Everybody knows that IQ stands for Intelligence Quotient and some of you might even know what your IQ is. More recently there have been may articles and books written about our EQ or Emotional Quotient, and if you picked up Cosmopolitan or GQ, you might even have taken a test to try and find out what your EQ is.

But what is your FQ, your Financial Quotient?

If you are a publisher, filmmaker, printer/duplicator or distributor it is highly likely that you did not go to business school. As a business owner and entrepreneur you probably take great pride in the seat-of-your-pants way you run your business and continue to expand, make payroll and turn out great work. Financial statements and projections are just "not your thing". You figure that you can always hire a bookkeeper, accountant or chief financial officer. You are an entrepreneur – a big picture kind of guy/gal…no bean counting for you!

The truth is…that, in business…a low FQ can kill you. Bam! Smash! Road kill!

The worst thing is that you will probably never see it coming. And it can destroy you and your dreams in so many ways. Poor financial planning, over borrowing, runaway costs and bad record keeping can drain the lifeblood out of your company like so many leaches on a fish.

Our firm sells communicating arts companies, and the saddest, most difficult cases we get are the brave entrepreneurs, who drag their little companies in like broken toys, without a clue as to how to fix them. "If only someone would put some marketing money behind my magazine," says one, "If only someone could get our costs down," says another. These are not people with low IQs. These are bright, intelligent, educated people – who’s only fault is a lack of financial foresight.

Is that you?

The difference between and an entrepreneur with a high FQ and one with a low FQ are like night and day.

Do monthly financial statements.

Track your revenue by source. Segregate revenues by divisions & source.

Track and segment your job costs and all expenses against their corresponding projects (books, tapes, films).

Review and fight for low pricing by vendors, outside services, reps and contractors on a regular basis.

Have a business plan.

Maintain relationships with many different potential funding sources (banks, investors, financiers).

Make budgets for projects and company.

Benchmark your company against others in the industry and know what your competitors are up to.

Despise the very idea of carrying inventory.

Hold a tight line on royalties and discounts by distributors and reps.

Watch your overhead and marketing costs "like a hawk".

Always look to retool or improve your business model.

Most entrepreneurs who are chasing a dream, sooner or later run off of a cliff. The problem is that they often take their investors, friends and family members down with them.

Fortunately, unlike your IQ you can greatly improve your FQ. Although, for English and most psychology majors this might require brain surgery to reroute some neural pathways.

You start by making yourself accountable for everything that happens at your company.

Our firm has been consulting with a $100 million association with a $16 million publishing business. They thought that they were pretty well on top of their financial picture until we started digging. In truth they could not come up with individual book sales, in-house versus distributor numbers, knew if their book publishing efforts were making or loosing money or could track sales by channel of distribution (professional, trade, library, etc.).

Some of the companies with the lowest FQs, are some of the most profitable. WHAT? Yes, because high profits tend to paper over a multitude of sins. So, don’t think that you have to be loosing money to have a low FQ. Even if your business is making huge margins, someday the immutable laws of supply and demand will catch up to you – and these laws assure us that only the strong will survive. Fat and happy little companies rarely stay that way for long.

Most people need to fight to overcome their old lazy habits and start monitoring and collecting the business data that makes their companies tick. Quick, can you tell me what your 10 best selling titles were in 1998 in dollars and units? Now, do you know what each of those titles cost you to produce and what your profit margin was? If you cannot answer these two fundamental questions – you have a low FQ.

I would not identify the problem without proposing a solution. The following represents five steps to raising your FQ? If you have a high IQ you will recognize that you can raise your FQ and start making your company a big profit maker and a magnet for investors.