The Balance Sheet - the Ultimate Scorecard

Could you imagine Russell Westbrook, the 2017 NBA MVP, playing without a scoreboard? No doubt he would play hard all the time, but he plays differently when he knows the score. We know that because he is constantly checking the scoreboard for the score, fouls, time remaining, time outs - the information he needs to manage his game.

The Balance Sheet is the ultimate scorecard for business. As a business coach, I’ve noticed that owners, like Westbrook, manage their businesses differently when they understand the score.   

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5 Things You Need to Know About Your Income Statement

“Our income statement shows we’re making a profit, but it sure doesn’t feel like it.”

It was a contractor’s wife who had a pretty good feel for how their business was going.

The P&L and the math are simple, but depending on how they’re prepared, P&Ls can show wildly different results. To get an accurate, useful report, we have to understand what goes into it and why it matters. My experience as a business coach has shown that there is a lot of confusion about that.

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Financial Reports Explained Without Numbers or Math

There is a saying often attributed to Edwards Deming that “We cannot manage what we do not measure.”  Numbers are the measurement that make management possible. The corollary of the quote is:  “If we don’t manage it, everything that happens to us – good or bad - is an accident.”  We might survive by accident, but we cannot thrive, which means we cannot thrive without numbers.  

Now don’t panic. As business owners, WE do not have to collect and compile numbers. We don’t even have to know how it’s done, but we do have to understand what numbers tell us.

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They Say I Make Money, So Why Don’t I Have Any?

As a business coach, that is probably the number one question I am asked by business owners. Payroll this week, suppliers next week, debt service the week after, and tax deposits, seemingly, all the time.  Everybody wants our cash. If you own a business, you know what I mean because you’ve asked the question yourself.  Even when we make a profit, it feels as if business is a perpetual scramble for scarce cash...

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