Image Image Image Image Image Image Image Image Image
Chris LoCurto

By

December 7, 2010

Hiding the Truth

December 7, 2010 | By | 5 Comments">5 Comments

Something that everybody close to me knows is that I love babies. LOVE THEM! I’m the guy who gets the mean look from a mom when she’s trying to feed carrot mush to her child in a restaurant, but can’t because I have the little blessing of God laughing at me making funny faces at the other table. (Sorry to all you moms. I’m working on it.) One of my favorite games is when you play peek-a-boo by covering your eyes, not theirs, and they still wonder where you went. Every time you remove your hands from your face it’s like you just reappeared out of nowhere, like New Kids On The Block. The funny thing is that you were there the whole time.

Sometimes as business leaders we can play the same game with the realities we don’t want to face. One of those areas that I see from time to time when I’m working with companies is the hiding of expenses or adding of revenues to their Profit & Loss statements. (P & L’s are taking your revenues less your expenses to show you your net profit.) What I mean by that is, many times to really see if something is being successful you should put it on what is called a sub P & L. That’s where you assign all of its own expenses, income, and fair share of overhead to a single P & L. Now, if you make one widget, only sell that one widget, and never plan on doing anything but that widget…then keep reading anyway ’cause you might change your mind someday. But, if you have at least two different revenue producing items then, it’s not a bad idea to separate them to see how successful, or tragically failing they are on their own. As you get more and more items, it becomes almost necessary to do so. This is a great measuring stick to see how a product is doing.

The problem comes in when an owner/leader is either too busy, or is already doing a bad job with the accounting as is, or they are afraid to see the truth about what is going on. I’ve seen both. I understand the busy thing, it’s wrong, but I get it. The one that bothers me most is when someone is unwilling to see what’s going on. I can’t tell you how many times the team members of a company will tell me how the whole company knows that they have divisions that are dying and bleeding money, but the owner refuses to look at the numbers individually since they are all lumped together. As long as they see a bottom line that’s in the black they feel that everything is working flawlessly. This is a tragic mistake. Not only is it a waste of money/time/resources but it’s also demoralizing to the team members who see it. The converse of this is the number of times I’ve seen a leader collapse sub P & L’s into one to hide what they’ve already found out. Once again this is ridiculous.

Fix the problem! If the problem is that you’re too busy, get someone who can do it. If the problem is your inability to handle the truth, don’t worry, it will eventually reveal itself to you. Let’s just hope that at that time you haven’t lost your team, your bottom line, and your company. Take your hands away from your eyes and get in the game!

Have you experienced this in business? What about personal finances?

StumbleUponEmail
  • FireSafetyandsecurity

    CHRIS!!

    I needed to read this today. We are working through some growth problems and because of being busy (and lazy) I’ve let some stuff slip. Julie and I are going to go through that moldy box of stuff tonight and face it. It hurts but I know it will hurt more later.

    • http://Chrislocurto.com Chris LoCurto

      That’s fantastic Mike!! Hahaha…not so much the behind part, as the you’re gonna fix it part. You will be amazed at how much it helps you to see the future. It literally will give you more options. Thanks for the comment.

  • http://medicalaccountsolutions.wordpress.com medicalaccountsolutions

    Excellent post & thoughts sir! Would love to send to my old employer…wow! Would he wake up then? Probably not. So sad when in reality, everyone wants a profitable P&L. Why is this so difficult? I think it goes back to self discipline, saying NO! What do you think? Maybe this question will trigger part 2 of the blog on this subject.