Believe it or not, the journey to forge better accounting education began in the shadows of the ANZAC bridge, in Sydney, Australia.

On a recent trip there, I found myself reflecting on those early days when Color Accounting co-founder Mark Robilliard and I hashed around ideas for making accounting more user friendly.

Mark and I met while working in KPMG’s Sydney office back in the early ‘90s, in a building near the famous bridge.

We recognized there was a huge gap in accounting literacy that needed to be bridged within companies. People just “didn’t get” accounting, and what’s worse, they didn’t want to. Previous training experiences were negative—too boring and complicated.

We wanted to change that. But how?

Synchronicity was at work. The desktop color printer was introduced around that time, which enabled us to create and share a color-coded diagram that makes finances much easier to learn and articulate.

And so Color Accounting was born. 

Now spanning the globe, we have helped thousands of organizations bridge accounting and business strategy using that same simple color diagram.

Peter

I am often asked how we chose a multi-colored zebra for our mascot. The answer is surprisingly black and white.

Just prior to a Washington, DC workshop, an attendee shared, “When I see a balance sheet, I see a zebra.” And with that profoundly simple statement our mascot was born.

This student had unwittingly identified a neurological phenomenon: 
Human brains don’t intuitively make sense of dense rows and columns - like those found on financial statements.

The smiling zebra mascot always reminds me of the happy relief our clients experience when they suddenly can read financial statements.

Warm Regards, Peter

Because of their unique internal dynamics, family-owned businesses have a very special need for powerful financial communication.

I was recently able to observe these factors for myself when visiting Salt Lake City to share Color Accounting with twenty managers in a family-owned conglomerate.

With three generations working in the business, expectations can vary greatly about how the businesses should be run.

"Why not pay out more dividends?" one group may ask - while others advocate keeping the assets in the business to finance future growth.

Family business is a fascinating intersection of personal matters and classical business issues. These same questions are often asked around the board tables of billion-dollar multinational corporations - only not among cousins.

Warm Regards, Peter

For our friends all around the world, the sound of Revenue is often generically represented by the sound of an old mechanical cash register drawer opening: Cha-Ching!

But, when we stop and think about it, the sound of revenue in your business is probably entirely different.

If you're in the window cleaning business, the sound of revenue is the squeak of a squeegee against a pane of glass.

In the printing business it is the rhythmic thumping of the press cylinders as they go 'round and 'round.

For an arborist, the sound of revenue may be the loud snarl of a chainsaw or the gentle kiss of a shovel blade breaking through the soil.

You see, Revenue is the Value Generating Activity you engage in which brings funds into your firm - not the money itself.

What does it sound like at your shop?

Warm Regards, Peter

Because we like equity and want to grow it, we often confuse it with assets.

But equity is not valuable to the firm.

Similar to a liability, equity is an obligation the firm has to the owner, which can sometimes create tremendous confusion.

This is a case where our point of view is critical - and where small business owners in particular become confused because they may fail to see themselves and their firm as separate entities.

So, when we are looking at the equity on a balance sheet, which hat are we wearing? Company's or owner's?

We must see the equity from the point of view of the business, not the point of view of the owner. From the company's point of view, equity is the obligation that the business seeks to grow in service to its owner. It’s the "good obligation." 

If the business could magically erase the liabilities to creditors, that would be wonderful. Whereas the business "wants" to owe its owner. That’s the very purpose of the business. 

As with many things in life, equity appears differently depending upon how you look at it.

Warm Regards, Peter