Do You Know What Last Month Cost You?
Do you know what you earned and spent last month? Or do you find out once a year, at the point where it is far too late to do anything about it?
I ask because I meet a great many practitioners who leave that kind of thing to their accountant, and I understand exactly why. You did not come into this work to look at numbers. You came into it because of what happens in a room when people breathe.
Here is the problem with leaving it. You cannot make this month’s decision using last year’s figures.
And if you are relying on your self assessment, you are making decisions on information that is older still.
I am not being an accountant at you. Or I am, but there is a point to it. After your reason for doing the work at all, the next reason to be in business is that it has to pay for itself. Even for a charity. Money may not be the purpose of the organisation, but without enough of it the work eventually stops.
There are three documents people treat as the same thing and they are not.
Your profit and loss account tells you what you earned and what it cost you over a period. Did the work pay.
Your balance sheet tells you what you own and what you owe at a single moment. What you are standing on.
Your bank account tells you what cleared. It is not the same as either of the above and it will mislead you if you treat it as the whole picture, because money that has arrived is not always money you have earned, and money you have earned is not always money that has arrived.
Someone said to me recently that they were all the same information presented differently. They are not. They answer three different questions and you need all three.
Now, the numbers that are not financial.
If you run a practice, you also have numbers about how people find you and what happens next. What it costs you to get an enquiry. What someone spends with you over the course of knowing you, not just on the first session. How many people who come once come back.
That last one is the one I would look at first, if coming back is part of how your work is meant to go. Where it is, the return rate tells you something no amount of marketing spend will. If what you offer is deliberately a single workshop or a one-off intervention, it is the wrong number, and referrals are the one to watch instead.
My friend who works in HR calls all of this the difficult shapes, and I think that is fair. For some people the shapes simply do not fit together easily, and no amount of being told it is simple makes it click.
So start smaller than you think you need to. One number, looked at monthly. Pick the one that would change a decision if it moved.
You will have heard the line about giving a man a fish and feeding him for a day, against teaching him to fish and feeding him for a lifetime. It usually gets called an ancient Chinese proverb. It is not. The underlying idea, that helping somebody provide for themselves beats providing for them, is a great deal older than the fishing. But the earliest known version using the fish comes from an 1885 novel called Mrs Dymond, by Anne Isabella Thackeray Ritchie, who was William Makepeace Thackeray’s daughter. Hers went: if you give a man a fish he is hungry again in an hour, if you teach him to catch a fish you do him a good turn. The feed him for a lifetime wording arrived later.
I am slightly ashamed to say my profession has largely made its living by handing over the fish. I spent my corporate career giving leaders the information they needed to make decisions, which was useful, and which also meant they never had to learn to read it themselves.
I would rather you could read your own.
Start with one number. Look at it next month. That is the whole of the ask.
