In part I, we started into the discussion of why business finance tends to be difficult to understand for most people, even though its relevant to everyone to some degree. Now, let me get into how this relates to you as a business owner or business manager.
I left off talking about the apparent communication gap between finance tacticians and the rest of the world.
I also mentioned how when you’re in business for yourself or managing business for others, you can be very much at the mercy of your advisers when it comes to matters of finance.
Does this mean you shouldn’t utilize advisers? No, I’m definitely not saying that. Experts in various financing disciplines can be absolutely critical to your business success.
So, lets summarize what we know so far.
– Business finance can be hard to understand, comprehend, and apply.
– Its an essential part of any business venture
– Leaving too much decision making up to your advisers can be dangerous.
– There is a long standing communication gap between finance experts and everyone else.
– 99.9% of the world have a very limited understanding of finance, how it works, and how they can more effectively utilize it to increase their wealth.
From a business ownership/management point of view, there should be a strong motivation to correct this trend, and I think there is, but few people understand how and continue to muddle through what already doesn’t work very well.
So what’s the solution?
Like anything else in business, the owners and managers of any business need to control and direct the forces of the business to be successful. When it comes to finance, its hardly practical to advise or expect non financial managers to develop a deep understanding of business finance in order to get greater value.
Most Entrepreneurs will have a primary focus on marketing, which they should as marketing is the #1 most important activity in a business. But finance is #2 , and is the counter balance for marketing. Look at any large scale business and see how they’re organized – marketing on one side, finance on the other.
So the answer is not to become expert at something you may not be good at or have an aptitude for (basically going against your wiring).
The answer lies in your approach and commitment to maintaining the necessary chi like balance between #1 and #2.
Can I have a drum roll please.
The secret to optimizing the finance component of your business is to connect all finance activities into the three core business finance objectives that apply to any and all businesses regardless of size, structure, or country of origin and then make sure they are congruent and supportive of the overall business objectives of the organization.
Wow, that’s a mouth full. And hardly more enlightening at this point.
But stay with me as all will be explained in the next segment.
I will reveal these three core business finance objectives in part III and further explain how they relate to the broader organizational objectives (and show you that its not even that hard to do once its been explained in a little more detail).