I had an interesting experience yesterday when my son, Brian, called from Penn State with accounting questions. He is taking the first accounting course that is required of all business majors. It should actually be required for ALL majors. Luckily, I was able to help him and I enjoyed it immensely. He had very good questions like, "Well, wouldn't a business owner want to put the earnings back into the company when it is new?" Mind you, he is just trying to figure out the two sides of the balance sheet so I didn't want to give him too much info and confuse him. The good news is that he seems to like learning about it so I'll take that!
I have always told my kids that Accounting is a great major even if you don't want to work in the field. There are so many avenues to take. I strongly believe every business owner should have a few courses since the financial aspects of running a business are usually what cause most of them to go under. If a business owner doesn't understand basic accounting and finance principles, how will they know how well or poorly they are doing and even if they delegate to others, how are they going to monitor what they are doing.
Our school systems do a great job of training accountants and other professionals. What I've come to realize is how poorly we are prepared to become financially secure or, better yet, financially independent. Our initial knowledge or financial habits are inherited by our parents. If you see parents with poor financial habits, many times, you will also see their children having the same poor habits or concepts about money. I was lucky my Mother taught me great financial habits early on in life and she inherited those from her immigrant Italian parents. But my parents were employees their whole lives and never understood that to be financially free, you have to own it and you have to have leverage. And by owning, I don't mean everyone that is self-employed. Real business owners understand leverage. You have to leverage something - money, people, or a product. You can't do what most of us do which is trade time for money - work an hour and get paid an hour. This is regardless of whether you are on a salary or not. If you quit what you are doing and do not continue to get paid or earn income from it, you are trading time for money with no leverage. I am a CPA and a CFP with a Masters in Taxation. So, yes, I understood the leveraging of money or investments but not about building a business with leverage. If I wasn't exposed to the concept of leverage in my education, who the heck was???? NO ONE IS. That is because it's not taught in schools! It's only passed down to others by parents who are business owners. It's no wonder that according to the SSA stats, 95% of the population ends up dead, still working, or broke at age 65. It's also no wonder that of the 5% that end up wealthy or financially independent, 75% of those are leveraged business owners.
If you have any questions or would like more information on owning a leveraged business, please contact me at 412-215-6115 or at kimberlybadams@gmail.com
