For new small business owners, a strong vision is key — it’s what will fuel the long days and logistical acrobatics of starting up. In those first few weeks, business owners will need to rely heavily on this vision, along with ample enthusiasm and a few crucial gut checks.
Even so, many of the qualities that make a business owner successful during the process of starting a company — good instincts, passion — can be problematic if they’re also the only basis for financial decision-making.
Just ask Erica Easley, founder of Gumball Poodle, a Los Angeles-based manufacturer of “statement socks” — fun, colorful knee-highs decorated with everything from political leaders to holiday greetings. Easley, who first started selling the socks wholesale in 2008, realised quickly how important financial reports would be in making decisions about her business’ health.
“You have to be paying attention to the actual numbers, because you will play favourites with your favourite styles. Or certain things will seem like they’re doing better, but you just can’t trust what you think is happening,” Easley says. “It’s important to learn to take your emotions out of any business decisions, and especially out of what product you’re going to make or discontinue. It has to be about the numbers in the end.”
How to Stay on Top of Your Business’ Finances
So what are the best ways to make sure you’re tempering your instincts with hard numbers? Easley recommends running frequent reports — such as profit-and-loss, sales and expense reports — to keep a thumb on the pulse of the business.
“I think that the most important thing for anybody as they build their business is getting comfortable looking at reports,” she says. “Even if it’s not the sexiest part of your business, because it isn’t, it’s a really important metric for how you’re doing. If you look at those numbers regularly, you’re going to be able to make changes and adjustments that allow you to grow a lot faster.”
Of course, none of this discounts the role of taking risks. As Easley explains, there’s a certain amount of trial-and-error — and even a bit of blind optimism — in getting any business off the ground.
“When I started out, I got my first accounts by knocking on doors. And just saying ‘Hey, I’m Erica, I have some fun socks — would you be interested in carrying them in your store?’ A number of people said ‘No,’ but some people said ‘Yes,’” Easley says. “And from those first few accounts, I got more accounts. I don’t think there’s anything that prepares you for having your own business; I think it’s just something you have to get out there and do, and get your hands dirty and get in the middle of it. And you learn as you go.”