What You Won't Learn In Business School
Well, after a few years of pouring money and time into the company, with nothing to show for it, I met Frank Blau. Frank took the time to teach me how to use financial statements. Frank faxed over his income statement and took me through the process of creating a selling price. What an education!
Reflecting on this, I wondered why didn’t I learn this stuff in business school? I learned about assembly lines, Proctor and Gamble’s marketing strategies, supply and demand economics — all interesting topics. But none of that was what I needed to know to run a successful business. You might think that if only you’d gone to college, this business business would be easy. Astoundingly, the basic stuff you need to know — how to bring in more money than you spend — isn’t taught. In fact, some dangerous myths are presented as gospel:
- The market will determine the selling price. Nope. The marketers will determine the selling price. And if they are smart — like Coca Cola — they’ll have the market clamoring for fizzy, chemical-laced, sugar water at $1 a bottle.
- Cut overhead to make more money. Yeah, sure. Where is the “fat” in your company? Aren’t you already skimping on your salary? Don’t your employees deserve more? How much are you contributing to charity? There is nothing to cut in your overhead. In fact, your overhead is too low.
- Business school will prepare you for life in the business world. You know, it just dawned on me — NONE of my professors owned a business. They weren’t in the business world. They were under contract for meager salaries. No commission or profits. No employee dilemmas. What did they know about business? Now, I know that the best coaches are not necessarily the best players, but it helps if they have played the game!
What won’t you learn in business school? How to run a profitable business.
Book Worm: So if you never went to business school, don’t worry about it. Don’t even plan to go. In fact, going to business school gave me a dangerous confidence about taking over the accounting duties at our company. “Stand aside! Let me do it! I’ve been to business school!” Ha!
Frank sent over his statements and all sorts of reports that showed — to a penny — how much his company made and spent. I was overwhelmed. So generous of him. I settled in at my desk and pored over them. At first, I really didn’t know what I was looking at. I had heard the words — depreciation, retained earnings, gross profit — but I wasn’t really clear on what the words meant. (How can profits be gross?)
So I went to a Barnes and Noble bookstore to find a basic business primer. Something that would explain what financial statements were, and define all the business terminology. Ah, how I love a bookstore! I love the way books smell of knowledge and wisdom. Surely the answers were there.
But every book I picked up …
Was waaaaay over my head. I was functionally illiterate as a business woman. Most of the books assumed I knew lots more than I did.
Or they restated those business school myths about “what the market will bear” and “keeping your overhead low.”
Sheesh. Here I was, a sheep-skin holding business graduate and I felt really stupid looking at all those books. Where was “Business Skills for the Absolute Beginner” or “A Kindergartner’s Guide to Financial Statements?” Where was the PRIMER? Even the book called “Business Plans For Dummies” was too advanced for me. Where was a book that taught you how to keep score so that you could play the game?
I knew the keys to my financial success were in the financial statements, the reports that told me where the money went. I just needed help figuring out the language, the business gobbledegoop. Seemed to me that all the great information I found on the business book shelves — about sales, marketing, empowering, staying creative, building teams — would only do me some good if I knew how to account for the money!
I forged ahead. Got my higher education at the school of hard knocks. Between Frank (God Bless You!) and the accounting illustrations in my Peachtree software program manual, I learned to read the financial information. It was mostly a matter of defining the words. L. Ron Hubbard says, “The only reason a person gives up on a course of study is when he goes past a word he doesn’t understand.” I started to make sense of the income statements and the balance sheet — the basic scorecards of business.
And I talked to lots of people. Guess what! The really successful business owners know how to read their financial reports. Some of them run reports every day. Make no mistake about this: The businesspeople who are making money are fanatics about keeping score.
Once I figured out our costs of doing business, we tripled our selling prices. Gulp. But from that point forward we started to make money. Nice, huh? Every month I would look at every line of the balance sheet and income statement. Soon I could zero in on the items that were the best indicators of whether we were doing well. I started to enjoy the process, and kept track of our family’s money, too — with an up-to-date personal balance sheet and even a monthly budget! I certainly slept better at night knowing where the money was! (It’s scary, in the dark at 3:30 a.m., wondering if you are going to make payroll.)
I spend a lot of time on the phone with contractors, talking business. Either I’m researching a story or recruiting members for Contractors 2000. Most business owners have no idea how to read a financial report. Recently, I asked a fellow a question about his balance sheet, and he was so embarrassed that he didn’t know the answer. Why would he? I didn’t even learn it in business school! It’s like the Emperor’s new clothes. Remember that story? No one would admit that they couldn’t “see” the Emperor’s new clothes because they were afraid that others would think they were stupid.
Business Literacy: It has become my mission to help improve business literacy. I don’t consider myself a business expert — yet. I don’t always like what the financials tell me, but it is so much better to know than to wonder! I figure I can read business statements about as well as a junior in high school can speak en francais after three years of French lessons. But I feel like I can play the game. I’d like to help you learn to play, too.
I created a beginner’s business book called “Where Did the Money Go?” It is an easy-to-read book that helps you understand the basic scorecards of your business — the balance sheet and the income statement. It is full of stories about a hard-working plumber named Bob Bird, who starts his first business. We follow him, and keep track of his activities with basic accounting. Naturally, Bob finds less money at the end of the month than he thought there would be. (Ever happen to you?)
“Where Did the Money Go?” will …
- Clearly explain business basics — the stuff you wish someone would tell you!
- Show you what all those confusing business and accounting words mean with easy definitions. You’ll be able to understand what your banker and accountant are talking about!
- Teach you how to read financial statements, so you can use them to make money in your business.
- Help your whole company learn to keep score — it’s an excellent resource for introducing “open book” management.
This book is a primer, the first step toward business literacy. It is hot off the press, and I think you are going to love it. I did my best to make it fun and interesting. So many people have lent a hand to me, and helped me learn about business. I am honored to help you. What I don’t know, I’m not afraid to ask and find out. Call me at 417/753-3998. The book is $20. The conversation is free. The book comes with a 100 percent no-problem, money-back guarantee. The conversation, well, you’ll have to live with it.
And as far as formal education goes, Mark Twain summed it up nicely … “I have never let my schooling interfere with my education.”