Being in the college textbook business, I find myself taking cues from the academic season and how folks react to it. As final exams begin to loom for many, I can’t help but notice three camps of students who face the week of intensity.
Some have put a steady strain toward this time period, keeping up with their reading and studying throughout. Others, however, have procrastinated up until this point and are now in a state of panic trying to cram 10-plus weeks of materials into the few days remaining in the term. Yet another group of students remain in a state of denial; not accepting the fact that there’s little time to waste before “Judgment Day” comes upon them.
As humorous as this may be from the sidelines, I see many entrepreneurs acting in similar fashion as they wrap up their end of year financials and will need to compare them to the projections they held in January. Several executives, to be sure, have been tracking these numbers all along with great care, making tweaks and changes to sales, operations and marketing strategies along the way to ensure their best chances in realizing their goals. Unfortunately, a few owners and managers haven’t kept a close eye on them, and now realize that they have less than two months to make up for lower than anticipated revenue in previous weeks. Still more simply don’t see an issue, and may not before the end of year statements are in the books.
To be fair, I understand the hesitancy by executives to watch their financials down to the penny each and every day; such micro-management tactics can cause businesses to lose sight of the “big picture” and run themselves into the ground. That doesn’t mean, though, that business owners can take their eye off the little things without having them add up to big problems later. Before a company management team breaks into the same cold sweat as college-age kids do this time of year, I offer three basic “rules of thumb” that entrepreneurs must ask themselves to keep their financial strategy on an even keel:
* Focus on the bottom line: Numbers can get overwhelming, even for the CFO. For executives, it’s not as important to know what the financials are as it is to know what they mean. Focus on main issues to start–such as cash flow, retained earnings/EBITA and top line revenue and see where that tracks with your expectations. If these figures look significantly different than what was anticipated, then go into the details to find out why.
* Get a “gut check” from your staff: This is a great way to know if there are underlining issues that need to be addressed without diving into the weeds yourself. Folks sitting around the conference table might not want to bring up little issues because they fear they are blowing things out of proportion–but you can sense when they’re uneasy about something. Ask them what’s on their mind. If it’s bothering them, maybe it should bother you.
* Look around you: While I’m not suggesting that companies should always take a cue from their competitors, there are times when comparing your progress with that of rivals is a good thing. Even if you didn’t meet your projections, you may still be in good shape if the entire market was down; such as the case for many industries nowadays.
The key point here is that no executive should be surprised at year’s end how things are looking, yet it happens more often than some would believe. It’s akin to how a small number of college students wake up in December and suddenly realize that Finals start in just a few days. If they fail, they’ve got no one to blame but themselves.
Bobby Brannigan is the founder and CEO of ValoreBooks, a fast-growing online provider of cheap college textbooks. He can be reached at firstname.lastname@example.org.