By Chuck Violand
Cleanfax Magazine – February 2014
If you’re the owner of a restoration or cleaning business, here’s something your accountant wants to tell you but may be afraid to because he doesn’t want to risk losing his job: stop using your business checking account as a personal piggy bank! If you’re just starting a business, here’s what your accountant wants to tell you: don’t even think about doing so!
Some time ago I was told by an executive coach that he thought the biggest challenge he faced in working with his clients was helping them maintain discipline with their company’s money. When asked if I agreed, my reply was that I thought money was second. An undisciplined ego was first as it influences the way one handles their company’s financial resources. Author George Kinder refers to this as Money Maturity.
One of the hallmarks of successful business ownership is the discipline and maturity with which the owner manages the company’s money, not just in the early years when it’s necessary for survival but especially as the company starts enjoying financial success. This is when too many business owners take a little extra cash, combine it with some extra time and a pinch of entitlement… and produce trouble.
It’s easy to fall into the trap of thinking we’re above having to play by the same rules as the “little people.” None of us are going to actually say this (we learned not to at the expense of Leona Helmsley), but often our actions tell a different story.
Every relationship in business, whether it’s with customers, suppliers, or employees, is based on trust. We trust our people to do their best work for the company. They trust us to make sound financial decisions that will provide them with secure futures.
It’s hard to gain our people’s trust by crying “poor” when it comes time to replace tires on vehicles, maintain equipment, or invest in new, more efficient technology—right after we reminded them not to scratch the personal toys we’ve bought with company money and have parked in the warehouse for the winter. While nobody may object to you buying them with your own money or quarrel with the fact that you earned them, what they object to is having you then use poor cash flow or soft profits as excuses for not upgrading or maintaining the equipment used to perform their jobs, thus compromising their trust. Trust can be lost with isolated, egregious transgressions on either party’s part. But more often it’s lost through repeated small comments, purchases, and decisions. We start compromising trust when we compromise fundamental disciplines.
Major league pitchers get in trouble when the mechanics of their motion get out of balance. Quarterbacks throw incomplete passes or interceptions when they start ignoring their throwing fundamentals. Business owners get in trouble when they haven’t established sound financial practices or when they start ignoring them.
The fundamentals of business finance are pretty basic: make more than you spend; only one person in the checkbook; no purchases made with company funds that don’t bring value to the customers. It’s when we start ignoring or think we’re above following these fundamentals that our businesses needlessly start to suffer.