When I joined Vending Times in 1988, I had just graduated from the School of Journalism at the University of Maryland with a concentration in advertising. My plans were to hone my writing skills and look for work at a prestigious advertising agency on Madison Avenue. But when I came home that summer, my father needed "temporary" help in this magazine's editorial department, and he asked me to serve as assistant editor until I landed that dream job. But in the words of the John Lennon song, life is what happens when we're making other plans.
As an adventurous college graduate, I enjoyed traveling, making friends and carrying the Vending Times banner while gathering content and taking photos for the magazine. This was, I realized, my dream job! I adapted well to its social aspects, and two years later, when a sales position opened up, my dad's partner offered me a job as an advertising representative.
My father wasn't crazy about the idea, because he wanted me to have more editorial experience under my belt so I would become "more marketable." But since I was already reporting on the industry and was able to speak intelligently about the products my clients were selling, I flourished in my new position.
As time passed, thanks to my father's tutelage (mostly aboard the Long Island Rail Road and on many road trips), I was groomed in editorial, advertising, marketing, production, billing and circulation. My father felt that, to pursue a career in publishing, I should know how to use a camera, write a caption, proofread a blueprint (which we used in those days) and post the billing for my accounts. Since we had a bookkeeper, I didn't see why I had to input the invoices; it seemed like a complete waste of my time. But he repeated, "you need to make yourself more marketable by learning all the aspects of the publishing business."
As time went by, I began to connect the dots. But there was one area with which I remained unfamiliar: the dreaded Profit and Loss Statement. I expressed my concern about my unfamiliarity with this area to my father, but he said that when the time came, I would surround myself with capable people and I'd be fine. I've learned that he was right -- but only up to a point.
Thinking you can rely on someone else to oversee the financial end of your business, and to watch your back, offers a false sense of security. Most of us who run small businesses wear many hats. We are all keenly aware that managing a small business is not the same as working for a large firm with dedicated departments. CPAs are tax-compliance oriented, and few have ever run a small company. As a business owner, even if you don't have an accounting background, you must know how to manage cash. You can have the best product in the world, but if you don't have sufficient cashflow, it won't be long before you are out of business.
This was one of the seminar topics addressed at NAMA's recent Coffee Tea & Water Show in Las Vegas. It really hit home, since I had recently fired two bookkeepers in as many months and changed accounting firms.
The seminar, "Find Your Profit Leaks," led by Fred Parrish, emphasized the importance of developing and communicating a "profit mentality." Parrish explained that you, and everyone who works for you, must have this mindset. It is up to the owner, not the accounting department, to set and communicate the profit expectations.
This may be the most important business lesson I ever learned. If we only look at the financial statements provided by our CPAs, we look only in the rear-view mirror; we'll never see what's coming toward us until it's too late. Similarly, trying to manage a business with cashflow reports is impossible unless you know when the money will be collected. The second part of this is not as much of a concern in coin-op as it is in coffee service, but the first part should engage everyone.
We must know the state of our receivables far enough in advance to allow us to do something about it; it is not unlike reading a map. Tallies of results to date may tell you where you are, but they don't tell you why you are profitable. And, of course, cash and profits are two different things. A wise man once told me that "cash is king;" truer words were never spoken.
I have been guilty of saying that, in this volatile environment, I can't forecast my business. But I know now that every company can find consistencies, and relational and seasonal dynamics, to determine how well or poorly they are doing. Armed with these, we can recognize trends and make the key decisions at the right time.
Every decision we make today will have an impact on future profits. No, I'm not an accountant, I'm a business owner. I haven't read up on accountancy, but there is one thing I know for sure: no accountant can care about the future of your business more than you do.