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It blows me away that that C-level staff would either ignore or not have the smarts to understand these basic reports. The recent story about the parenting eco

It blows me away that that C-level staff would either ignore or not have the smarts to understand these basic reports. The recent story about the parenting ecommerce store (I forget the name) where the CEO didn't understand the financial reports was crazy. It's high school level math!! How can you feel good about making decisions when you can't even do the basic math to figure out if you're gonna be profitable or not? How do these people get to their position without being able to do that type of stuff?

auctiontheory 13y ago
Richard Branson claims to not understand basic financial statements.
efsavage 13y ago
> How do these people get to their position without being able to do that type of stuff? Typically by hard work and good fortune. A non-accountant/non-MBA has a good idea, starts making money, hires a few friends, and tada, a person who has never read a P&L, never mind the more arcane reports, is now a CxO.
gregpilling 13y ago
The audience of HN is programmers. Why would you be amazed that someone could code up a success, and then have a bunch of employees and an accounting department before they knew it? I have known Phds that had no experience reading financial statements of their companies. It is not that they CAN'T do it; it is that it has never been a priority. In any small business (tech or not) there are always many, many things to do.. so my advice is simply about which of the hundreds of reports that your accounting software spits out that you should look at. To be honest, I did not look at Statements of Cash Flows for the first 10 years I was in business. It is less essential to watch SoCF if you are doing Cash accounting instead of Accrual accounting, and if you have positive cash flow it is not as dangerous to ignore it. But when the crap hits the fan, you should know what is really happening. The OPs post was about a business in decline.
- loganfrederick 13y ago
  The problem is that businesses live and die on making money. Accounting keeps track of your money, and by my made-up-but-probably-true commutative property, accounting keeps track of your business. If you are managing a business, you should be managing accounting by default.
- hga 13y ago
  If you're starting a business, especially if you're a programmer who's not afraid of basic math, shouldn't you spend a day or so learning the basics of accounting? Granted, that might not tell you to "watch cash flow like a hawk", but ... say, the moment you either have a paying customer or hire an employee, you have a minimum duty to not crater your company out of sheer ignorance of the basics.
ambiate 13y ago
This is why every programmer needs a regular, non-STEM, internship. Small, medium, large businesses all have accounting departments that need enhancements. That 4-8 week adventure will change your outlook on accounting, risks, and valuations for the rest of your life. Financial auditing also changes your outlook on software auditing. It opens up new doors when everything you do is watched like a hawk. The amount of people who deal with financial transactions and do not deal with audits or accounting brings much worry to me.

auctiontheory 13y ago

Richard Branson claims to not understand basic financial statements.

efsavage 13y ago

> How do these people get to their position without being able to do that type of stuff? Typically by hard work and good fortune. A non-accountant/non-MBA has a good idea, starts making money, hires a few friends, and tada, a person who has never read a P&L, never mind the more arcane reports, is now a CxO.

gregpilling 13y ago

The audience of HN is programmers. Why would you be amazed that someone could code up a success, and then have a bunch of employees and an accounting department before they knew it? I have known Phds that had no experience reading financial statements of their companies. It is not that they CAN'T do it; it is that it has never been a priority. In any small business (tech or not) there are always many, many things to do.. so my advice is simply about which of the hundreds of reports that your accounting software spits out that you should look at. To be honest, I did not look at Statements of Cash Flows for the first 10 years I was in business. It is less essential to watch SoCF if you are doing Cash accounting instead of Accrual accounting, and if you have positive cash flow it is not as dangerous to ignore it. But when the crap hits the fan, you should know what is really happening. The OPs post was about a business in decline.

loganfrederick 13y ago
The problem is that businesses live and die on making money. Accounting keeps track of your money, and by my made-up-but-probably-true commutative property, accounting keeps track of your business. If you are managing a business, you should be managing accounting by default.
hga 13y ago
If you're starting a business, especially if you're a programmer who's not afraid of basic math, shouldn't you spend a day or so learning the basics of accounting? Granted, that might not tell you to "watch cash flow like a hawk", but ... say, the moment you either have a paying customer or hire an employee, you have a minimum duty to not crater your company out of sheer ignorance of the basics.

ambiate 13y ago

This is why every programmer needs a regular, non-STEM, internship. Small, medium, large businesses all have accounting departments that need enhancements. That 4-8 week adventure will change your outlook on accounting, risks, and valuations for the rest of your life. Financial auditing also changes your outlook on software auditing. It opens up new doors when everything you do is watched like a hawk. The amount of people who deal with financial transactions and do not deal with audits or accounting brings much worry to me.