A Known Financial Position – What I call KFP – is essential to your success and profitability. “Known” is the key element. It may be that you are losing money, or deeper in debt than you would like to be. Find out how much and how deep. That’s what we focus on in the Making Money section of your Biz Plan. The financial reports are the Scorecards in the game of business. You can always improve the score. But you must know where you are right now. Additional exercises include: Budgeting, establishing your Selling Prices, and sound Month End processes for staying at KFP.
In my experience as a business consultant, I’ve found that nine out of 10 business owners don’t know where they stand financially. There are a couple of reasons for this.
- They don’t know how to keep score.
- They are afraid to look, because they don’t want to know how bad it is.
Be in the 10%! Work through the Making Money exercises so you can operate with financial power!
For more on Making Money, check out these blog posts…
Maybe because they’re a mess. Maybe because you don’t want to know. Maybe because you’ll have to start holding someone – you? – accountable for getting them caught up and accurate? Maybe you don’t really know what to look at or how to use them. Maybe because you’ll have to…change?
My friend Howard Partridge is a master at building businesses. He could grow sales. He could attract great people. However, when it came to the money, he had his head in the sand.
Howard says, “Many years ago, I was in tremendous debt. My credit cards were maxed out, lines of credit tapped out, and I had to struggle to make sure I had enough money in the bank for payroll. Now, I’m debt free except for real estate, I have ZERO credit card balances and we don’t use our lines of credit. Meet the lady that helped me turn it all around and find out how she can help you too!”
I’m honored that Howard gives me all the credit. The simple reality is that I know what it takes to become a master at the financials, and how to do it. Howard brought his why…he was ready to fix his cash situation. He was ready to get profitable (and not just “bigger.”) Here’s more of our story…
Are you ready? Once upon a time, in my family plumbing business, I reached the same point of frustration. Lots of money was flowing through the company, but there was none left for me or my over-worked husband. So we fought about it. It almost ruined my marriage. Finally, I took a deep breath…and exhaled. I can still remember that moment. I said to myself, “No one is going to handle these money issues for me. I am going to learn what I need to learn and do what I need to do to fix this situation. I am sick and tired of not knowing, not understanding and being so far in debt.” That moment of acceptance changed everything.
So after years of denial, whining and complaining, I discovered something pretty awesome: The financials are just not that hard. I didn’t know the language, so at first I felt stupid. I didn’t understand the math because I had always avoided it. Once I embraced the journey, it was, well, easy. And kind of fun! I found help, through consultants and bookkeepers and accountants. Sure, I hit a few rocks along the way. But I figured it out. Now, I will never be bamboozled or held hostage. I understand the money! It was much easier than I thought it would be.
I’ve helped hundreds, at this point probably thousands, of people become powerful financial managers. I’ve become an expert at making business and financials UN-complicated! As a consultant, I could visit your shop, grab you by the chin, and help you untangle the mess you may have mad. That is a pricey, though valuable, option. However, I’m wrapping up my consulting practice, mostly because you can do this without me! I’ve got the what and how. If your why is big enough – if you are ready – you can get amazing results from our Phenomenal Profits Webinar series.
Here’s the scoop! We will meet 8 times, 8 Tuesdays in a row for an hour of strategy and use-em-right-now tactics. We’ll build on the week before, and check homework assignments. Here are the sessions…
- Webinar One – FREEBIE! What do you REALLY need to know about the money? I’ll lay out the simple plan for becoming a financial powerhouse…and laying claim to your responsibilities. (Hey, it’s your money!)
- Webinar Two – Getting to a Known Financial Position. I’ll share the standard systems, the essential reports and procedures for you and your “Bean Counting Team.” Even if it’s just you, for now.
- Webinar Three – The B Word – Budgeting made really, really easy. This is where we establish goals and a reasonable selling price. So good!
- Webinar Four – The Financial Quick Check, my customizable one-page, weekly report. This is a great way to keep score and make more $. When to expand, and when to cut back? This report helps you make better decisions. One of my clients said, ” Once I started to use the Financial Quick Check, I haven’t lost money in a month since.” How cool is that?
- Webinar Five – Raising Your Prices and reducing your fear. If you are going to charge more, you have to be more. Which is ridiculously easy to do. This will be a fun, creative, lively session.
- Webinar Six – Finding the Sweet Spot – figuring out which customers and clients are the best fit for you. Smooth sailing jobs with mega-profitability. The score will light the way.
- Webinar Seven – Getting Your Team In On the Game. What if they knew the score? I’ve discovered your team will fix everything for you! I’ll introduce Open Book Management and how to use it to play a really big game.
- Webinar Eight – What Few Things Make all the Difference? In this last session, we review and share commitments. What will you do that will change everything. One focused action, one or two engaged projects…you could create a positive quantum shift in your business, and your life!
I’ll stay on the webinar for 15-20 minutes after each call if you need some one-to-one time. We will celebrate successes and bolster you through the tough spots. We’ll help each other. Learn More Here…
Bonus! If you are a pretty solid financial manager, this a a GREAT course for helping your team expand their skills and power. Perhaps some family members are stepping into management positions? Invite key team members to the webinars!
Or, perhaps you’re thinking, “My boss could use this webinar series!” Encourage him or her to join us for the free first session. It’s even better when you participate together!
Ready? Let’s go go go!
Signed up? Let me know below! Not sure if it’s a good fit? Ask me anything! 🙂
Business is a path to peace, prosperity and freedom. Your business is no small thing! You just don’t have to make it such a big deal. 🙂
I graduated at the top of my class with a degree in Business Administration. I took Accounting 101 and 102 and got “A”s in both. My professors drilled this into my head: “Find a good accountant.”
Alas. That was a disastrously incomplete lesson.
What I wish I’d learned sooner: My money is my responsibility. If it’s my money, it’s my job to manage it. I can’t delegate financial stewardship to my accountant or anyone else. I tried for years to neglect my responsibility and dump everything on my accountant. And I dug myself a deep hole of debt. Ugh.
A good accountant could help you understand your asset from your elbow. A good accountant can help you clean up your financials and get them rocking’ right. Together, you can develop systems and procedures for making sure the money and the numbers are current and accurate and clear to you. So, that you can make better, faster, more profitable decisions. Not your accountant. Because it’s not his or her money.
What else I wish I’d learned sooner: The financials are not that hard to understand. It may be that no one ever taught you how to read them. In my case, at school, I understood a bit of the theory, but later, in my business, my financials were a mess. In school, the case study financial reports were assumed to be accurate. That, amigos, is a very costly assumption when it comes to your financials. Your stewardship requires that you make sure that they are right. Your job is to dig in and drill down and get to KFP – a Known Financial Position.
Once I got over my drama about not wanting to learn the basics, I discovered that financial reports are not that complicated. The words are weird. You need a glossary. It helps to have a good accountant to teach you accounting basics. You might also attend a financial webinar or two. (Stay tuned! I have great products launching later this year.) You can learn this! I’m happy to report that if a distractible, creative, no-attention-span person like me can learn how to read and use financial reports, then there is hope for you. 🙂
What I ultimately learned: It’s not too late if you start now. You can improve your situation. You can make better financial decisions. Like my husband Hotrod likes to say, “When you’re digging a hole, you can stop digging.” You can let go of your whining and frustrations. You could meet with you accountant and say, “It’s time for me to learn this. I don’t understand the Balance Sheet. I don’t get why I am always so short on cash. Will you help me make sure these reports are current and accurate? Will you help me understand what I am looking at?”
And if your accountant says, “Yes! I’m so glad you asked. It’s your money and you should know what you have, what you owe and what you own. You should know the score. Let’s get started,” well…you may have found yourself a good accountant. That’s not all you’ll need, but it’s a good start.
PS…The attached picture is of John, accounting whiz at Zoom Drain in Philly, digging into the numbers with Jason, one of the owners Zoom Drain on Long Island. This is how it’s supposed to work. 🙂 Thanks, fellows! xo$
The end of the year approaches. Time to assess progress and get ready for a fresh start and new year. NOW is the time to clean up your accounting messes. Like being physically fit, fiscal fitness requires a bit of focus and discipline. The numbers may not be way off. So you and your accountant may be letting things slide. My encouragement: Clean it up. Commit to your fiscal fitness. Here are just a few reasons why…
- If the dollar amount is wrong, it may be way off in both directions. The net effect could be small but the data is unreliable. Better to trust every account, every dollar amount, on the reports.
- Someone may be pulling a fast one, counting on the fact that you don’t really know what the balances should be. This is how you get ripped off.
- Messy accounting is poor financial stewardship. It’s your money and your responsibility. Treat your assets respectfully if you want to grow them.
- When the books are right, your company is worth more when you go to sell it someday. Just saying.
So, here are some tips for fixing weird accounting entries…
- Comb through every account on your Balance Sheet. Assets are what you HAVE. Every account is verifiable. Your Cash account should reflect what you actually have in that checking account. You can verify it by reconciling the account with your bank statement. Your Accounts Receivable account should total the dollar amount that you have billed customers but not yet been paid for. You can add up the stack of entered by not yet paid invoices. Liabilities – what you OWE – can be verified by the loan statements or credit card statements. Equity is the difference between Assets and Liabilities. Each account should be right. If it isn’t right, you have to adjust it to right.
- Use Journal Entries – Debits and Credits – to get the balances right. Suppose the Asset account for Inventory says that you have $$75,000 in Inventory. But you counted your Inventory and your actually have $55,000 worth of stuff on the shelves and in the trucks. Credit Inventory $20,000 and Debit COGS Materials $20,000.
- The fix gets a little trickier if it involves a “linked” account. For instance, if your AR balance reflects a weird balances, you can’t use a Journal Entry to fix AR. You have to find the customer account that is creating the weird balance. Make an adjustment to the customer’s account…to make it right. If they customer doesn’t owe you anything, adjust the account to zero. Code the entry to Sales or an expense called Adjustment. Leave lots of notes in the description fields. If the discrepancy is less than $1000, and has been hanging around your reports for 10 years, make the fix. Bottom line, the accounts have to be right.
- Run the Balance Sheet before and after the fix. Look for the effect, the Debit and Credit, of your adjustment. Verify…are the accounts right? Bit by bit, clean it up.
- Then, write procedures to make sure the data is being entered properly. Most importantly, starting now, review the Balance Sheet weekly so you find and fix mistakes quickly, before they become old, stinky, weird accounting entries.
- Work with your accountant and bookkeeper to drill into each account and fix the balances. Your accountant can let you know if the weirdnesses are big enough to justify an amended tax return. Chances are good that you can just fix them. Keep a journal of your fixes.
- If you ever get audited, show the auditor what you did. Say, “There were some weird accounting entries. At year end 2014, I reviewed every account and adjusted them to right. Here are notes about what I did. Some of the stuff we fixed was left over from entries going back to 2008. I really didn’t know much about accounting and finance back then. I’ve gotten smarter. The books are in good shape now.” Then, offer coffee and a snack and provide anything else the auditor asks for.
- Lighten up. Dig in. Learn something. This clean up can be kind of fun, like a Sudoku. Embrace the process. Do it now, so you don’t have to deal with the weirdness in 2015.
Join me for my next LIVE Online Workshop! The “Let’s Get Fiscal! Year End Accounting Wrap Up.” I’ve got lots more tips and tricks to fix stuff. We will work in real time so bring your weirdest accounting questions to the Workshop. I’ll keep it light and easy…and maintain your privacy, too. Get the books right and finish strong in 2014. Then, make 2015 your best year yet! Here’s the scoop for the Workshop…
“Teamwork makes the dream work.” ~Sh’niece Tabb
Every now and then, I get an email or call from a client that reminds me of why I do what I do. My mission, my why, is to expand peace, prosperity and freedom through honorable, profitable business. When someone reaches out to me for help, they are usually not feeling very prosperous or free. Often, they are at odds with team members and family members about the business. They are short on cash and patience, and that gets frustrating. I am so grateful when I share something – some words, or a product, or a webinar – that helps get them moving in the right direction.
Here’s an email from my friend and client, Jamie Miller. I am so proud of him and his family and his “Bean Team.” Ultimately, the most successful of my clients discover that they are responsible for their own success. Sometimes they just need my help to get them started. I offer appropriate education, organization, solid systems, accountability…and lots of love, with no judgement. I’m like Glinda, the Good Witch. “Dorothy, you had the power all along.” Jamie took my help and engaged his family and accounting team. Now, together, they can tackle the accounting issues and apply sound financial management strategies.
Hi Ellen,Just wanted to share some good news. Today Mom and I had a meeting with our accountant. The meeting went very well. I had not been able to sit down with him previously and was hesitant because I felt he would not be easy to work with. I was wrong. I understand so much more about what is going on and feel very comfortable reviewing the financials. I shared with him what we had been working on and he was happy to see the progress. He is going to help me with the chart of accounts and making sure everything works well for taxes, but he liked very much the simplified accounts we are now using. I talked to him about meeting on a monthly to quarterly basis over the next 12 months to work on all the changes.
I want to thank you for all you have done for me. I told him today that if I knew 5 years ago what I know now I probably would be in better shape. But I’m not going to look backwards just move forward. We have also had some very profitable jobs lately and I am holding my pricing up and things are going very well.
I am actually excited to review the financials and take control of my business. You have truly been the saving grace for me this year and I feel I have been on a trip of a lifetime to work with you. Thank you, Ellen, for all you have taught me, some of which you have had to drive in to me. I am excited to start 2015 with a new outlook and direction and to continue to make more and better changes in my business.
Thanks, Jamie, for your inspiration! (And thanks, Sha’niece, for the lovely rhyming reminder!)
So, here are 3 tips for helping you and your “Bean Team” make your dreams come true!
- Meet weekly with your Bookkeeper, and monthly with your CPA/tax accountant until your accounting is cleaned up and the financial reports are rockin’ right.
- If you don’t understand something, don’t be intimidated. Keep ask ask asking for help. Spend some time learning basic accounting and finance. It is a course of study. Get the books, listen to the webinars and ask your team to explain what they are doing. By and by, you can learn what you need to learn. Just. Don’t. Stop.
- Remember…you have the power. And it is your responsibility. It’s your money, so you are the Financial Manager at your company. Assemble your “Bean Team” and make the dream work.
Let’s Get Fiscal! Year End Accounting Wrap Up
Wrap up the year and submit your tax return with no extension, no drama and no surprises in my Online Business Workshop!
Your accounting is like the back of the truck, or your top desk drawer. It can get messy. It takes discipline to get things cleaned up and keep them that way. And discipline makes all the difference to your success. So, let’s get the financials tight and right by year end 2014. Here are 3 ways to finish strong – fiscally fit! – in 2014…
- Get back to KFP. Operate from a Known Financial Position. Even if you are pretty organized, things drift. Reel it back in. Go line by line, through every account, on your Balance Sheet and Profit and Loss. Work with your CPA and bookkeeper to uncover every weirdness and correct every inaccuracy. Start now, and you can get it done by 12.31.2014. Calculate your tax burden and nail down your strategy. Be ready to submit your tax return on time, no extension. No surprises. No drama. Then, you’ll be off to a clean start for 2015.
- Assess your “Bean Team.” As you move to KFP, is your CPA helping or hindering? Is your bookkeeper embracing the conversation, or fighting you? They should enthusiastically support your KFP efforts. It’s your money and it’s their job to help you account for it, protect it…and grow it. Perhaps you have put rocks in their road by requiring too much detail or making the systems too complicated. Fair enough. Work together to streamline the systems. But too much protectionism or pushback is a bad indicator. Get them working for your, or find people who will.
- Commit to the weekly review. Every week, compare actual to budgeted financial data. That’s the game! How do we get from where we are to where we want to be. Review the disparity between real and idea. Then, what projects could your energize that will move the needle? Work with your team. Show them the score. If you are not looking at solid data each week, while the month is on, you playing the game without looking at the scoreboard. Put on your big kid panties and play the game of business at a higher level. Don’t react…create!
Sometimes a small shift can produce a quantum leap. These 3 Tips pack a big wallop. Raise your standards when it comes to accounting and financial management. Finish strong in 2014 and blast off in 2015.
Hey, women! Come see me in Pittsburg! at the 7th Annual NAWBO Day event! Topic: How to build a profitable business in a weekend! Join in the fun on November 21st. Click here for details!
Anthony and Rose joined me and Shauna (aka Sha-nomenal!) and the Phenomenal Team at Howard Partridge’s Inner Circle program in Houston. There, we hosted the FUNomenal Financial Blast. Owners from 21 companies cleaned up their financials, crunched budgeting numbers, determined selling prices and explored the Financial Quick Check report. Super Nerdy Fun! And powerful financial training. I’m still aglow from the experience.
And apparently Sha-nomenal Shauna made a big impact! Cute video! The event was a big hit…and we decided to do it again. This is a winning way to become a powerful Financial Manager. Stay tuned…we’ll make an announcement soon!
In the meantime, have you taken The Biz Plan Challenge Home Edition? Financial Clean Up…Profitable Business Planning…we are here to help you succeed! This is one BIG product for a “no brainer” price.