Charting the Course by Figures
Making business decisions based strictly on the numbers came easy to Rockefeller, but for most young entrepreneurs, it is a skill that must be refined through practice and discipline. Removing emotion from decision making in business virtually always results in an outcome most favorable to the success of the business, but requires an extreme level of impartiality, an unwavering confidence in the accuracy of the accounting, and the discipline to act without hesitation in accordance with what the figures reveal.
Rockefeller stands as the best example known of the emotionally detached business leader whose decisions were made based strictly on meticulous accounting practices. Rockefeller is known for saying, “I charted my course by figures, nothing but figures.”
His disciplined adherence to the numbers allowed him to make sweeping decisions with extreme confidence and absolute certainty. In one well-known example of this, he made the decision to close four out of six refineries effective immediately when the figures revealed that they were operating at a loss. This may have been to the detriment of the workers employed there, but the figures weren’t swayed by emotion, and they supported the only prudent decision that could be made for the greater interests of Standard Oil.
Let Money Be My Slave
Rockefeller learned very early on that money should be put to work, and held steadfastly to this tenet, as he stated, “… it was a good thing to let money be my slave and not make myself a slave to money.” This principal’s value is two-fold. Not only is this a belief that easily transfers to the lending of the saved capital at interest, it also speaks to a practice of frugality that is largely gone in today’s culture of profligate consumerism.
Amassing capital must be considered in two equally important measures: how capital is generated and how it is spent.
Like only a few others distinguished among the world’s most successful businessmen, things of frivolous luxury did not easily woo Rockefeller, and he was not tempted towards expenditures that simply satisfied vanity through outward expressions of wealth.
To Rockefeller, the satisfaction that came from amassing wealth and growing his business was its own reward, and beyond necessities, he reserved entries in the expense column of his ledger for those things that would help him realize his broader ambitions. Still, he was not miserly with his money, only thinking about its ability to grow rapidly when invested wisely, and disappear just as quickly when spent recklessly.
With the money he held in reserve, Rockefeller leaped at opportunities to loan money and snap up refineries and other assets at bargain prices. The passive income that capital reserves can generate through sound investments and careful accounting can be the difference when an opportunity arises to strike a bargain that will diversify a business or allow for greater market share, and the less that is spent on things of questionable value, the more that will be available to exploit these opportunities.
An additional trait of Rockefeller was he was a master of delegation and outsourcing work to his employees, he would hire some of the smartest workers in the world. If applied in the modern day, he would most likely seek workers with qualified certifications that can be obtained through university, education portals such as accountingedu.org, or from years of experience working in the trenches.
Ultimately Rockefeller would hire those with a dedicated work ethic, hiring the best made sure his money was going to good use. As young entrepreneurs look to America’s greatest success stories for knowledge and inspiration, John D. Rockefeller is always counted among a select few whose life and legacy speaks volumes. Rockefeller’s character may be lauded by some and called into question by others, but all who aspire to become successful in managing their own business finances have a great appreciation for his disciplined savings practices and thorough accounting methods.
The Rockefeller Guide to Accounting series (part 1 and part 2) is a guest post by Tony Smith and his team over at Accounting EDU – an education portal built to help aspiring accounting professionals and students interested in requirements needed for licenses and certification. I am thankful and honored to have his knowledge on DeepSky’s blog as we continue to deliver insights to the entrepreneurs of the world.