Know Your Numbers

People ask me what the first thing to do when a business is in trouble. The obvious answer is “Cash Flow”. Cash is king – everyone knows that (almost everyone). So unless cash position is healthy everything else will fall apart. Fix the cash, stop the bleeding, then panic disappears and calmness ensues.

What the not so obvious answer is this: “know your numbers”

Before we try to fix cash flow it is imperative that we know the numbers. Everything from sales figure, profit & loss, cost of goods, cost of operations, hidden expenses, and so on. If we are to have a chance to get to the bottom of the pit we need to keep digging .. and keep digging.

Some people are happy enough to get “an idea” of where things are – trusting their gut feeling and intuition. There is nothing wrong with gut feeling and intuition. Those are important to make a quick decision. But when the time comes to make a more involved and analytical decision such as “where to cut cost that does not affect the core business” – intuition can be misleading.

Knowing your numbers can be heart-breaking. Most business owners in trouble might avoid this because they know the numbers are bad. They couldn’t face reality. Some convince themselves into denial – hoping and praying that everything will turn around tomorrow, or the next day, or the next day.

The problem is of course, the longer they wait the worse it will get. If you cannot do anything with the business then at least do something else. The point is, you have to do something. And all of these start with knowing your numbers.

Knowing your numbers will not kill you, not knowing your numbers will.

A lot of things in a business are out of our control. We can only do so much, try to anticipate, be pro-active, and response to the best of our ability. Everything else is not our problems because we couldn’t control them anyway.

So don’t feel bad or afraid, we are only humans. In other words, don’t be too hard on yourselves. Know your numbers and improve, or exit and do something new.

 

Startup Illusion

Starting a business can put someone’s mind into overdrive. It will then either shut him down or propel him forward. The euphoric moment will last as long as financial resources have not dried yet. With enough funding, the startup party can sometimes last for years. It is only after investors start demanding (sometimes not so) reasonable returns that the party turns into a big reality check. The dreams have dissipated into thin air, and cloud of judgement descending onto earth.

Party is over.

That’s the hard truth of starting a business. It will get worse before it gets better (if it does get better). Starting a business is like eating a box of chocolate – mixed with some not so edible foods. You never know what you’re going to get but the only way to find out is if you keep eating. In business we never know what tomorrow will hold, it can be a disastrous day or a day when we beat all sales record. The only way to find out is if we wake up in the morning and go to work. The only way to eat the good chocolate is if we keep eating the bad ones.

Some people are addicted to starting businesses. They have brilliant ideas, get the funding,  and off they go with an exciting venture. They don’t however stay long enough to feel the downturn, the heartbreak, the never-ending pressure, and the struggle. When things go south, they are the first ones to pack up their bags and go – some of which utilise bankruptcy regulation to move on.

Some people however, are born to build businesses. Not only that they will start their businesses themselves but they will also see to it that their ventures are successful before they move on. If things go south, they will be the last people in the company to pack their bags. Some might take part-time jobs to help with the cash flow.

There is one distinct difference between real entrepreneurs and wannabes – perseverance.

The startup illusion might be alluring but the hard reality is not as glamorous. Starting a business is hard work, it requires sheer mental strengths more than mere intellects or skills. Building a business is about getting up in the morning, go to work not knowing what will happen that day, persevere throughout the day, and then do it again the next morning.

“Being an entrepreneur is like eating glass and staring into the abyss of death.” –Elon Musk

Worry, Stress’ evil cousin

What causes stress level to spike? Is it too much work? Is it too much pressure?

Or is it too much worry?

Psychologists will have their PhD level theories on what causes stress. However, I guess we can all agree that worry is somewhat correlated to stress. Is worry the main cause of stress? We don’t know, but we know they go hand in hand. When a person worries – his stress level will go up.

Can we eliminate worry altogether? Living the life of worry-less. What a great life. Unfortunately, this particular behavior seems to stick to us, like a super glue. It just won’t go away, eating its host like a parasite.

Let’s be practical, what feeds your worry? Or the better question is, why feeds your worry? We know it’s eating us alive, so why do we keep feeding it? Human nature? We couldn’t help it? Our world will end if we don’t?

The truth is, worry does not change anything apart from reducing our effectiveness (and efficiency) in living. It increase our emotional level, we couldn’t think straight, our mind just couldn’t get into gear. It’s almost like a trojan horse living inside us ready to be activated anytime. The only place in our brain suitable for worry is a black hole.

Brain Black Hole

If there’s any benefit of worrying to our lives than we should consider feeding it, growing it, and keeping it safe. Is there?

Why don’t we channel our worry into something else? Let’s hammer it away by focusing on other things.Worry feeds on one thing and one thing only: “our attention”. The more we pay attention to it, the bigger it grows, the stronger it is. It’s like a dangerous seduction, difficult to resist, only to grab us by our throats and refuse to let us go.

Do something else when we start to worry. Run, or walk, or swim, or paint, or talk to your friend. Anything to move our attention away from it. It’ll be there still, seducing us at every opportunity – but at least we are putting a good fight.

Keep fighting!

Matthew 6:27 27 Can any one of you by worrying add a single hour to your life?