Brett is a cowboy from southwest Colorado who was living his dream. He did leather work. His main product was panniers, the ?suitcases? that fit on either side of a pack horse. Brett?s reputation for high quality work assured he was kept busy. He was serious about his work because he himself used his panniers. He grew up using inferior quality panniers that came apart after just a season or two in the high country and vowed he would create and deliver a product that would not let a ?packer? down.
I met Brett in the late 80s when he came to my office to discuss his business. His profit was so small he could not live on it.
Analysis indicated that Brett had to raise his prices. He immediately objected. His customers were working cowboys and hunting guides. They didn?t make a lot of money and Brett was afraid he would lose their business if he raised his prices. Brett was not conversant with his key business financial report, the Profit & Loss statement (P&L), and didn?t understand much of the financial case I was making. He just knew he couldn?t raise his prices.
I asked Brett to explain his product warranty. He proudly replied that he stood behind his work and his products and warranted his panniers for lifetime against any defects. I then asked him how he would make warranty repairs if he was no longer in business. He was quiet for a few moments. He then replied that he got it. He had to make an adequate profit if he was to remain in business to deliver on his warranty promise.
Brett had a dream. He had energy and drive to work hard. He was honest and delivered a high quality product. What Brett lacked was financial savvy. He didn?t understand that his financial statements were warning him that he was headed for financial difficulty. Because he didn?t understand the clues, he didn?t recognize that he was in trouble until he was about out of money. Brett is not alone. Most entrepreneurs are not financially literate. They don?t understand basic principles and best practices for business money management. It?s not their fault. This subject matter is poorly taught.
At businessmoneyinsights.com, we?re dedicated to providing practical business financial education in plain English. We?re a ?jargon-free zone? where high-level theory that can?t be implemented is not allowed.
We like theory only if you can apply it and get it to work for the benefit of your business, your clients, customers, and patients.
Ultimately, we help dedicated entrepreneurs who have big dreams to make more money in record time and keep more of what they make, so they can continue to make a positive contribution to the world.