The truth will set you free
Hands down if you’ve ever put off going to the dentist, the mechanic…the accountant.
They’re only going to tell you things you don’t want to hear, right?
Amen to that. And following on from the first instalment of this series; I really hate hearing bad financial news from myself! If I wasn’t an experienced accountant, I’d tell me that those numbers can’t be right.
Truth #1 –The first draft of a budget or forecast usually looks bad
Perhaps I’m a pessimist, or perhaps just a conservative accountant. Whatever the case, when I hit <Enter> on the final number of a new forecast, I tend to cover my eyes and peak through the gaps in my fingers.
I’m happy to recommend it as a tactic when you first look at a financial projection.
The first draft of a budget or forecast usually looks bad. It’s not necessarily over confidence or laziness or some other character flaw.
It just is.
Truth #2 – Emotion is healthy, denial is not
It’s normal to feel grumpy, disappointed or frustrated with the figures sometimes. I’d just encourage you to use that power for good.
The emotion can easily lead to good questions about the numbers and the assumptions that produced them. For example, will wages really only increase by inflation, are there customers who could pay earlier or did you copy a figure from last year that no longer applies?
Make reasonable changes.
Once the figures are final, they will ALWAYS help you know what to do. Sometimes it’s obvious, like when our food costs went up while sales were falling. Other times it’s harder and you might be tempted to think that it’s all just guesswork.
If you’re struggling to understand what the future might hold, consider Truth #3.
Truth #3 – Somebody near you has been through it before
Not sure what a recession would do to your turnover? Wondering how much of your business a new competitor might take? Not sure if you should open on the weekend?
Somebody you know, or somebody geographically near you, has been through your situation in the past. Give them a buzz.
I’m happy to tell you that our retail sales fell 14% when a new shopping centre opened nearby. If you’re interested – ten weeks of road closure took 9% of our cafe turnover at the lowest point.
Ask for specifics about somebody else’s experience. They’ll probably love to tell you and, if they think it’s confidential, remember it’s the percentages that matter and not the exact dollars.
Truth #4 – With a plan comes confidence
When you’ve made sense of the numbers and you have, at least, some idea what you’re going to do, there comes confidence…and extra hours of sleep!!!
Confidence is a valuable attribute in executing your plan because confidence will help you communicate with others.
This article first appeared in Cafe Culture magazine and contains general information only. It should not be taken as constituting professional advice.