The family management team must be financially astute. This does not mean that each member must be trained as an accountant or hold a degree in finance. But, it is expected that the owners understand and play an active role in the company's financial reporting and internal financial systems. Financial reports should be reviewed regularly and inconsistencies addressed quickly. Although often used interchangeably, pricing and costing are not the same.
Pricing relates to the amount charged for goods and services.
This can be the most dangerous tightrope act performed each day. Prices must be set to remain competitive, but still cover costs with a positive margin. Many companies focus solely on the cost of their raw materials or other inventory purchases. This is only a piece of the puzzle, however, as they must also factor storage, manufacturing, shipping, financing costs, obsolescence and administration. Many companies think that they are making money, but when they peel back the layers and see what their product really costs, they find that they are not.