Small Business, Big Lessons

Would you sail the Caribbean Sea without a compass?

Entrepreneurs are naturally risk takers and some might even say adventurous. But there is a difference between calculated risk and simply being unwise. When asked about their financial soundness, some (small business owners) might say, I’ve got it all in my head, I know what I’m doing. I don’t need a compass, I travel by the stars. But, what happens when a cloud covers the skies; can you see your way then? Columbus was a great sailor, but sunk many a ship and lost many a crew. Ask yourself, how much you are willing to lose?

Do you have the right tools to navigate the complicated waters we call today’s economy? As a small business owner do you review your detailed financial statements monthly? If your answer is no, you are sailing the Sea without a compass, a sonar device and a depth finder. You are operating a business without the benefit of an income statement, balance sheet and cash flow analysis – the three components to successful business management. You are sinking like the Titanic, and you may not even realize it, until it is too late. You are on the Promenade Deck with the violins playing and the lower deck is already under water.

If you sold your business today, how much equity is available to you? Are you profitable? Can you pay your bills next month? And if, (no) when the market changes, can you sustain?

With these necessary tools, you can make needed decisions to grow your business, sell your business, buy new equipment, or hire a new employee. Without these you are sailing up “you know whose creek’ without a paddle.

All of the analogies and metaphors aside – A sound and successful business person, records and analyses their business operations periodically (monthly, quarterly at least). FYI, the end of the year scramble of receipts that you dump off to your tax accountant does not qualify.

The difference between a Tax Accountant and a Financial Manager/Advisor/Accountant……

Your Tax Accountant is a magical creature that whips those receipts into a pretty report. They legally find creative ways to reduce your tax liabilities.

Your Financial Manager/Advisor/Accountant meets with you periodically (monthly, quarterly at least) and discusses the story behind the numbers.

Understand that the purpose of these two types of accountants serves two very different purposes. If you are lucky you can find an accountant that does both – management and/or operational accounting and tax accounting (such as IBCVI & Co –“shameless plug”). All doctors are not the same and specialize in different areas of medicine and SO DO ACCOUNTANTS. So if the only time you see your Accountant is at tax time, my friend, your business is in TROUBLE.

Do you know your numbers? What do those numbers tell you about your business…….?

There is no time like the present to get these questions answered. Reach out to your CPA, Accountant or Bookkeeper to assist you. If you do not have someone/a company that provides these services, Please contact IBCVI & Co. at or call 340-778-4228 for a “Free” Consultation.

For more tips follow us on...

Facbook at: Bella’Place ibcvi and IBCVI & Co,

Twitter: @IBCVI and Co

LinkedIn: Abbelle Bakr

Remember if you’re not managing your business by the numbers, you are not managing at all.

Suggested Reading:

Managing By The Numbers, Chuck Kremer and Ron Rizzuto with John Case

Until Next Time...

Abelle

Tags Finance IBCVI Small Business Entrepreneurs Tax Accountant Financial

Manager Financial Advisor Accountants Tax Accounting Bookkeeper Budgeting Virgin Islands St. Croix St. Thomas


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