By Niki Tudge
We all know that Henry Ford was one of the richest and most famous Industrialists of all time. Though he didn't invent the automobile he did, through innovation and cost control, make it affordable to just about anyone. With no formal education in engineering, Henry Ford revolutionized the world.
His success would have surprised his father who assumed Henry would take over the family farm. But Henry hated farming and was a natural tinkerer who spent hours taking machines apart and putting them back together. So rather than farming Henry took an apprenticeship as a machinist.
Though his name is synonymous with automobile engineering and production few people remember that Henry actually pursued a formal education in bookkeeping at Goldsmith, Bryant & Stratton Business College (now the Detroit Business Institute). So why would this natural-born engineer feel that he needed formal education in bookkeeping and what does that have to do with your pet industry business?
Henry realized early in his business life that keeping track of your finances is fundamental to all businesses, no matter how passionate you may be about your company and no matter how innovative your product or idea. History gives us many examples of superior products and ideas that failed because of poor financial management (and the government isn't going to step in and bail you out). The proverbial better mousetrap benefits no one if the company making them can't stay open for business. According to the Small Business Administration, 71% of the firms that fail, fail because of poor financial planning.
Henry also believed that, even when he had entire accounting departments keeping his books, a business owner must understand the fundamentals of finances in order to make sound business decisions and discuss company accounts intelligently. No one, not your lawyer, your doctor, your accountant, your mother, brother or sister, will ever care about your money they way that you do. Understanding your business finances is crucial to the success of ANY business and returns lifelong benefits for you and your company.
To operate your business effectively you need to know where your money is coming from and where it is going. You also need to be able to fluently discuss your business decisions with your accountant, lawyers and other professionals that make up your support team. However, it would be a mistake in any small business to leave money decisions fully to your accountant. Certainly take your accountant's advice on taxes, payroll etc. but your accountant will never understand your business or your customers the way that you do. You are the one who is ultimately responsible for your business. If you can't pay your bills or meet payroll will your vendors and staff blame your accountant or are they going to blame you?
There are many free and low cost resources available to help you learn the basics of business finances including SCORE.org, SBA.gov (finances and accounting) and dwmbeancounter.com to name but a few. Learning to use financial management software is also a great way to build your financial management muscles. Even though you got into the pet industry because of your passion for animals, your financial expertise will directly contribute to making your business a success so you can keep your dream alive. Then, when your business is growing, hire bookkeepers like Henry Ford did. But because you now speak “finances” you will always be in the best position to manage your financial team and make the best decisions for your business.