Learning the Language of Business
I was recently sitting at the chef’s counter of my favorite restaurant, the Hairy Lobster, watching the chef and sous chefs work their magic to produce what I consider the best food in Portland, I was thinking about mastery and the language required to achieve it. These chefs have learned the language of cooking—teaspoons,tablespoons, cups, pinches,temperature, seasoning, and much more—allowing them to produce amazing results. The language is such a part of them, it’s as if they’ve become native speakers.
It is the same with musicians. The ones that move us with their songs have learned the language of music—flats, sharps, chords, and keys. Their investment in learning the language produces the compositions we spend our time listening to.
As a business owner,you are responsible for learning the language of business:accounting. Understanding the P&L and balance sheet and how they are interconnected is critical to the success of your business. But these two tools both look backwards. Their informationis already dated by the time you get your reports. What has happened has already happened,and you can’t do much to change it.
Business owners need one more tool to produce great results—the cash flow projection. The cash flow projection is the only tool you have that looks ahead at what is coming in your business so you can forecast your cash needs.
Business owners often think that net income on the bottom line of their P&L is cash, but it is actually only the theory of cash since the P&L does not account for debt payments. This highlights the need for a cash flow projection, which takes your debt payments into account (which is a use of cash).
If you would like to learn the language of business and master the finances of your business as well as the business metrics that will create amazing results, give us a call. We can help. 503-312-3145.