“I believe the mindset of business owners is likely similar, if not worse, when it comes to discussing finances,” suggested Karen Wimbish, Wells Fargo’s director of retail retirement. “Business owners are so involved in the day to day of their business they often don’t take the time to dive into finances. For many, they go into business because they are passionate about something, but running a business has some real challenges.”
A difficult subject
According to Buck Heidrick, certified business advisor for the Small Business Development Center (SBDC), many business owners lose money by simply failing to communicate.
Oftentimes, he said, finance-related issues that cut into profits are not that difficult to solve.
Nevertheless, Heidrick said, business owners are afraid of the unknown.
“There’s a lot of discomfort,” he said. “They are unsure what they might see, what others might find.”
Taking it a step further, Jeff Leveen, owner of Camas-based Padgett Business Services, said that talk of finance is just very personal.
“When business owners open up, they risk someone questioning a lot of their decision-making,” he said.
Scott Jonason, founder of Lacamas Medical Group and new start-up EverMed, said that from his perspective as a business owner, “people who run businesses are proud. It is hard for them to admit when things aren’t going well. You want to reflect to your employees, your customers, your vendors that everything is good.”
The pitfalls of silence
Between the legal, regulatory and financial obstacles of business ownership, business owners who “miss things and hope for the best” are subject to a number of pitfalls, said Heidrick.
“The liabilities are huge. In today’s business climate, you can’t expect businesses to be able to know and manage everything on their own. There’s too much,” he said.
Leveen agreed, adding that “by not understanding what they are seeing, or even what to look for, businesses are, in fact, losing money. They put themselves and their business at risk for penalties and head down an unrecoverable path.”
Jonason pointed out that keeping silent about your business’s financial health can also damage relationships with staff.
“It’s tough enough to manage through down times,” he said. “When you don’t translate to your staff, your inner circle [about] why changes have to be made or why expectations can’t be met or have shifted … it chips away at their confidence. When they understand, they can buy into what needs to be done to keep heading in the right direction.”
Airing it out
After saving countless business owners dollars that they didn’t know were on the table, the message from Heidrick and Leveen is clear: Whether it is a reduction in taxes, a savings on expenses or increases in potential profits, you don’t know until you look.
“I have seen a business grow 50-fold after finally facing their financial issues,” said Leveen. “Instead of continuing down a path that might have ruined them, they are now a multi-million dollar company.”
A crucial first step in overcoming the fears of finance is to understand that the right financial team can help increase a business’s bottom line, noted Jan Stockton, a CPA with Vancouver-based Stockton and Associates.
The next step, Jonason said, is building trust.
“There is absolutely value in opening up about your business’s finances,” added Jonason, drawing on his own experiences. “They (finance experts) had ideas I didn’t think of and avenues for saving money I didn’t even know were out there. People work for you and with you for a reason – they trust you. Reward that trust by ensuring you are not only operating soundly, but you are driving the organization in the best possible direction.”