Sunday, December 18, 2011

Are Business skills really needed to run a company?

It was a fairly straight forward annual report for a public company:

"Financial position
The net assets of the Company have increased from $8,008 as at 30 June 2009 to $191,448 as at 30 June 2010, which is an improvement on prior year due to the improved operating performance of the Company.
The Directors believe the Company is in a stable ļ¬nancial position."

The directors are happy with the improved net assets - and even have an explanation for it.  Let's look at the actual figures that they are so happy with:

Notice anything wrong about it?    Yep - the numbers for 'Net Assets' are in brackets ... which to an accountant means a negative number.

So the net assets of the Company actually decreased from -$8,008 to -$191,448.

The most surprising thing is that the company with the ignorant board of directors is actually a bank, operating under the logo of 'Bendigo Bank'.  (To be pedantic - it is a 'Branch of Bendigo and Adelaide Bank Ltd, pursuant to a franchise agreement')

Think about that for a moment - the entire board of directors who were responsible for running a bank either didn't even know how to read a financial statement or didn't bother to do it.

This story has a happy ending - The bank's board of directors figured out how to read a financial statement by the time the next annual report was issued.

But misunderstandings like these don't seem to be a rare occurrence in the indie end of film production - non-profits and creative fields seem particularly susceptible.  Obviously the answer is training.  But what training?  We all should know the duties of company directors in Australia - but what about training especially aimed at creative businesses?

AFTRS Open did have a short course 'Running your own Creative Business' - but they don't seem to run it any more.   However they still have long courses like their Masters of Screen Business for $20k & their Graduate Diploma for $17.5k.

But before you sign up it's worth considering how important is business training on the success of a project.  Thankfully we don't need to guess - thanks to the Centre of Screen Business Producer Survey we can look at real data to make up our minds.

From their 2010 Survey results it appears that there appears to be absolutely no correlation between producing income and completing a course in management or commerce.

That was a curious result.  Is further business training a worthwhile use of limited training?   I don't know.

But at least if people running creative organisations have trouble with basic maths they can take solace in the fact that Bendigo Bank has the same problem.

1 comment:

  1. One would think the fact their Liabilities increased by $140K would have rung an alarm bell in someone's head and highlighted the discrepancy. Unfortunately The reason for this increase is not shown in the posted screenshot.



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