Financial statements, financial projections, and the fat smoker

“If all business improvement is like curing a fat smoker or helping an alcoholic recover, then what actually motivates people and organizations to change? We all know the main thing that works: a major crisis! If revenues drop off sharply, it’s amazing how quickly businesses can act to deal with known inefficiencies and bad habits they could have tackled years ago.” Strategy and the Fat Smoker by David Maister

It’s so true that many of us wait for a crisis before we take action.

We all do that in one form or another (in our business life and in our personal life).

It’s probably why so many entrepreneurs procrastinate about improving the accounting and financial side of their business.

Let’s take action before the crisis

Sometimes it takes a bank or another lender to put a gun to your head (usually when you bust a few loan covenants) to create the motivation to get the work done.

Or when you need capital and a prospective investor or lender requires that you provide them with good financial statements and solid financial and cash flow projections. That will do it too!

Maybe we just found a great New Year’s resolution (so we can act before the crisis)!

Comments

[Anna Baird]

Well, well...nice to pick on the fat people, the smokers, and the alcoholics. Like there aren't any business types that aren't guilty of those sins! Don't those people have enough problems without being further ridiculed in your book?

[Anna Baird]

which reminds me, what with you do with the fat smoking alcholic business owners who are in deep financial crisis?

[Philip Campbell]

Not trying to pick on anyone. The quote in the post was from David Maister's book titled Strategy and The Fat Smoker. David is a consultant to other consultants and advisors and his message is meant to be helpful on a couple fronts.

First, that we all have bad habits and problems and we all tend to wait until a crisis before we either ask for help or try to make changes for the better.

Second, that same tendency is present in how people tend to run their companies. He tries to help consultants better understand themselves and their clients so they can help them solve problems and sometimes push clients a bit to work on issues and challenges before the crisis arrives.

It is all meant in the spirit of being a helpful resource to business owners and recognizing we all have challenges to overcome.