Small Business

The ABCs of Financial Literacy


By Mary Ellen Sheets Our company, Two Men & a Truck/International began more than 20 years ago, when my two teenage sons moved people with an old pickup truck for spending money. We organized and polished this little business and, in 1988, began offering franchises. We are now in 25 states, with 125 locations, and making plans to go international. Last year our company grossed $122 million, systemwide, with $8 million accruing to us. We are a privately held, family-owned company. My daughter, Melanie Bergeron, is the president and COO. My two sons, Brig Sorber and Jon Sorber, are actively involved in running the franchising end of the business.

My background was in data processing. I knew how to design systems, reports, and forms, but nothing about handling money. I've been invited to share my thoughts with you on financial literacy for the entrepreneur. Yikes! Every entrepreneur has a special interest, which combined with persistence, hard work and luck, may produce a successful business. Unfortunately for me, I had no background in finance. No Accounting 101. I called my accounts payable and receivable the "in and outs." For more than a decade, I kept them in a shoebox under my desk!

My sons and daughter didn't have a financial background either, nor did any member of my staff. Melanie is trained in marketing. Brig has a degree in community planning, and Jon has a business degree. Oh, a daughter-in-law is an accountant by training, but she is a stay-at-home mom.

MUDDLING THROUGH. When our company became a franchiser, a yearly audit was required. So the auditors would come in. It was hard for them to dig through the papers, and they would be here for days. We didn't hire an accountant until four years ago (more about that later.) But somehow we muddled through.Sure, there were problems. In 1994, I decided to run for the Michigan State Senate. I asked my son, Jon, and my daughter to run the business in my absence -- for no pay. Happily, politics wasn't for me, and I soon came back.

In the mid '90s, a spate of lawsuits brought by five different franchisees nearly put us out of business. A lawyer agreed to work for us under the only terms we could manage: We would pay what we could when we could. Eventually, we prevailed, and the lawyer did get paid. Muddling through characterized our day-to-day financial operations as well. I used a simple Quicken software package to pay the bills, fishing through the "in and outs" for the paper invoices. When we wanted to buy something, such as space for our annual meeting for franchisees, if we had the money, we'd buy it. If we didn't have the money, we wouldn't.

So what's the moral of our story when it comes to financial literacy for entrepreneurs? Well, I do have a few thoughts. A lot of being on top of finances involves common sense. Some of it can be learned. Finally, when you feel there's nothing you can do but throw up your hands, there are still things you can do.

COMMON SENSE. Let me explain. When it comes to being in business, you must first pay your people (and their taxes), even if you have to sneak the money out of your grandmother's knitting basket! That's just common sense. You know that from experience.

You also know you must pay your bills. If you run short, contact the person you owe, explain the situation, and send a partial payment. If your vendor couldn't pay you, after all, you'd want the same. You'd want to talk and work it out. You're doing business with people -- you have to talk to them!

When people owe you money, be persistent about collecting. I used to hate sitting at my desk, knowing I'd have to call someone who hadn't paid. But I had to, and I did. Let the customer know you're serious about collecting the money owed. Charge interest if it's legal in your area. Never let accounts receivable end up in a dusty pile on some shelf because you're uncomfortable about pursuing the debt. It's money right out of your pocket.

NEXT STEPS. Finally, if your business is cyclical, put aside money during your busy season. In the moving business, we are busiest during the summer. That's when we have all of this money and think we can spend it. Then come January, February, and March. Once, I was driving to the bank so broke that I had to put in money with a credit card. Never again!

I'm still not a financial expert. Unlike me, you could become reasonably proficient by taking some business classes. Many community colleges offer them. You could learn how to make wise financial decisions and let your money work for you. I should have known how to prepare a business plan and have a budget. But I never took those classes. I was "too busy." That was a mistake.

We finally did hire an inhouse accountant four years ago, and we now have a staff of four in finance. The impetus was that my auditors were hounding me, because our company had gotten too big, and the books were messier than ever. I don't know why we waited so long. Actually, I do know. We thought we couldn't afford it. That, too, was a mistake. The new accountant found a large error in our workman's comp rate the first week he worked for us -- and the savings paid his annual salary!

JELLYBEAN STRATEGIES. Sometimes, you don't have the money to do anything. Those are the times you should be working to improve your business. Clean out the files! Clean your office! Make your headquarters inviting to customers! Plant flowers around the front door! Call on prospects -- I would pack jellybeans in coffee mugs inscribed with our logo and pass them out to apartment-building managers. It was our version of cold calling.

Get moving! Do something! If you do, the money will come. You'll then have to put all your common sense to work to make the best of it. You might even have to take a course -- or hire an accountant. Good luck in getting smart about your company's finances!

Mary Ellen Sheets, 64, is the founder and CEO of Two Men & a Truck/International, based in East Lansing, Michigan. The outfit, founded in 1988, is the first and only local-moving franchiser in the U.S., with 125 locations in 25 states and $122 million in revenue systemwide (and $8 million to the franchiser.) It has 50 employees. Entrepreneur's Byline comes to BusinessWeek Online readers courtesy of EntreWorld.org, a resource for entrepreneurs that is sponsored by the nonprofit Ewing Marion Kauffman Foundation.


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