A Rosh Hashanah Call to Accounting
BusinessCoach’s Corner

A Rosh Hashanah Call to Accounting

Being a profitable business doesn't mean much if your cash runs dry.

Jason Adler
Photo by the Israeli Government Press Office
Photo by the Israeli Government Press Office

We are in Elul, the month before Rosh Hashanah, the day we crown G-d as king. There are many customs and observances during this month in preparation for our yearly reconciliation with G-d our king.

One custom is to blow the shofar every day at the end of morning services. The rabbis discuss several reasons for these daily blasts. The following is my interpretation and how we can apply this ritual to our business life.

There is a thought that during Elul, G-d goes out in the field (metaphorically speaking) and waits for us to visit him. The daily blowing of the shofar is a reminder. We should do a lot of preparation and be in the proper physical and emotional state to meet the king.

In life, with G-d as our king, anything is possible. When your focus shifts off that spiritual ideal, your path can become a slippery slope.

In business, there are often daily wake-up calls. Business owners would do well to listen and act in response.

Oftentimes, I am called on to help after many of these wake-up calls. The business owner is in a state of panic for any number of reasons.

The No. 1 question I am asked in this situation is “If I am showing a profit, why am I going broke?” The answer is different for every business, but the problem is universal. Most often the answer can be found in the cash gap.

Here is one client’s story.

Mark started his own landscape business. Because he had many contacts in commercial real estate, Mark decided to target the commercial landscape business. His business took off like a rocket.

Mark was an excellent salesman, and his business grew from 10 to 20 accounts to 50-plus in a short time. Then the bad news set in: He had no cash in the bank even though he had more business than he could handle.

Mark did not account for his immediate need to pay employees and vendors while his customers took 30, 45 or even 60 days to pay him. The more accounts Mark sold, the bigger his immediate expenses became. His cash gap grew larger as his business became bigger.

The king of all the financial statements is the cash-flow analysis statement. Yes, it’s true: In business, cash is king.

Once Mark understood all this, the answer was simple. He needed an infusion of cash to get back on his feet. Then he needed to calculate the dollar amount that each new account drained his cash flow and for how long so as not to get in that position again. He then set terms of net-30 with all new and existing clients.

Within six months Mark was back on the road to a healthy business. Problem solved. Mark needed an evaluation and reconciliation to understand how to best manage his business’s cash and grow his company.

Cash flow and profits are both crucial aspects of a business. Cash flow is the inflow and outflow of money from a business. It is necessary for daily operations, taxes, inventory purchases, and payment of employees and operating costs.

Profit is the surplus after all expenses are deducted from revenue. Profit is the overall picture of a business and the basis on which tax is calculated.

Determining which aspect is more important depends on the business and the circumstances. You should know before you start your business when and how to look at all your accounting statements. In business, a visit to the king of accounting statements is always available.

At this time of year we all should be examining our spiritual books and do an accounting of where we are. What is our relationship to our king? While it is never too late to have a relationship with G-d, our lives become more enriched with our king in it today. Listen to the wake-up call, and let’s go visit him in the field.

I want to wish all my readers a g’mar chatima tova! We should all be blessed with spiritual and material growth in the upcoming year.

Jason Adler is a John Maxwell-certified executive coach (www.johncmaxwellgroup.com/jasonadler) helping people and their organizations hire and keep quality employees.

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