What Keeps Businesspeople Up At Night
I have gone on many leads for new clients where I was told they are switching accountants because they believe they are paying “too much tax.” However, at most of these meetings we usually spend a few minutes on taxes and then most of the time on them wondering whether their controls are good enough!
My conclusion from this, as well as from many conversations with clients, is that potential loose controls are a major cause of keeping someone awake at night. No one stays awake at night wondering if they are paying too much tax – a pending tax audit might, but not paying too much tax.
There are certainly many other reasons, but I want to address controls here.
Businesses are organic and need minding. Part of this is to have adequate controls that do not tempt personnel to steal and:
- provide methodology to get things done the right way at the right time by the right people,
- customer orders do not get mislaid,
- customer backlogs are managed and are for the right reasons,
- inventory doesn’t accumulate unwisely or unnecessarily,
- orders to suppliers are for the right things in the right quantities,
- operational data is provided timely,
- overhead is properly allocated and not excessive in space and cost,
- that the cash flows in the right direction.
Being a businessperson is very difficult. Aside from knowing how to make the product, manage the process and personnel and control the cash flow, they need to know how to lead and run a business. Each separate function is essential for a successful business, but many times how well the overall business is managed is the determining factor of its continued existence. Yet, many owners do not do this claiming they are “too busy.” The old cliché is true – you need to work on your business, not in it! Benjamin Franklin said that the eye of the master earns more than both of his hands.
If you don’t want to stay wake at night, have procedures established that watch over and control each of the items in the bulleted points above. It all has to do with controls. Each of the items mentioned can be controlled and transparently quantified with information provided regularly and timely so that it can be acted on as soon as a problem is detected. That is control and this will 1) enable you to sleep better and 2} provide time and comfort for you to work on your business!
Controls work, but only if you work on getting the right controls and then using them.
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