The Financial Cornerstone
by Fred Roed on 13/11/06 at 11:00 am
3 comments
A bank manager, who specialises in small business in the Western Cape, gives all his clients the same advice: ‘Ensure that your books are well-looked after‘. He says this because he sees a lot of ‘going concerns’ go straight down the toilet, with the owner always looking mighty concerned. The common thread is always cash-flow (or lack thereof); and the reason why the money runs out? There’s no one on duty in the financial engine room.
A turning point in World Wide Creative came when the books were wrested from my cold, clammy hands. We converted our accounts from several piles of lever-arch files to a professional accounting package (QuickBooks), and a ‘Financial Cornerstone’ was appointed.
What does this mean? At the time I didn’t even know the term existed, but after recently scanning a book called ‘Finance on a Beermat’ it has become apparent that the person who took over the books was, indeed, a Financial Cornerstone. Here are (as defined in the book) the characteristics of such a person:
Must have:
- Professional skill
- The right experience (specific sector experience nice but not essential)
- Liking for SME’s
- Strategic understanding
Personality:
- Relaxed
- Prepared to detailed stuff
- Responsible
- Adventurous
- Accept risk
- Don’t crave power
- Like getting things done
- ‘Big’
- Trustworthy
- And you must like them!
The stats are well known: 95% of all businesses fail within 5 years. With the little experience I have (7 yrs in business), I now believe that the reason a large portion of these failures are because of the lack of a Financial Cornerstone in their team. From the list above, it may seem difficult to find this person, but it is important enough to try. Believe me, from personal experience, I know!
Fred Roed is the marketing guy in the Ideate crew. Fred is the CEO of web marketing company World Wide Creative and the co-founder of online learning portal Heavy Chef. Fred loves writing about people out there doing marketing right. Follow Fred on Twitter here. View more articles by Fred Roed.
Karin
Nov 13th, 2006
Definitely must show this to my partner (who still calls me a number-cruncher
) I can tell him now it’s the wrong terminology 
But you’re absolutely right Fred. Finance (cash-flow) is one of the most important assets of/in any business (small, SME and multi-national). The person responsible for the number crunching is an important part of your building team; don’t hire the first one that comes around and knows a bit about bookkeeping because you just want to get rid of the ‘tedious’ task yourself.
It’s an important ‘investment’.
Freddy Rodrigues
Nov 13th, 2006
‘Investment’ is the right term. I can honestly say it has been one of the biggest changes in our business, and the thing that has helped us to succeed. There is another bonus (other than sorting out your cash-flow), and it is possibly the biggest of all: ‘peace of mind’.
It is this peace of mind that allows the wild entrepreneurial spirit to do what he / she does best… and that’s certainly not sitting at a desk creating statements and capturing payments.
Karin
Nov 13th, 2006
“It is this peace of mind that allows the wild entrepreneurial spirit to do what he / she does best… and that’s certainly not sitting at a desk creating statements and capturing payments.”
Oh well, that has it’s own charms I must say. (And ‘rewards’ of a job well done also). Or is it just that I’m a wild entrepreneurial number cruncher?