“The 500 Hats of Bartholomew Cubbins” by Dr. Seuss was one of my favorite books as a youngster. It’s the story of a boy that tries to take off his hat when the king comes by, but another one just pops up in its place. He gets into trouble, as he keeps taking the hats off, and new ones appear on his head. Each one was grander than the one before, until the final one, which was the most glorious hat of all. Bartholomew is a bit like every entrepreneur I know. As you start a business, you’ll be wearing
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Every business owner is buried by information. There aren’t enough hours in the day to read, digest and then decide what you should act on. So how do you decide what to deal with today that can’t wait till tomorrow? Many business owners have dashboards that tell them how their companies are doing. Some electronic systems continuously scroll information about the company. Some use reports that are created weekly or monthly for the management team. It’s nice to have that information, but all those reports and all those numbers could cause your eyes to glaze over. TMI – Too much
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Are the people who work for you honest? Of course – or are they? Internal controls are designed to keep your business safe. No matter how honest people are, when they get into trouble, it’s just a short step from borrowing $20 from petty cash to issuing a check to themselves (or a fake company) and signing it. Even if they’re just “borrowing” from you, it’s still theft. Every year, owners discover that the office manager they trusted has been writing checks to themselves for $1,000 to $10,000 a month for the last 10 years. The losses run from thousands
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Think about what records are important to your business. Your situation is no different from any other business. Everyone has the same need for recordkeeping. You need to be able to document what your business did. It may be because your accountant wants to verify numbers before he puts your taxes together. It might be because your bank wants to do a field audit. It might be because your customer is looking for verification for a shipment they received. Documentation is the backbone of your business. If you can’t document what you’ve done, then you can’t verify that your reports
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The year is over. Your accountant did the hard part of creating the financial statements. You have the easy work of figuring out what they mean. But is that really the easy part? A quick review of your Income Statement and your Balance Sheet won’t tell you about the details of running your business, and the changes you need to make. Trend Analysis is actually an important monthly analysis. Let’s understand why Trend Analysis is so important. You know your business, and what good numbers look like. But even though you remember these numbers from last month, or even from
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