If you’re looking for a super summer read, and haven’t pored over this article already, may I recommend our interview with Solopress co-founder Aron Priest.
By turns entertaining, illuminating and inspiring, it’s also wonderfully honest. I was agog at Aron’s comments about the financial running of the business in its early days, the notion of going to see the accountant once a year is truly mind-boggling.
His advice to business owners to, well, get the right advice and make sure they truly understand metrics like EBITDA is worth repeating.
In a similar vein, I smiled at this comment in Cimpress founder Robert Keane’s recent annual letter to shareholders. “I wish that I had figured out the importance of capital allocation many years ago…” also wonderfully honest.
Keane went on to explain that Cimpress is entering its fourth year of making capital allocation an explicit area of focus for management “so we are still learning and revising our internal processes. But better late than never: as CEO, founder and a significant shareholder, I now spend a major amount of my time on activities related to capital allocation and consider it a critical responsibility.”
It’s rare to hear big bosses being so candid.
It also reminded me of Fulmar founder and CEO Mike Taylor and his FD Derek Harris setting a regular evening date to go through the group’s purchase orders, so they had a handle on exactly what Fulmar was spending, and on what.
Yesterday, I was chatting to a seasoned accountancy professional about the above, and he relayed the following hair-raising tale: he’d been brought in to provide external advice at a company that was apparently making plenty of money, yet had no cash. Upon delving into the firm’s books, it transpired that at some point in the prior two years, trade creditors had gone missing from the company’s accounts, despite those accounts being audited and signed off by all concerned. The upshot being that the business wasn’t just not making as much money as the directors thought, it was actually losing money. Shriek-making, but a true story.
The common point across all of this is that ultimately business owners need to be up-to-speed on the numbers and metrics that are critical to the success of their business, and/or they need to team up with someone who’s devoted to that task. I’m thinking of Bob Gavron and Brian Edwards, Taylor and Harris, Nick Dixon and Rick Taylor, and and more recently David Nestor and Lorenzo Fardella.
Know your numbers, or know someone who does.