I woke up next day feeling better, my head was clear but I still had flashes from the previous day, I knew there was no turning back at this point, so I needed to face what was in front of me. This is my business, it’s very dear to me and even if I kept feeling like “I was my own village people” because I let things get to this point, I also knew I had to be gentle with myself. I snuggled out of bed, had a bath and proceeded to work. I’m not much of a breakfast person plus I can’t be thinking of food at this crucial time so I headed straight for my work desk.
I went back to the payments we had made to influencers in the last 6-9 months, though we didn’t have a proper accounting system as we did this last month but the payments were sitting in the Dm’s and mails I exchanged with each of them. I needed to review what the business had paid influencers in these past months. I knew they reviewed their prices but I also reviewed prices for goods right? So I thought or is there something I’m missing?
After going through the payments, i realised that in the last 3 months, just when the dollar shot up above 670, these influencers had reviewed their prices by over 50%, yes you heard right lol 50 whole %.
When they (the macro influencers) sent a mail informing us of this increase, I negotiated with them and we had to meet at a point or they gave a discount and I also reviewed prices for inventory but little did I know that the price review for goods wasn’t commensurate with our major expenses which included influencer payment, clearing fee from cargo that had shot up markedly as well. So, while the Revenue was building, it was building to service expenses! hmmmm at this point, what came to my head was the voice of Dr. Ejeaba saying ‘Revenue does not equal profit’.
It was clear at this point that Retained Earnings from profit after deducting expenses which was meant to be put back into the business and used for the purpose of acquiring more inventory as expected wasn’t enough to double stock purchase from suppliers.
So I made a decision. I Looked through the number of Influencers we were using at the time, now it was time to pick the best 2 of the 4 and from the books most of our customers were retained after first purchase and words of mouth sold us a great deal so I chose to leverage on that and create an offer that would work for referrals this way our loyal customer will have a reason to stay and refer us as well.
These and many more changes did I apply and the result has been amazing. This goes to show the importance of a proper accounting system. If I hadn’t come across this course how would I have known I was making a mistake?
Or should we talk about how I now understand what Assets are and how the different types of Assets relate to my business:
There are 2 types of Assets and the difference between both is the “INTENTION”.
My business deals with goods so when I buy with the intention to sell its called “CURRENT ASSET” but when this product is taken and handed over to a model or influencer for the sake of wearing to create awareness/adverts for the brand then its termed a “FIXED ASSET” because it’s not sold but used by the business to sell more.
These and many more have I learnt since my encounter with Corporate Financial Accounting and the beauty of this lies in the fact that I can relate it to my day to day life as a business owner. The faculty, Professor Owolabi and Dr Ojeaba literally took us by the hand and walked us through this course and what would have seemed like a mountain was levelled with their superb way of impacting knowledge and i know with constant practice that this will be the beginning of my walk with scaling up my business as it was one of the core reasons i came to LBS in the first place, so lets just say this might be the start of becoming a “Financial Analyst” because i think i like the sound of Finance.