A little over a year ago, I quit my regular job. The most important lesson I learned in this job was more than ten years ago. I still benefit from it today. And it all started with my lazy boss.
When I decided to study history, I didn’t care what I could do with it later in my career.
I just wanted to learn something that had nothing to do with numbers. My grades in mathematics and physics were incredibly bad because my brain just didn’t seem to be able to deal with abstract variables.
Since I had failed a math thesis in fifth grade, numbers were my enemies. So I studied history because I ran away from numbers. That wasn’t the only reason, but a pretty important one.
After my studies, I worked as a temporary assistant in a technical management company for wind turbines. I took care of document management there. After about a year, I became a permanent employee.
Another year later, the group to which our company belonged got into trouble. It was about investment fraud and other unappetizing things. An arrest warrant finally sought the company’s managing director, and the company filed for bankruptcy.
My direct superior then bought our small company out of the group for little money. We continued on our own account.
However, my boss had not yet understood that we were now only a small company. Before there were over two hundred employees and now we were only six people. But that didn’t stop my boss from continuing to pay himself the generous salary he had previously earned in the group.
All in all, he personally withdrew almost 20.00 € from the company every month. However, our turnover was only between 30.00 and 50.000 €.
So we had to pay the salaries of five people, the office rent, running costs and taxes but had only between 10.000 € in bad and 30.000 € in good months.
I was glad that this was not my problem.
The boss disappeared into an extended vacation
Well, I thought that wasn’t my problem. Because one day our boss came to my desk. He gave me notes with account access data and powers of attorney and said: “You’ll be in charge of the finances from today. I’m going on vacation for a few weeks.”
You can imagine how surprised I was. I couldn’t quite believe he was serious yet, but then he invited me to a conference call with our accounting firm in the afternoon.
I was told in a kind of crash course how I should do the preparatory accounting in the future, that I should keep an eye on liquidity and that I should be responsible for ensuring that there was always enough money on the company account to pay the salaries.
To ensure this, I was given sole responsibility for accounting and permission to decide for myself when I would pay which invoice.
Negotiations with creditors who were waiting for their money were then to be conducted, if necessary.
After that, my boss at the time actually said goodbye to a vacation of several weeks. He had really done it.
There I sat now. I had neither talent for numbers nor an idea of business administration. I didn’t know how to calculate social security contributions for employees, nor how our accounting software worked.
By the way — I should always transfer company taxes to the tax authorities on time.
The leap into the cold water
I spent most of the first few days on the phone. I had contacted our external accountant and asked her to give me a thorough introduction. I asked her a thousand things, took notes, and tried to keep the business running at the same time.
I had to write the first invoices for the services we provided within a week. What we were allowed to invoice resulted from complicated contracts, which of course, I first had to read and understand.
The first invoices were promptly rejected due to various mistakes. So in the next few days, I often phoned the accounts department of our customers and asked them holes in their stomachs.
Fortunately, I met helpful people throughout. When I told them what situation I was in, they always had compassion and understanding.
Together we then managed to get the bills into the correct form. The money finally arrived in our account two days before the next salary payments.
All colleagues (and of course I too) received their salaries on time.
Afterward, I transferred the due taxes and social security contributions to the state, and then I had a few days rest. But I had to use this time to plan the next month. I made a liquidity plan. I had never done that before.
First, I researched everything about this topic on the Internet. Then I downloaded an Excel sheet that was designed for simple forward and liquidity planning (I still use this Excel sheet left today — both privately and for my business).
I had the accounting department send me a list of all running costs and entered them in the list. As a basis for the profit forecast, I took the average values of the last four years.
Our income varied depending on how much electricity the wind turbines produced. To have planning security, however, minimum remuneration was stipulated in every contract.
I used these minimum remunerations as a basis for liquidity planning.
One thing quickly became clear: if we only received the minimum remuneration from all customers for a few months, we would be broke in six months. That was not allowed to happen.
So I advised my boss (telephonically) that we should develop further sources of income. Two weeks later, we offered our customers some simple maintenance activities for the wind farms and, out of sheer necessity, undercut all our competitors.
We got the orders. I was now able to include these revenues in my planning over the next twelve months.
I lost the fear of large numbers
After only two months, I was that advanced that I no longer came to work every morning with high blood pressure and fear of failure. I had accepted my new role.
Suddenly it was normal for me to bill over 50.00 € or pay over 10.000 € in one day.
Tens of thousands passed through my hands on those days when salaries and taxes were due to the state.
For me, the moving sums soon made no difference. If there was liquidity, I didn’t think about the size of the transactions at all, as long as they fit into the budget.
At that time, I had a hunch what Wall Street brokers had to go through who move millions or even billions of dollars every day. At some point, it’s just numbers you have to handle.
Today this experience still helps me. I am now my own boss and manage my own budget. I don’t get nervous when I have to spend 2000 € on a new release in one day when the cover designer, proofreader, and advertising pages have to be paid at the same time.
I just do. And I always know where I stand financially and where I will probably be in half a year.
My lazy boss raised me to be a businessman. At least once in his professional life, he did something right.
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