MYTH VS TRUTH: Only My Banker and My CPA Care About My Financial Statements

Home » Blog » MYTH VS TRUTH: Only My Banker and My CPA Care About My Financial Statements

Financial statementThe myth most business owners believe: Most new small business owners get excited about marketing and sales.  They also necessarily concentrate on delivering the product/service and on new product creation.

Why this myth causes a problem: When a business owner chooses to ignore their financial statements they are failing to use one of the key tools available for managing their business!  Business owners who grow the best businesses know this is a huge mistake.

The truth successful business owners learn the hard way!  Accounting is the language of business.  Successful business owners have learned that understanding financial statements is a vital success skill. They use accounting records to measure everything from the effectiveness of their marketing and sales staff to the efficiency of their product manufacturing and delivery. 

It is particularly useful in when managing employees.  Employee appraisals that are based on accurate data are many times more useful than what normally happens during employee management. Hear the difference between “You are making too many mistakes!” and “The average error rate of other employees who do your job is 3%. Over the last month yours has been 10%.  What do you perceive is the problem and what can we do to reduce your error rate?”

The first statement just leads to arguments, anger, and denial. The second leads to solving the problem and moving closer to reaching your goal for that employee.

Lesson learned: Peter Drucker’s main law of management is deceptively simple:  What gets measured gets managed!  If something is vital to you reaching your business and personal goals, you must find a way to measure it.  How else will you know if you are making progress toward your goal.