Have you ever been dreading something, only to find out after the “event” happened that you really had nothing to be afraid of? This usually happens to me when I go to the dentist. I won’t bore you with why I’m always afraid to go, but I always feel like an idiot when I am done with my bi-annual visits and I walked out alive. It’s a waste of energy, but we all do it.

What if I told you that, as an entrepreneur, being afraid of your numbers is a threat to your business? Would you believe me? Would it change how you think about the fear?

This fear isn’t irrational and it needs to be addressed. Pronto. Most entrepreneurs that come to us through Godwin Start-Up School are new to the game, but some have been in business for a while. Those that have been in business for a few months, in nearly all the cases we see, have been operating without any knowledge of their true financial position. While it’s not uncommon, it’s definitely dangerous. Here is why:

  • You truly don’t know what you don’t know, and what you don’t know can kill you: Operating a business should come with a warning…OPERATE IN THE DARK AT YOUR OWN RISK! We take time to educate our clients on how to read financial statements, which metrics to track and what they mean, and also how those financials relate to their tax exposure. You have to know how to read your numbers. Period.
  • Playing the ostrich about your numbers will cost you opportunities: If you don’t know how to interpret your numbers, how will you know if you’re in the position to take advantage of a new opportunity? This cuts both ways…you are in worse shape than you think, and you spend money you really don’t have, or you are in great shape and pass up an opportunity because you’re scared to spend the money. Either way, you lose.
  • Lenders, partners, and investors don’t like cluelessness: While we field lots of questions from outside lenders with whom our clients work, such as bankers, mortgage lenders, and other third parties, they also like to know that the client understands their financial position. We receive accolades all the time regarding how clean the accounting is and how great the books look, but those accolades are no substitution for an informed business owner. (Re-read my sentence on how we work with clients to educate them.)

Just like I feel dumb when I walk out of my dentist’s office under my own power, I think you’ll feel like you wasted a lot of energy on fearing your numbers after we talk for a bit. Just yesterday, I met with a longstanding client (she was the inspiration behind our Start-Up School, in fact), and she was fearful of a call with her franchisor where numbers would be discussed. I reminded her of how far she’d come with her understanding of her financials and received a follow-up email today from her. She let me know that her franchisor was very impressed with her company’s growth and her grasp of the financials. That felt good, but it was no match for how good she felt. I’m certain of it.

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