I have been assisting businesses for some time now and the truth of the matter is that depending on how creative the owners or their accountants are, they can make the business look like a shiny diamond in the ruff. This is done without telling a single lie or making “Mistakes”. It is simply done by using accounting tools in a manner that they were not exactly intended for or by projecting figures based on completely irrelevant, but accurate facts. These are things like “Provisions and Future Value. All this now gets carefully entered into a Excel Sheets with pretty, pretty graphs and pie charts that leaves investors drooling all over the boardroom table.
Back at the accountants desk though there is not even enough cash left for this week’s wage run. The other fable about projections and reports are that far too often business owners and managers spend so much time in capturing “results” or calculating targets that they completely lose touch with reality. Over and above the masses amounts of time spend on these reports that could have gone into actual production to generate a profit. These reports actually never get read and business owners most definitely won’t waste their time comparing this projection with the actual results. I mean what would be the point; we all know it’s just projections and we can expect them to be accurate.
The truth of the matter is that sometimes you need to look at the results as they are what pay the bills. Spend less time on projections and budgets and more time on generating profits. Without profits no matter how pretty and colourful your charts and sheets eventually reality will catch up with you and your business will become another statistic of businesses that did not make it.