This evening I attended an AccessEN event. Kristen Manger, CEO of Webvisible was the guest speaker. Her presentation was about how her company survived 2009, one of the most difficult year for many companies. Not only did her company survive, but it met its operational goals and raised $20 million from venture capitalists in the last quarter of 2009.
During her presentation, she said one thing that really stuck out: even though Webvisible is a privately-held company, she and her team run it like its a publicly-traded company. Not only does the company have their financial statements audited annually by Ernst & Young (Kirsten, if you want more value for your money, call me — who the hell are Ernest & Young anyways? Never heard of them), but they have their financial statements reviewed quarterly.
Kirsten is running her business like she means it. She is putting the right infrastructure and talent in place. There’s no mom and pop mentality.
Many business owners ignore the realities of their business. They spend more time being the technician in their business rather than the CEO — the person with the vision for the company and the person who puts all the pieces together. As Michael Gerber, author of The E-Myth, says, business owners spend too much time working in their business instead of on their business.
Business owners are so concerned with product development and sales that they do not pay attention to the infrastructure: accounting, human resources, technology, and building key management.
A business owner that is not intimate with the numbers and whether those numbers are accurate are going to have a tough time attracting investors or convincing a bank to extend it a line of credit or loan.
Business owners who don’t know the difference between EBITDA and net income are in trouble. Those who don’t understand the interplay between the balance sheet, profit and loss statement and the statement of cash flows are in trouble. These business owners simply don’t know their business.
The same goes for human resource issues. Many business fail at correctly classifying their employees between exempt and non-exempt or know the criteria that separates an employee from an independent contractor.
Does this all sound overwhelming? It does because it is. A business owner needs to understand these things, but they don’t have to be an expert in them. Outsource the talent that you don’t have but just understand how it all fits back into your company.
As with all new businesses, money is tight but that doesn’t mean that you can’t buy a little help here and there when you get a chance; buy a little advice at a time just to make sure that you’re on the right track.
