1. Numbers run a business. If you don't know how to read them, you are flying blind.
When I started out, I thought that CEOs ran businesses with the help of their top executives. What I didn't realize is that a business is a living entity with needs of its own, and unless the leaders pay attention to those needs, the business will fail. So how do you know what those needs are? There's only one way: by looking at the numbers and understanding the relationships between them. They will tell you how good your sales are, whether you can afford to hire a new salesperson or office manager, how much cash you will need to deal with new business coming in, how your market is changing, and on and on. You can't afford to wait until your accountant tells you these things. Nor do you have to become an accountant. You do have to know enough accounting, however, to figure out which numbers are most important in your particular business, and then you should develop the habit of watching them like a hawk.
2. A sale isn't a sale until you collect.
There's a common assumption that when somebody buys something from you, it's like money in the bank. Sooner or later, you are going to get paid. That's not always true, of course, and just how much sooner or later the payment arrives can make a big difference. But most people don't think about that when they first go into business. The term bad debt doesn't enter their vocabulary until they suddenly find themselves with a receivable they can't collect. By the same token, the concept of collection time doesn't become meaningful until they discover they don't have enough cash to pay their bills despite having made a lot of sales.
Click Here to read entire Secrets of a $110 Million Man | Street Smarts by Norm Brodsky
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