It's the first day of the week-long Business Bootcamp today, and I get to do the bit at the start, which is philosophy and history, how we got here, and the things we learned. Then, a little bit on the importance of financial management from somebody who is not very good at financial management.
I recounted the story (two stories, actually) of when my family and I went to the London 2012 Olympics, for which I wrote a massive blog series about how brilliant it was. I'm sure I will enjoy reading it later in life. I also talked about how I had a summer where I felt like I was famous, I could do whatever I wanted, and everything was rosy and great.
And then I got back to work, and I had no work, and we had no money in the business.
The problem had been that I was looking at numbers for the previous quarters of work. Everything was great up until April, and then I didn't really pay attention in July because I was busy pretending to be famous. By the time I got to September, we were two months into a downturn, and I hadn't even noticed.
The next lesson happened in 2019, when I didn't have the opportunity or the headspace or the energy to do regular financial meetings with the team and I realised in December before we opened the practice that we'd entirely run out of money, having not realised that before.
And so, the lesson is that retrospective financial management is all fine to celebrate what happened in the past.
It's ok to learn from patterns and that, but there's no point in celebrating that.
You need prospective financial management. You need to know where your business is today, right this minute, what's happening, what the costs are, and how it's going, and you need to be able to use that insight to comfortably and sensibly predict where it's going next.
Retrospective is a bit of vanity, prospective and forecasting, that is sanity.
Learning that and how to do it is, to my mind, one of the most fundamental parts of running a business responsibly.
Blog Post Number - 3743
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