Check out this guest post from Frank Lunn of Kahuna Accounting!
I’ve been an entrepreneur my entire life, more than 25 years. I’ve been fortunate to be a part of building, developing, buying, and selling dozens of businesses with millions of dollars in annual revenue and value. And although I’ve been fortunate to have a small part in some great success stories, I’ve learned more through the difficulties and failures than in any of the successes, and there is a single lesson that stands out above all the others.
Before sharing this lesson, I have an admission to make. Although I’m the founder and CEO of Kahuna Accounting, I’m NOT an accountant, and I don’t love accounting—at all!
With that admission, let me share the lesson I learned and why I—as a person neither gifted nor passionate about accounting—initially founded Kahuna Accounting, and how you can design your accounting to create an unfair advantage.
Reframe Your Definition and Practical Application of “Accounting”
I didn’t like accounting or enjoy being in the accounting process. I never really connected how it applied to me or my full measure of leadership responsibility. I had a bookkeeper, accountant, CFO, and CPA—they understood accounting. Unfortunately, my lack of interest and lack of leadership ultimately cost me millions of dollars until I realized a key ownership lesson: When you own a business, you need to OWN it—all of it!
The formal definition of “accounting” is “the process of recording financial transactions pertaining to a business… The financial statements used in accounting are a concise summary of financial transactions over an accounting period, summarizing a company's operations, financial position and cash flows.”–Investopedia
While accurate, the above definition completely misses the true value of “accounting” as a business system and powerful navigation resource for guidance on your entrepreneurial journey.
Accounting is not about the mechanics or the process. It’s not about debits and credits. It’s not about historical, bureaucratic, tax-related record keeping. While accounting is necessary for the bureaucrats and taxing bodies to extract their blood, you’ll sadly diminish your future if you only focus on the past.
Reframe your attitude about traditional accounting, and it can become a powerful tool to keep you on track to achieve your vision, mission, goals, and ambition!
Harness the power of accounting for dynamic guidance, and you’ll have a feedback mechanism designed to keep you aligned, calibrated, and coordinated. Achieve what’s most important to you and your key stakeholders in the fastest and most direct route possible.
Building a Successful Business or Professional Practice is a Journey—Not a Destination
Before my entrepreneurial career, I spent time as an officer in the Army, where I learned the vital skill set of every soldier: land navigation.
Land navigation is the learned skill of using the basic tools at hand—potentially a compass or map, and things like the position of the sun or stars, landmarks, and knowledge of the terrain—to assist you in figuring out where you are in relation to where you desire to be.
It took me a while to connect the land navigation skills and relate it to the journey of entrepreneurship. But once I understood the basic framework was the same, I found a way to embrace and love accounting—NOT in the traditional bureaucratic bean counter perspective, but rather as an entrepreneurial soldier on a mission.
There are five basic objectives necessary to successfully “navigate” from where you are to where you desire to be.
- Establish where you are specifically
- Understand where you desire to go
- Evaluate possible route options related to your mission objectives
- Choose your best path and start
- Use feedback to recalibrate your position related to #1 and #2 to stay on track until arriving at your destination
Business is not static; it is dynamic and constantly changing. A map is helpful for initial planning, but you need to be able to recalibrate once you’re on your journey as your situation changes.
YOU are the Leader, NOT Your GPS
I was recently reminded of this important lesson on a trip to a remote cabin in the woods of northern Tennessee. As we were ready to head home four states away, I plugged the destination in our vehicle’s GPS. It provided me with route options and a suggested route based on my preferences. I wasn’t thrilled with the recommendation, so I checked the GPS on my phone. Different preferences created a different recommended route that was equally bad.
I tried one more time with my wife’s phone and got a third primary recommendation.
While all three route preferences would get us home, there were tradeoffs for each one. (see #3 above). We could choose the shortest path on the map that would take us through the “scenic route” or two variations of similar, more economical routes. But, the fastest route was actually longer and more out of the way. After evaluation, the longer route looked to be a more efficient path to our objective. Even though more miles were between us, the destination was ultimately achieved sooner than the shorter and seemingly more direct path options.
The big takeaway for me is that there are a lot of GPS-like systems and people advising us on our entrepreneurial journey. We need to ask good questions and evaluate the options as well as weigh the alternatives for the advantages and disadvantages as well as the potential tradeoffs.
With this information at hand, we need to make a leadership decision, and then we need to lead.
All routes are NOT equal. You can’t let your GPS (or your advisors or your team) determine the destination; they are here to provide suggested routes based on your preferences, but you need to tell them where you’re going and then select how to get there. You are the leader; you must lead. It is your leadership responsibility to choose the business strategies and tactics most aligned with what is most important to you.
Align Your Accounting to Achieve Your Vision
To fully optimize the shortest, most direct, most net economical, and most net efficient path to your vision, you can use your accounting as a business GPS. This has nothing to do with additional software, staff, or even the mechanics accounting.
Instead, organize your accounting to be your secret weapon. Align, calibrate, and coordinate your bookkeeping and accounting as a business feedback system for dynamic guidance. Like a business GPS, accounting can improve your navigation and optimize your route from where you are to where you desire to go.
There are multiple variables, tradeoffs, and options at the beginning in the planning stages. This is even more pronounced as you are on the route to your desired destination. The faster you desire to go, the more important a dynamic feedback system becomes. The speed at which you calibrate where you are in relation to where you desire to be is the key to optimizing your journey and achieving your objectives.
Discover YOUR Options
Most entrepreneurs, business owners, and professional practice builders are too close and too focused on the issues and challenges IN their business. They struggle with coordinating the simple design and recalibration ON their business. We get it. It’s not your fault, but it is your responsibility.
If you’d like to see what’s possible utilizing your existing resources to recalibrate your bookkeeping and accounting to accelerate your results and achieve an unfair advantage over your competitors and peers, we have a special offer for Foster Web Marketing clients.
Sign up now for a No-Obligation, 21-Minute Discovery Strategy Session to explore the possible route options and alternatives for your ideal business outcome and desired destination.
Kahuna Accounting specializes in working with ambitious and driven law firm entrepreneurs and professionals to let accounting be their secret weapon in achieving ideal practice outcomes.
We understand the specific challenges and unique accounting needs related to trust/IOLTA compliance accounting for law firms. We also understand how to harness the power of accounting for dynamic guidance to achieve your entrepreneurial vision, mission, goals, and ambition!
-Frank Lunn, President & CEO, Kahuna Accounting