Knowing Is Half the Battle

Polished reports do not guarantee accuracy. I'll teach you how to rebuild your chart of accounts for true financial visibility and control.

Last year, I started working with a guy who owned a restoration company doing around $2.5 million a year. He had come from the corporate world, where he managed a business unit at a Fortune 500 company and oversaw a full P&L. 

In our first call, I asked what his biggest challenges so we could talk about what would make our coaching engagement really valuable to him.  He had three main areas that were on his mind - sales, tightening up his SOPs and recruiting.

He didn’t mention financial understanding and profitability and when I asked him about those things . . .  “All good there,” he said. “That’s not where I need help.”

Wrong.

He wasn’t being dishonest. He was just used to having a finance team handle all the details. He didn’t build the chart of accounts. He didn’t manage the bookkeeping function. He didn’t reconcile anything. He got polished reports and made decisions from there. So when he launched his own business, he assumed things would run the same way.

They didn’t.

Within a week of working together, I reviewed his P&Ls and spotted the problems immediately. The reports weren’t telling the real story. Job costing didn’t exist. The chart of accounts was a mess. Cash flow was unpredictable. Profit was there one month, gone the next.

To his credit, he didn’t get defensive. He was open to seeing what he didn’t know.

He said, “I never realized how much went into creating the reports I used to rely on. I just figured they came standard.”

So we got to work.

We cleaned up the books. Rebuilt the chart of accounts. Put systems in place to get job-level visibility. Created reports that actually meant something. And when he could finally see what was happening financially, everything changed.

Margins improved. Cash flow stabilized. His decision-making got sharper. He didn’t just feel in control . . . he was in control. He stopped wondering where the money was going and started using it to grow the value of his business.

By the way, this is very similar to what I went through when I started my business.

This is way more common than most people think.

I hear things like:

“I’ll look at the numbers when I have time.”
“My bookkeeper handles that.”
“We’re on cash basis. Our accountant does the reports.”
“I just check my bank account and go with that.”

Or the classic: “I’m not a numbers person.”

You don’t need to be a numbers person. But you do need to stop ignoring the numbers.

Avoiding financial understanding is like ignoring your health. You can get away with it for a while, but eventually the bill comes due. Maybe it shows up as a cash crunch, or a surprise tax hit, or months of barely making payroll while your top line keeps growing.

I’m not a doom and gloom kind of guy but worst case? Ignoring the numbers can put you out of business.

2nd worst case - You try to sell your business and realize no one wants it. Not because you didn’t work hard, but because the numbers just aren’t clear and explainable to a buyer and you just haven’t been as profitable as you could have been.

The good news is that it absolutely does not have to be that way. 

This is why I push my clients to get their arms around the numbers early. Not because I think spreadsheets are fun - although I do love a good spreadsheet, but because the clarity gives you options and ideas to improve your situation. And those options lead to better profit, less stress, and a business that’s actually worth something someday.