Understandable Solutions Coaching and Consulting

Examine the Details of Your Business

In the book The E-Myth Chief Financial Officer by Michael Gerber and Fred Parrish, they noted the difference between tactical work and strategic work. Tactical work refers to getting answers and strategic work refers to asking questions. In a previous post I recommended knowing the details of your organization’s financial performance. Specifically, this is the tactical work that will provide you with the answers you need to understand your financial outcomes. For example, if your company is short on cash, this will not be evident from your income statement, but will be apparent in your cash flow. Maintaining a positive cash balance is critical in order to pay current debts. The only way to know that your cash balance is in a poor position is to review your financial statements. The only way to know why is to complete the tactical work. For example, it may be due to an adverse change in your receivables, or an unplanned spike in current expenses, or you just paid down a significant sum on your debt. Whatever the case, you need to know the reasons and adjust accordingly. That way you won’t be scrambling in the future. You will have reviewed, examined and you can now adjust!

In summary…

(1) complete your financial statement review, and

(2) examine the details by completing the tactical work. You are now in a better position to adjust for an improved future outcome.

Jeff Newkirk, Founder & CEO, PEM Consulting Group

– a management consulting firm

pemconsultinggroup.org | 281.591.4747

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