Is your bookkeeping a major risk to your business? Could your spreadsheets send you broke? Between 80 and 90% of spreadsheets are inaccurate. Maybe some figures have been entered incorrectly; maybe a formula is flawed.
The larger the spreadsheet, the greater the risk. It’s been estimated that nearly 90% of spreadsheets with more than 150 rows are hiding at least one major error. One error is bad; two or more are worse, because they increase the risk of compounding mistakes.
Unless you undertake a forensic analysis of your spreadsheets, these errors can remain hidden for years. Slowly bleeding cash from your business. Or overstating your profitability. Either way, it’s a disaster.
So what’s the alternative? Running cash sales and flying by the seat of your pants? One of my clients tried this, and it almost destroyed him.
Here’s how it went down. Paul’s a second-generation tyre dealer. Most people replace their tyres every four to five years, and Paul’s prices were competitive. He should have garnered plenty of repeat business.
But revenue was heading south. When I looked at Paul’s accounts, I realised that 80% of his sales were cash. He wasn’t retaining any client data. He didn’t know who was buying his tyres, how often, or how much they spent each time.
I met with Paul and his leadership team. I pushed for a digital accounting and client management system.
To my surprise, I found myself stonewalled. I pressed my case, and the conversation became heated. In the end, they kicked me out of the room.
I didn’t make any sense of it until years later. Paul’s 2IC, who’d been the most resistant to change, had been robbing him blind. The cash sales had been hiding his theft.
Paul’s 2IC sent him broke, driving him to the edge of despair. I’ve helped him get back on his feet, and salvage something from the wreckage. But I learned a valuable lesson from that experience. Any time I’ve been punted from the boardroom, it’s because someone close to the CEO is crooked.
So we’ve identified four thieves that can drain money from your business:
- Error-riddled spreadsheets
- Cash sales, combined with slack record keeping
- Not knowing who your customers are
- Dishonest employees
What’s the common thread that ties all these together?
Blind trust. When business owners trust sets of spreadsheets that have been cobbled together over time, or refuse to update their accounting and CRM systems, they set themselves up for failure. Then there’s the most human mistake of all: trusting someone who’s milking you dry.
Fortunately, I have a solution: Strategy to Cash and 24-month rolling forecasts. In fact, Paul inspired me to develop Strategy to Cash. I realised how important it is to retain and analyse client data. These lead indicators show you where the business is headed in the future.
We load your accounts and your client data into our 24-month rolling forecasts. Once they’re up and running, they’ll highlight any discrepancies in your figures. So if there are any errors in your spreadsheets, we’ll soon pick them up.
That’s why Paul’s crooked 2IC wanted me gone. Because accurate accounting means real accountability. Thieves hate that.
So if you’re keen to keep the four thieves at bay, let me know. We can build a system that protects your assets, reduces the risk of accounting errors, and strategises future business growth.
There’s a silver lining to Paul’s story, by the way. He owns the building he works from. It’s in a prime Adelaide location, close to town. Although his business isn’t saleable, the building is. Once he sells it, he’ll have more than enough to finance a comfortable retirement. After the disappointments he’s endured, he deserves nothing less.