Tuesday, March 08, 2005

I could have prevented WorldCom's demise!

I was reading last week about poor Bernard
Ebbers, beleaguered CEO of the now bankrupt
WorldCom. Bernie took the witness stand in
his own defense. He offered the following as
his explanation of his role in creating the
largest bankruptcy in U.S. history.

Bernie reports that his “marks weren’t too
good” in school. He said he’d never had an
accounting class and didn’t know anything
about finance and accounting.

Oh, Bernie. Bernie, Bernie, Bernie. If only
you had taken my “Strength in Numbers”
class or read my cash flow book. We could
have avoided all this mess. Or, if only your
defense team could have come up with
a better defense than, “I’m just plain dumb.”

But, poor old Bernie’s demise brings home
a very important point. When you own a
business, regardless of the size or complexity,
you have to understand accounting and cash
flow. It’s not an optional business skill.

Jessie Hagen of U.S. Bank did a study of
failed businesses and here are a couple of
sad statistics:

82% of businesses that failed had owners
who had poor cash flow management skills
or a poor understanding of cash flow.

70% of businesses that failed had owners
who didn’t recognize (or ignored) what they
didn’t do well and didn’t seek expert help.

The good news is poor Bernie won’t have
to eat lunch all by himself. He’ll have lots of
friends with him who didn’t understand
accounting.

The even better news is small business
owners have a shining example of the
importance of learning the numbers side
of their businesses.

And here’s a great way to get that knowledge.
I will be teaching a series of cash flow and
accounting teleclasses for a great small
business resource site. The classes start
March 30. These classes are for members
of www.my1stbusiness.com only. I encourage
you to check out their website. It is chock
full of excellent resources for every aspect
of running your small business.

And if anyone sees Bernie Ebbers on the street,
let him know about the classes. His future
depends on it.

Until next time,
Caroline Jordan
Get Knowledge. Get Focus. Get Results.
The Jordan Result