As a business coach in the decorated apparel industry, I constantly speak with many business owners about their companies. Whether it is on a discovery call, sitting at a table at an industry event, or hanging out somewhere.
A good chunk of the time, whoever I’m talking to will start describing their business, how it's going, and what they are struggling with currently. They might be over 20 years in business, or just started eight months ago.
Sooner or later, everyone’s favorite topic comes up. Money.
Of course, I’m going to ask a few questions. This is when I usually discover some amazing things. Like the shops that haven’t run a P&L statement this year. Or the owner doesn’t pay themselves regularly. And how about those shops that say yes to a low-ball price because the customer “can get it cheaper somewhere else.”
Busy Being Busy
This past week I was speaking with my good friend Mark Coudray about this. Years ago, he coined the question “Are you busy being busy, or are you busy being profitable?”
I say that all the time.
In between chuckles on this topic, he said something remarkable. “There really ought to be an FSI, “Financial Shenanigans Index. You know, some way to rate how people make financial decisions in this industry.”
Well, I took that as a challenge. Why not? It made sense. A few weeks back I wrote a “Shop Owners Guide to Reading Your Own Financials,” as plenty of people miss the target there.
A casual and lighthearted survey to measure a shop’s financial performance and discover how many financial blind spots are running rampant right now. Hey, it’s not an audit. It’s a slightly goofy but structurally sound quiz that looks at your habits that revolve around money.
I’ve grouped them into three buckets.
Know Your Money
Do you actually see what’s happening, on a habitual schedule, with real documents? How accurate are they?
Making Money
Are you pricing and selling in a way that builds profit? How do you know?
Keeping Money
Once the money has arrived, does it stay a while and hang out, or does it leak out through cracks that aren’t being tracked? Are you putting your money to work?
From what I’ve discovered speaking with so many business owners in the industry over the years, many people are strong in one area but weaker in another. The purpose of the FSI isn’t to hand you a grade and walk away empty-handed. The purpose is to show you where you are healthy, and where you are bleeding, so you know what to fix first.
And yeah, the survey is mildly funny on purpose. Not to be snarky, but to give a little levity because white-knuckle seriousness with this stuff is the reason why people avoid the math.
What Avoidance Costs
Before you move on, let’s acknowledge the elephant in the room. This industry moves very quickly sometimes. You probably live in a stressed, overloaded state for a good chunk of the time. I get it.
But not paying attention to this stuff is what drives companies out of business, and keeps the used equipment dealers loaded with inventory.
So, let’s not go there today. Instead, let’s take a peek behind the curtain and see what we see. The Financial Shenanigans Index isn’t going to tell you whether or not you are a financial genius. But it is going to show and rate you on how structured and healthy how you handle the money-side of things for your shop.
And that’s important.
Take the Index
Below is the Financial Shenanigans Index. It’s 18 multiple-choice questions. Just pick the one that feels right for you. The whole thing will take you about three minutes, tops.
Nobody sees the score but you. That’s the point here. This is a safe place to look.