I’ll start with the end.
We all want to have confidence in our decisions. We want to KNOW that we are making the best choice we can that will bring the biggest benefit for ourselves, for those we love, for our business. “Yes, I know this buying this equipment now will lead to more profits in the future.” Or “I am confident I can hire another employee and that will help me expand my business like I want.” Okay, now backing up. What does it take to get there? What do you need to make this happen?
Clarity.
You need to know what has been done, and what has resulted (Here’s a teaser for Connections). You need to know that there is room in the budget for that decision and that cash flow won’t suffer. Knowing these things and more, and having confidence in them comes from clarity. That is the first step, and it sheds so much light on all the rest!
In Disney’s Moana, Maui has a pretty good way of making this point.
It’s called wayfinding, princess. It’s not just sails and knots, it’s seeing where you’re going in your mind. Knowing where you are by knowing where you’ve been.
To be more akin to bookkeeping, here is an augmented alternative: “It’s called [organizing your finances in a compelling way], princess. It’s not just [Income and Expenses], it’s seeing where you’re going [on your reports]. Knowing where you are by knowing where you’ve been.”
Step zero exists, too, and Clarity is also very useful here. Really it’s helpful everywhere, in all stages. From mechanics of data entry (cleaning up past transactions) to structural books-building organization, laying a solid groundwork, from which all else is founded upon, is crucial to gaining the visibility you want and that is useful to you to make decisions.
The Chart of Accounts is a critical example. From small details to large, very impactful ones, the COA dictates how everything is reported and can either promote engagement with those reports, or detract engagement. If the Balance Sheet is an eye sore how likely are you look at it? Is there any chance of you actually understanding your Income Statement if the jumbled mess is causing you to avoid reading it? There is no value in that! There’s no knowledge to gain from that.
To fill in, “small details” could include using numbers to label Accounts and what numbers to choose. Doing so provides organization and eases friction for the viewer to easily identify what type account we’re looking at: Current Asset vs. Long-term Liability, Expenses vs. Cost of Good Sold, etc. By large details, I mean something like Account Type. This determines which report and where the account balance shows up on. “Do I put fuel as an Expense or Cost of Goods Sold? I put fuel in my truck and into my equipment I use at the job site.” (Answer: it depends. In the above case, fuel in the truck is likely an Expense, whereas fuel in the equipment would be COGS).
A lack of clarity could put the brakes on any journey to success.
Steve Maraboli
In the grand scheme of things, these are just a few small potato examples, but those little things all add up to gaining Clarity–visibility, awareness, consciousness…. whichever word you like best. That clarity removes confusion and uncertainty and restores confidence and reassurance that you’re making the best decisions you can. Those good, solid decisions drive your business forward, help you accomplish your mission and reach your goals. And by the way, they do so without sacrificing future capabilities or risking running out of cash!
Let’s start wayfinding to Clarity.