I love this quote from Scott Adams (the creator of Dilbert) in his book How to Fail at Almost Everything and Still Win Big:
"I found accounting nearly impossible to learn because of the bubbling moat of boredom that surrounds the entire field.
But a basic understanding of accounting is necessary to be a fully effective adult in a modern society, even if you never do any actual accounting on your own.
… Accounting is part of the vocabulary of business, and if you don't understand it on a concept level, the world will be a confusing place.
… You can pay others to do your accounting and cash-flow projections, but that only works if you can check their work in a meaningful way. The smarter play is to learn enough about accounting and spreadsheets that you understand the basics."
There are three things you can do to better understand the accounting and financial side of your business:
- Ask and answer this question every month: What happened last month (financially speaking)?
- Ask and answer this question every month: What's about to happen (financially speaking)?
- Pay attention!
In the end, accounting (and financial statements) are about keeping track of money!
Do you know where your money is hiding? J