What is your balance sheet going to look like next year? The year after? What about three years from now? Do you care? Many times the answers to these questions are: not sure, no idea, don’t know and yes I care but I don’t have the information to properly answer these questions. It’s very typical for a small or medium sized business to not know what their financial statements are projected to look like over the coming year much less the next three years. Many times they will have a budget (that is usually inconsistent with their historical performance) but haven’t done the work to take the budget one step further and have it flow into an actual set of pro forma financial statements.
What are pro forma financial statements and why do they matter?
Do you know what your business owns and owes? Do you know what your business makes and spends? More importantly – do you know what the equity is in your business or what it might be worth? It’s typical for an entrepreneur or for someone running a business to say “yes I know what we make and spend” but unlikely that they know what they own/owe and what the equity in their business is or what the value might be. Small and medium sized businesses can be so focused on surviving that they often don’t take time to see if the needle is moving in the right direction with respect to the equity or value of their business. This is unfortunate because one of the very reason businesses are started is to build value and one day be able to cash in or have that value recognized.
So where is the best place to start if you can relate to this?
Let’s face it. Entrepreneurs and business owners are always looking for money. I find it interesting that many folks running a business who need money don’t take the time to really understand how much money is actually out there and available to them. When words like “money, financing and capital” are used they can cause someone’s eyes to glaze over as these terms are associated with confusing and uninteresting concepts. The truth is that money can be complicated and boring to understand but it doesn’t have to be.
For almost two decades I have seen many different types of financial challenges for businesses including my own. One of the scariest moments of my life was the financial crisis of 2008/2009 as I had never witnessed or had to manage a business through a market correction. It was high speed learning and years later the lessons are still relevant not just for myself but in seeing and helping businesses manage their way through a tough spot.
A few months back our family bought a piano from a local piano refurbisher and after making several phone calls to book an appointment to have it tuned with no response, I decided to stop by the business to see if I could speak with the owner personally. I had met him when we purchased the piano and learned that he had been in business for more than 20 years. On this particular morning when I drove up to the front door it became obvious that the business had shut its doors as the space was empty except for the sign still displayed on the front of the building. Continue reading “It’s a sad day when you learn of a #failedbusiness”→
This week Dylan spends time revealing how he learned to let go of customers he never really had in the first place as well as the personal lesson of realizing there are many different paths that a business can take to get to its goal. Dylan shares a conversation he had with someone who was recently fired and is considering starting a business.
This week listen to Dylan talk about the concept of how entrepreneurs who try to do 10 things at 10% never get 100% results. Focus is the key and Dylan recommends using one key question every day to direct your efforts as an entrepreneur or business owner.
Tough times call for tough measures. Even if your company is the size of Microsoft the market can force your business to change overnight and the only option you have as a business owner is to decide: will our company acknowledge the changes and adjust or will our company ignore what is happening and stay the course. These are not easy decisions to make but the reward for choosing one or the other can lead to new opportunities.
Last week Microsoft announce a new holographic/virtual reality product called HoloLens (video here). If you follow the technology wearables market at all you are probably familiar with Google Glass or Oculus but you probably didn’t know that Microsoft was about to become a contender for eyeballs. In fact you may have not thought much about Microsoft who really hasn’t delivered many new ideas to the market in recent years. The HoloLens is a product that doesn’t utilize the same technology as its competitors but does cater to the same customer who will be seeking a virtual experience. It would seem that Microsoft may have found a new way to bring revenue in their front door and will be trying to get your attention. So what does this have to do with your business? Continue reading “Can your company pull off a HoloLens?”→
From time to time I read a great article (defined by me to be innovative and creative) and feel the need to share it. For those of you who are aware of Uber this article may be of interest to you. For those of you who do not know of Uber you should know that they have been disrupting the taxi industry in a big way. They built a platform for people who need a ride and for people who can provide the ride they need. The cost is more than that of a taxi but the experience is apparently incomparable as the owners of the car get rated for the service they provide meaning you are able to get a “private driver” as you need it without paying the full time wage of a driver. As a result of not only their popularity but also their expansion they are now looking at helping 100,000 entrepreneurs get onto their platform in countries around the world (see “Financing 100,000 Entrepreneurs“).
There was no drama. There was no systems melt down. Everything went as it should yesterday when Twitter went public. Great to see another success story of entrepreneurs that start from less than nothing and by virtue of that position are forced to bend their will and work against the grain to produce something that adds more value to the world.