The Importance of Auditing Your Business
I have just come off the most exhilarating internal audit in years, in fact I was so pumped I seem to have missed that a full 26 hours just buzzed past.
I am the first to confess that the word “audit” used to invoke visions of me stabbing some pencil pushing accountant through the neck with a ball point pen, but that was until I met a remarkable businessman 7 years ago who completely changed my opinion and outlook on “auditing”.
It was a chance meeting that brought us together, I was scouting the deep south of the USA (Houston Texas to be precise) for e-waste that could be salvaged and resold into Africa, and he had just come into retirement after not one, but two, Fortune 500 success stories that he was instrumental in building from the ground up.
As it turns out my crazy South African accent and his curiosity for all things foreign got us talking in some backend, back road, dinette and has since led to a seven year friendship that has left me with more business lessons than I am able to impart in this lifetime.
It’s very rare that I find myself in awe of anybody, but I am first and foremost a scholar of life, and if I find a teacher that has value to add, you can bet your uncles left knuckle I am gonna listen and learn.
The one thing that Alan impressed upon me early on, is the importance of reviewing and measuring performance in all aspects of the business, and for the past 6 years we’ve been aggressively turning over every stone in the business, evaluating it, perfecting it and leveraging it.
Four times a year we do a complete internal audit, from budgeting to expenditure, through to productivity, infrastructure and resources, and when I say no stone gets left unturned, trust me that’s not just figure of speech.
My staff and I have come to love these audits, because not only are they a benchmark on the perfection and goals we strive for, but they ALWAYS turn up little gems that take us to the next level.
You know you hear big corporate talk about Q1 VS Q4, budget versus expenditure and often as a smaller business you think, “what a load of baloney”, but let me tell you something, if you don’t know these important numbers in your business right now buddy old pal, you’re flying blinder than a dingbat out of hell.
So glace over this post if you must, but if you want to be in the winners circle sipping champagne, ask yourself this, if you continue to do the same thing, how can you expect a different result?
Bottom line, if it can be tracked and measured, it should be!
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Heath said,
Wrote on March 16, 2010 @ 6:40 am
Very wise words there Mr. Harrison… More people should look at audits the way you do, they are not to catch you out and rap you across the knuckles but they should be meant to assist in finding your shortcomings and help you grow.
Thanks for sharing this,
Heath
luisteixeira said,
Wrote on March 16, 2010 @ 6:45 am
Wise Words is it not sometimes the simple things we miss that needs to be looked at. I do believe in always comparing results. This is the only way one will learn and improve.
Jan Rautenbach said,
Wrote on March 16, 2010 @ 6:37 am
Its great to learn from successful people.
You're right, the word audit seems to conjure up an image of a guy with a green pen. (THat was my first job) What you are referring to is really an internal process of re-evaluating what the buisnes is doing which is great! We don't do enough of it.
JustinHarrison said,
Wrote on March 16, 2010 @ 6:46 am
You 100% correct Jan, I think it takes an attitude change, like instead of counting backwards when doing sit ups because mentally you want to get to the finish, rather count upwards towards the goal, it's a small mental shift but it makes the biggest difference.
JustinHarrison said,
Wrote on March 16, 2010 @ 6:48 am
Exactly the point, its a great tool for measuring where you want to be.
geoffrey_gordon said,
Wrote on March 16, 2010 @ 6:55 am
great post Justin, I know this is absolutely crucial to business growth, I just find it hard to find the time. No excuse I should plan better. Working on putting in measuring systems to check progress and evaluate changes to improve for the future.
The key feature I think in what you mention is that one must associate with people that are successful so you can get great advice to improve your own business, this is why we follow you Justin.
JustinHarrison said,
Wrote on March 16, 2010 @ 7:04 am
Yes Luis its always the simple things that have the most impact, but get overlooked more often than not.
JustinHarrison said,
Wrote on March 16, 2010 @ 7:08 am
Thanks Geoffrey , it is indeed a discipline that needs to be undertaken, and you are right about having to attach yourself to others who are doing what you want to do, that's exactly how I have got ahead. As my old man always says, you become who you associate with.
Dawie said,
Wrote on March 16, 2010 @ 7:16 am
Great post. Must admit that I also hated doing this the first time but the results are pretty interesting and makes it worth while.
rob anderson said,
Wrote on March 16, 2010 @ 7:33 am
Ok, so reading, and knowing that you are right does not make me able to do it.
sorry.
some people are cut out to be efficient in certain aspects of their lives and any form of paperwork shuts down my faculties.
this is not to say that i never have a clue as to what is going on in my business, but i have to do it in a more "holistic:" way.
which really means thinking about it while driving. LOL!
seriously – just THINKING about renewing my cars license can cause a minor form of shutdown and make me need to lie down.
I do not even have a reason to justify my aversion to paperwork ( unless it stems back to 1994 when i went insolvent) but i think it was because i bunked a lot of high school.
I am aware that it could be costing me as much as 30% less profits, and i would rather pay that than have to scratch through paperwork.
when i am earning more than i can spend i will pay someone to do the scratching for me.
until then i will just mutter about "anal" types to cover for my shortcomings in this department.
final comment about "becoming who you associate with" i must stop hanging around with fat people as it has made me fat! and i always thought that it was because i am simply a glutton. :+)
rob
MJGilchrist said,
Wrote on March 16, 2010 @ 8:03 am
Very true with regards to gleaning as much information from a mentor as possible and then applying it not only to your business but personal life as well. These valuable mentors that perform a information dump onto your lap are few and far between – the term scarcer chicken's teeth spring to mind.
It's really to have had Justin as a mentor for the past few months.
Thanks for your words of wisdom … again.
JustinHarrison said,
Wrote on March 16, 2010 @ 8:10 am
LOL Rob, that was a funny response and I get your knee-jurk reaction, but let me say it again, doing the same thing and expecting a different result is like waiting to win the lotto but not buying the ticket each week.
As Dawie said above, none of us likes the process to begin with, but when it shows in your results and bottom line, you soon fall in love.
My final point is somewhat more philosophical, and a personal opinion that you may pr may not share, but the I believe that if you cannot prove to the universe that you can take care of what you have and make the most of it, don't expect to receive any more.
Derek said,
Wrote on March 16, 2010 @ 11:01 am
What you have said is so true…most of us are scared of doing an audit! Scared of the truth of where we are…and mostly when auditing ourselves who we are. Scared of the bullshit we have smeared all of our words as they may be shown to be untrue. Yet an audit is the only way to get to the fact and then determine the path forward. How can you measure your way forward if you do not know where you have started from.
Good stuff Chucky
malcolmp said,
Wrote on March 16, 2010 @ 11:05 am
Very lekker post, thanks Justin.
Communicate with great people, and listen to what they say – never judging. I always find a lesson when speaking to older people, they have been on this planet longer than me, and therefore will have learnt life lessons I have yet to experience. Not to say young ones are idiots
If you don't know where you are, how will you know where to go to reach your goal – just like a map – if you don't have a position, how will you navigate to your destination.
Joan1911 said,
Wrote on March 16, 2010 @ 12:25 pm
Very true analogy – if we don't know where we are coming from, how will we know where we are going". Auditing your own work all the time, especially when you start out is a must. So thanks Justin for spelling it out again.
Werner Wichmann said,
Wrote on March 16, 2010 @ 12:54 pm
LOL Rob, very funny. I also hate doing paperwork, but it is a very neccesary party of business. I have an accountant that does most of my paperwork for me and believe me he saves me alot more money that I pay him!
Phillip van Coller said,
Wrote on March 17, 2010 @ 6:51 am
I find this an interesting theory:
"if it can be tracked and measured, it should be!"
I will definitely investigate the possibilities of factors to be measured in my business.
JustinHarrison said,
Wrote on March 17, 2010 @ 11:30 am
Its the only way to measure growth and performance
Kerie Hinchliffe said,
Wrote on March 17, 2010 @ 12:46 pm
Great post as usual.Just like Joan says how do we know where we are coming from, how will we know where we are going – also how do we know we got there.'
I only started to make notes of states on a daily basis it gives me hope as a newbie.
Cheers
Kerie