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“Embrace your ignorance” — Frank Lunn, Founder and CEO of Kahuna Accounting.

As entrepreneurs, we believe in what we’re doing and we believe things will eventually work themselves out. But just because you have faith in your business doesn’t mean you can ignore the facts. It’s important to be honest with yourself, and to face the current realities your business may be facing.

To do this you can start by asking yourself two simple questions: Where am I now and where am I going?

Where Are You Now?

Brutal honesty and confronting the truth provides a means for improvement. If you look at your personal expenses and actually start tracking them day by day, you’ll naturally start to improve how you handle your finances.

Unfortunately, when it comes to numbers most people are too afraid or are too overwhelmed to confront their reports head on. Here’s a short list of simple, honest questions most people can’t answer off the top of their heads:

  1. How is your cash flow right now?
  2. Where do you expect your cash flow to be in six months?
  3. Are you profitable?
  4. How much does one sale cost?

To effectively grow your business, you need to start by confronting your current reality–however brutal that might be.

Where Are You Going?

While accounting can act as your road-map, it’s important to have a sense of clarity about your destination. Start by breaking your goals down on a macro level. If your end destination is 10 years from now, where do you want to be in five years? One year? Next month?

Being honest with yourself and confronting the tough questions can set you on the right track. Not knowing something is normal; realizing you don’t know something is the first step toward becoming better informed.

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