Many entrepreneurs have a love-hate relationship with their financial administration. It’s just not their thing, they don’t have the patience for it, and it often feels redundant and bureaucratic.
And yet, the right financial administration is also key for that entrepreneur!
Intuition
True entrepreneurs are always working on new ideas and growth. Often they know almost intuitively perfectly the financial parameters around which their business revolves. They know exactly how their business is doing and why it is going the way it is. Where someone else sometimes has to puzzle for hours, that entrepreneur can take drastic decisions in a moment. At such a moment, all knowledge and experience come together in the head and underbelly and a decision is made with courage and ambition. Beautiful to see and super valuable for a company to have such an entrepreneur at the helm.
If you continue to talk a bit further with such an entrepreneur, it often only concerns a few simple numbers that form the basis of a decision. These are the real KPIs (key performance indicators) that the business is all about! No endless lists, but a manageable set with a few key figures. And then the financial administration suddenly turns out not to be that bad. Those few crucial indicators turn out to be razor-sharp; often even on a daily basis! You can wake up the entrepreneur in the middle of the night and he will be able to call them flawlessly.
Growth
The problems arise with the further growth of the company. The business is getting more complex. The number of employees is growing. The interests are increasing. New stakeholders are entering and have different information needs. Processes are standardized and IT systems renewed. And, last but not least, the entrepreneur can no longer be involved in all decisions. Before you know, the financial administration becomes a monstrosity and a compromise of the information wishes of all those persons and parties.
Of course, the financial administration must be professionalized as the company grows. And of course stakeholders are entitled to the information they need for their organization. But never lose sight of the entrepreneur’s lesson. What are those few key figures that really mattered in the business? Can they be retrieved flawlessly and up-to-date from the administration? Does everyone know them? And are those few key figures actually used by every manager in the organization as the basis for their decisions? The right drive in the organization means: all of us continuously trying to score better on those key figures.
Good financial administration is not bureaucratic. But an efficient system where only relevant data is entered and everyone receives exactly the information that is important for their own role or function. Timely and current. No more and no less!