“Know well the condition of your flocks, and give attention to your herds,
for riches do not last forever; and does a crown endure to all generations?”
Proverbs 27:23-24 (ESV)
On the surface, it would appear that such a pastoral proverb would have no relevance to a capitalistic technological economy. However, when considering the applications we find that not only is the proverb relevant, it’s wisdom is often ignored.
Maintaining flocks and herds meant knowing the numbers of each kind of animal, the distribution of ages and gender, and the health of each animal. A diseased animal would need to be quickly quarantined so it would not spread disease to the other animals and provide treatment not only to heal the animal, but also preserve the investment. Wise animal husbandry can identify which animals should be bred to develop stronger and better flocks and herds and how to deal with the weaker members. Consistent attention to the health and the needs of the flock would yield great results and careless inattention would lead to a loss of animals in the short and long term, weaker offspring, and lower profits. The animals would not manage themselves.
Marcus Lemonis, billionaire CEO and host of CNBC’s The Profit, has a consistent lesson for small business owners he is trying to assist: know your numbers. His surprise and derision is unleashed on those who cannot give him their specific costs, profit, inventory and receivables turns, expenses, revenue, primary customer revenue, and other key numbers that determine whether their business will be a success or failure. This admonishment is justified because it is a keen awareness of key metrics that can indicate what decisions an owner should make and the general health of the business.
Many businesses fail because owners and managers fail to know the key financial metrics of the company, the true condition of their company’s image in the marketplace, and the health of customer relationships. Companies are blindsided when an important customer abruptly leaves for a competitor noting that they didn’t feel like an important customer anymore. Valuable employees quit because they feel their management does not care about them or recognize their important contribution to the success of the company. Failure to manage the finances and relationships of the business, knowing the status instead of assuming the condition, will disrupt and could ultimately destroy a company.
“For riches do not last forever” Success can breed complacency. Assuming customers still love you because they used to love you is dangerous; you have to constantly compete for their business. Assuming that your products will always be desired and profitable is foolish and a wise company will plan for the replacement of their product lines with products better suited for future needs. Yesterday’s results to not promise profits tomorrow.
This principle is also important in personal finance. Do you know how much insurance you have and if it will cover the risks to your person and property? Some people have home insurance but find out too late that it didn’t cover flood or fire damage that destroyed their house. Do you have a retirement plan in place or hope that money will materialize somehow in your future? The key is having specific information about your income, expenses, insurance, investments, and anticipated future needs.
Tracking expenses, like tracking calories when dieting, can indicate that you are spending more than you think in a particular area that is contributing to being in debt. When you look at your expenses you might see opportunities for savings that you can invest in the future, areas where you are overspending and could get better discounts, or big bills that you need to plan for long before they are due. Knowing the status of your finances will help you not overdraft your checking account, keep debts low or eliminate them altogether, have investments for the future, and have money to use for helping others and doing good. However, you have to know the numbers in order to make such wise decisions.
This proverb can extend even into matters of productivity. Do you know the status of your projects and required tasks? Past success does not guarantee future success. You need to manage your time and energy and use it to work towards your goals which requires a frequent assessment of your opportunities, capabilities, and obligations. If you do not maintain the status of these things your life can become chaotic and unproductive. Organization does not happen by accident, only by design. Maintain the status of your actions and projects or you can lose whatever gains you have made.
Categories: Proverbs for Business