The Happy-Sad Syndrome

Most of the business owners I meet go through this process every month:

• Around the 15th of the month their bookkeeper or controller hands them the prior month’s income statement and balance sheet. Each are 2-3 pages long.
• They look at the “top line” of the income statement (sales) and are happy or sad.
• They flip to the last page of the income statement to the “bottom line”, net income and are happy or sad.
• They quickly glance at the rest of the income statement and the balance sheet, looking at just a couple of accounts they are very familiar with, like the cash and accounts receivable balances. There are often 75 or more lines on the income statement and balance sheet that don’t seem to tell the owners much, other than the spending levels and balances. They skip over them.
• They then stick the financials into their drawer until the next month when they will again be “happy or sad”.
• Owners are often frustrated because they believe they are doing everything they can to improve their business, but it still not performing as well as they think it could be.

Financial statements and reports should provide business leaders the information needed to help them drive increased sales and profitability.  They should be excited to receive their comprehensive monthly financial package with dashboard, margin analyses, KPI’s, summary P&L’s and balance sheet, expense analyses and cash flow statement that detail out exactly what happened in the month and where they should focus energies to improve performance.  The last place the reports belong is in the drawer.  If you or any other CEO/Owner you know has the “Happy-Sad Syndrome“, I’d be happy to provide them some free medicine – by showing them a few quick ideas to increase the value of their business and improve their financial management – in a short, complimentary meeting.

Current year profitability can still be improved. With just a little work, companies (even the already very profitable ones) can implement a few new tools and financial management techniques that will help them have a breakout year.  They will also be prepared for a downturn in the economy and will improve their overall financial management, helping make them even stronger. The small investment will pay back many, many times over for many years to come, especially for those looking to exit their business in the next few years.

Contact me directly at 608-576-3773 or rperrin@b2bcfo.com.