Some time ago I wrote an article in which I took at jab at accountants. Dennis Howlett, a fellow blogger and an insightful writer on business technology, and an accountant, called me out here. I was a little embarrassed by my remarks, not because I made them, but because I didn't offer a substantial argument for them. Shame on me, I should know better, undergrad philosophy degree... But we all get caught up in business from time to time and throw ideas at the wall, instead of offering clear argument. But today I want to revisit the subject again, because over the recent Thanksgiving holiday I learned that an acquaintance had closed his business. He is the brother of an in-law, and a man that I have met on several occasions. A very decent guy by all accounts, and an accountant by profession. I fielded several questions from him over time about business operations, software, etc.. I never questioned him about his background or qualifications; actually, never thought to, though at the time I thought his questions a little surprising. He has been an accountant for many years and worked for several Fortune 500 companies. So what happened to his business? Frankly, from what I can gather, it was a nosedive from beginning to end. As my in-law described it, he had done his homework, but was hit by a lot of unforeseen problems, from finding the right labor to help him run it, to finding the right location. So what was the homework that he had done? Well, as you would expect he did what he knows how to do best - spreadsheets. He had it all laid out to the last penny, from budgets to cash flows, amortization and depreciation. Literally hundreds of hours of work. He is a smart man and knowing how businesses run on the books was an advantage as he spoke to interested third parties. But when it came time to operate the business he was a little lost. The point is that we are all inclined to this pattern. We return again and again to the thing that we do best, of course. The first thing that I did when I wanted to start my own practice was to search the market for a software line that I wanted to represent, because my forte is the software. I was fortunate that the software I settled on, NetSuite, also offered a market vision that I was really in tune with. I was coming from the same Oracle background as the NetSuite founders, so I understood immediately the values with which they designed the software. But to run the business really forced me out of my comfort zone. I was forced to learn marketing and sales in ways that I had not practiced them in the past. I learned an entirely new way of doing software implementations. And the education never ends. I can say without hesitation that we are only halfway, after 3 years of effort, to where I expect we will end up. Unfortunately, my acquaintance cannot say the same. He never considered sales and marketing challenges, or even basic operations of the business. Just the numbers. Even more unfortunate is the number of small businesses that I encounter on a regular basis who really struggle with some aspect of business. Nowadays, it is not enough to just have an accounting software, though that is a necessity. Of course, it helps if you understand the debits and credits enough to carry on a meaningful discussion of how the business is doing. But there are so many other things to consider, like how are you going to attract interest and turn that interest into cash. There is a lot of work that happens prior to a transaction that posts to the books. This work is some of the toughest in business because it is more ambiguous, less easily understood than accounting; more of an art than a science in many respects. My advice to anyone looking at starting a new business is to think through then entire business process, from attracting interest, to delivering the goods, or services, to posting the cash. Make sure that you have both the understanding and the software lined up to manage the entire process. The earlier in the business formation process that you ask these questions, the better off you and your business will be. |
