndrome – I’m a business owner so I should know what all these things mean.”
So for Dominic (and others) here are three easy points to help you understand the basics of business accounting.
1. Business accounting is the same for everyone,whether you are Tesco or a one man/woman band. It’s “money in and money out”
2. Cash is not the same as Profit. You can be profitable and be overdrawn at the bank,and making a loss while sitting on a pile of cash
3. A balance sheet is a statement of what you own and what you owe.You always want the number at the bottom to be positive
If you’re the sort of business owner who is slightly afraid of the numbers but need help with a cure for their phobia……get in touch!