Accordingly, every business must capture some amount of the value it creates as revenue, which is used to pay expenses and compensate the people who make the business run. In order to continue to exist, every business must bring in Sufficient revenue to justify all of the time and effort that goes into running the operation.Įveryone has bills to pay and groceries to buy, so the people involved in the business need to consistently make enough money to justify the time and energy they’re investing, or they’ll quit and do something else. If you’re creating value, marketing, selling, and delivering value, there’s money flowing into and out of the business every day. Yes, there can be fancy models and jargon, but ultimately you’re using numbers to decide whether or not your business is operating the way you intended, and whether or not it’s enough.Įvery successful business must bring in a certain amount of money to keep going. It’s really not any more complicated than that. Accounting is the process of ensuring the data you use to make financial decisions is as complete and accurate as possible. It doesn’t have to be that way – finance is quite easy to understand if you focus on what’s most important.įinance is the art and science of watching the money flowing into and out of a business, then deciding whether or not it’s enough to keep going.

Finance conjures up associations of “bean counting,” mathematical formulae, and spreadsheets overflowing with numbers. When it comes to Finance, however, eyes glaze over. In my experience, people enjoy learning about Value-Creation, Marketing, Sales, and Value-Delivery – they’re easy to understand and visualize. Somerset Maugham, author of Of Human Bondage 'He had heard people speak contemptuously of money: he wondered if they had ever tried to do without it.' W.

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