If you don’t know how to read accounts, you will end up at the witch doctor! I once knew an older gentleman who ran a very successful trading business [by the standards of his time]. He had shops, warehouses, farms, and a large family.
Then the economy of the country began to slow down, and soon there was hyperinflation. The impact on his business did not come at once, but soon he was struggling, and he came to see me to unload and vent: “I don’t know where my money is going. People are stealing from me. I also suspect I have been bewitched.”
Since we were related, I felt an obligation to try and help, so I asked him the following: “Would it be possible for me and you to sit down with your accountants, so I can get an understanding of your financials?”
To which he answered: “I have a bookkeeper who keeps records for the tax people. It’s another relative. I have to be careful, you know. And besides, we have to manage those government guys.”
“I’m sorry, unless I can see a proper set of financial statements, I cannot even begin to show you what must be done,” was my stern reply.
“My nephew, if you are really interested in helping me, just call the bank and give them a guarantee for a loan. I will pay back,” he pleaded.
“I will not do so unless I see your financials. Period. I don’t want to pour money into a black hole,” I declared.
Desperate, he finally relented, and allowed me to see a rather unimpressive bookkeeper. It was a mess.
Before he died, this relative had found solace in seeing witch doctors, and so called “prophets”. He was also running for elected office so that he could have power against his creditors!
Today there is nothing of what he built.
We all know someone like that, and I have a message for them: “No one is stealing your money, and if they are, it is because you have no financial literacy [yourself]. No witch doctor or medicine man ever made anyone rich in the history of mankind on the planet!”
As you make plans to #SkillUp this year, mastering financial literacy should be top on your list, which of course includes at least basic maths.
The fact is, fear of numbers paralyzes a lot of people. In part this is because maths teaching is often not up to standard in the formative years. This is something we need to recognize and work on URGENTLY in our schools [and homes] if our children are to drive the next wealth creation revolution.
I would rather you speak bad English or French as a second language, and yet be able to do your maths than the other way around!
Calculating percentages, for example, is something EVERY entrepreneur must be able to do, even if you are just selling tomatoes!
These are the “first numbers” of any business! It is non-negotiable!
If I ask you: “What is your Profit Margin?” you must be able to flash back in an instant.
“What is your GROWTH RATE?”
-Revenue?
-Volume?
What percentage of your OPERATING COST is salaries?
Can you sustain a conversation on your business that is based purely on NUMBERS?
All too often I meet young entrepreneurs, and they cannot even calculate the percentage increase in price that they just added to their product or service.
Don’t say things like, “I was not very good at maths in school, and so I can’t do percentages.”
I have known entrepreneurs who barely went to school able to do business percentages.
No excuse here. Time to go and learn, this and more.
“An investment in knowledge pays the best interest.” Benjamin Franklin
#SkillUp
#KnowledgeUp
Do you have a story in your community or an opinion to share with us: Email us at editorial@watchdoguganda.com
