Don’t Shoot the Messenger, Two Tales of Financial Sorrow

//Don’t Shoot the Messenger, Two Tales of Financial Sorrow

Don’t Shoot the Messenger, Two Tales of Financial Sorrow

“When you argue with reality, you lose, but only 100% of the time.” – Byron Katie

Optimism and financial data are both double edge swords.  Too much of either is a slippery slope. Excessive focus on optimistic predictions can lead to poor decisions and, as a result, financial challenge.  Excessive analysis of financial data can lead to paralysis in decision making and therefore stifle the forward movement of a company.

Last month I wrote about how optimist thinking and financial data create winning decisions when treated as equal partners.  This month, I tell a sadder tale, one of optimism refusing to acknowledge when financial data clearly says change is necessary.

Here are a few examples of what it can look like when optimism speaks loudly and ignores financial data.

Case Study 1: A training company

You know there is one thing your business must do exceptionally well to achieve its goals, your annual conference.

If the conference succeeds, the rest of your year falls in line.  To that end, you developed a flowchart of the critical marketing steps, building consensus with your team as you went along.  Responsibility was assigned for each task.

When it is time to kick off this year’s marketing, you are distracted, and you miss it. Your optimistic self-steps up immediately and tells your team not to worry, you will catch up. Your CFO has a different point of view, expressing concern without hesitation.  You shrug it off.

As the months progress, your CFO points out that the numbers are way down over the prior year and you are already under plan. You brush it off. CFOs can be so negative! Your optimistic self steps up and insists, you will make it up.  This same conversation happens month after month.

Your event comes to pass and you miss budgeted revenue by 25%.  Having missed step one, you never caught up. Your CFO points out that you are headed for a pending cash flow crisis in the next 60 to 120 days.

You knew what to do.  You didn’t do it.  The problem was compounded month after month, as you ignored the clear financial data that you were off track.

You are angry. You want to shoot the messenger. That is an option. It is easy and if you do, for a brief time, you will feel better.

A more courageous option, is to look in the mirror and learn something. If you step up and look, you will see that you refused to give financial data the respect it deserves. While this lesson is painful now, by learning from it, you’ll avoid repeating it and more pain in the future.  The choice is yours.

Case Study 2: A niche construction firm

You have a nice, modestly profitable firm.  You see opportunity in the market place for a niche strategy. It will cost you at least a $250,000 to get off the ground.  You know it is a winner!  You find an outside investor who agrees to invest in your business, with the understanding you will make this unit profitable in 24 months.

You hire a marketing firm and spend 90 days working with them to formulate an e-marketing lead development strategy. It sounds like a winner and the outcomes they have laid out are consistent with what your investor wants. Given your short, 24 month window, the marketing firm urges you to front load the marketing cost to build the pipeline faster.

Your CFO urges you to test the plan first, taking the first 90 to 120 days to see if the pipeline builds as anticipated.   Financial people can be such Debbie Downers, bringing up the possibilities for failure.  If you follow the CFO’s advice, you are likely not to meet the 24 month window your investor prescribed.  You can’t be patient.  You go all in and commit to the plan.

Three months in, your website is getting a ton of clicks, way more than anticipated.  You are feeling validated by your decision.  Your Debbie Downer CFO points out that the clicks aren’t moving from interest to sales pipeline and that you have missed first quarter sales by 95%.  You tell yourself it is OK. You’ll make it up. The incoming web traffic is amazing.  It just a matter of time. Full steam ahead.

Three months later, 6 months into your marketing strategy and 9 months since your new investor came in, you have virutaly nothing to show for the $175,000  you’ve spent to get your new strategy off the ground.  Analyzing the pipeline tells you that this marketing program will never achieve the level of success necessary for this new service to break even.  You’ve spent 70% of the capital you had to get this strategy off the ground and you are in the sme place you started.

You are angry. You want to shoot the messenger. That is an option. It is easy and if you do, for a brief time, you will feel better.

A more courageous option, is to look in the mirror and learn something. Your CFO had a point.  If you had tested the program, the results would have clearly demonstrated the strategy would not work.  More importantly, you’d still have most of the capital needed to get the niche program working. While this lesson is painful now, by learning from it, you’ll avoid repeating it and more pain in the future.  The choice is yours.

What is the magic formula?  How do you garner the energy of optimism to move your business to new heights while respecting the reality of financial data?  Here are three keys:

  1. Slow down and ask questions. Yes, CFOs can be Debbie Downers. It is their job to keep your balance sheet healthy.  If you run out of cash the game is over, and your CFO wants you to stay in the game! When you find yourself resisting your CFO’s advice, slow down. Sit down one-on-one with your CFO and have a dialog.  Ask as many questions as it takes to really understand what they are telling you.  Don’t shoot the messenger, learn from them.
  2. Use graphical data with clear goals. Looking at columns of numbers can be boring! Ask your CFO to compile your key financial data into graphs with goals built into the graph.  That will make it easier for you and your team to visually see where you are.  When you are off track, create a pop-up team to address the issue and come back to you with a recommendation for improvement.
  3. Know yourself, your strengths, weaknesses and related blind spots. There are lots of tools to help you learn more about your inner self, the enneagram, Myers Briggs, Emotional Intelligence to name a few.  Find a system that you find helpful and use it to be more self-aware.

At Mackey Advisors, we love helping entrepreneurs prosper.  If you’d like to know more about how we can help you, reach out to us at 859-331-7755 or email Mackey@MackeyAdvisors.com

About the Author:

Author, speaker and fearless leader of the Prosperity People, Mackey McNeill is a passionate entrepreneur dedicated to creating prosperity in the lives of her clients and within her community. She has merged over 30 years of expertise as a CPA and Personal Financial Specialist with her knowledge of internal alignment to create The Prosperity Experience: a planning program rooted in self discovery and financial self actualization. A sought after thought leader on the subjects of money and intention, Mackey has been quoted in The Wall Street Journal, The New York Times, TIME, Money, USA TODAY, Mint.com and Reader’s Digest, along with many other publications.

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