Each company is unique. Your company is unique. So why use a generic chart of accounts?
Think about the story you want your reports to tell, then structure your chart of accounts, classes of business, items, and everything else that you can possibly configure in the software, to get reports personalized for your
Some ideas for structuring your chart of accounts and configuring your software:
The possibilities are endless, so focus on what are the most important factors that ensure your business will succeed. Those factors are what you want to build your record-keeping and reports around.
What’s the story you want to know about your business?
E-mail me your comments at [email protected]
What's the one thing that business owners never talk about when I ask them to tell me about their business?
I don’t blame them. They didn’t start their business to manage cash. They started their business to do something they really enjoy and get paid for it – like create websites, sell real estate, practice law, do collision repair, or do any of a million things that people enjoy doing to make money.
When I start working with a business that has a cash crunch and may not survive, I first work with the business owner’s mindset.
I help them understand that while managing their cash isn’t what they want to do, it will keep their business alive so they can do what they love to do. It allows them to spend more time and energy on what they love, but only after their cash management systems are in place.
Want to talk about managing cash in your business? Then tell me, what's your biggest cash management challenge?
E-mail me your comments at...
If you are in a cash crunch, will a loan help, or just make things worse? Or for that matter a capital infusion from a new partner? Or cash from your personal bank account?
The answer all depends on your ability to manage your cash and understand your cash flow. Depending on your situation, a loan could dig a deeper hole, a new partner could end up in a lawsuit, or could be throwing your good money into a bad situation.
Here are three basic scenarios:
1. You have complete understanding and control and know that the money will pay off through profitable business activities and healthy growth. Bring in more cash.
2. You don’t have a complete understanding, but you 100% know that for a particular project, order, or capital investment there will be a payoff. Bring in more cash just for that project or order.
3. You just don’t know what will happen, but you need the cash to survive. In this case, do everything you can to avoid bringing cash in until you know what will happen....
What do you think? A new connection asked me if he could get to where I am without my educational background (he has a professional certificate and additional professional training, but no 4-year degree.) I first commented that I wasn't sure that he knew where I was, nor where he wanted to go.
Then I said, "Yes, you can get to where you want to be." My concern is that he is not sure where he wants to go.
I get the same type of questions from clients:
"Will I ever have money in the bank?"
"Can I ever stop having huge cash swings?"
"Does my business have a chance to get to the big leagues?"
The answer is always, "Yes, you can get to where you want to be." Then we have two discussions:
1. Where do they want to be?
2. How can they get there?
So what do you think, can people get to wherever they want to go? Can companies always have the success the owner wants?
E-mail me your comments at [email protected]
The quality of your team can have a HUGE impact on your cash flow. You are much better off paying ABOVE market wages and benefits to a smaller number of "A" and "B" players than trying to save some money hiring average people at lower wages.
Here are two examples:
The COVID-19 global pandemic is a wake-up call to ALL business owners to take responsibility for their company finances.
I posted that financial advisors are responsible for the companies they work with to have good financial plans, including a 13-week cash flow model. Now, I am putting the responsibility 100% onto business owners. There are no more excuses.
For too long business owners have said...
"It's not about the money, it's about the people."
"I do it for the love of my craft."
"Someone else can deal with the finances."
"I want to be my own boss, but so I decide that I only want basic bookkeeping."
Now a tiny virus has told you that you are wrong.
You are in business. Business is about the numbers.
Not only numbers, but if you don't have money, you can't...
...work your craft
...let someone else worry
...be your own boss
If you survive this downturn, fix your finances.
Start with a cash flow model that tells you how long you can survive. (Put "Cashflow" in the comments if you...
Profit does not mean that there is cash in the bank. A growing bank account does not mean that you are making a profit.
Surprised? You're not alone. Most schools, CPAs, news reports, etc. focus on a company’s earnings, profits, and sales. That’s because those same institutions are geared toward teaching, working for, and reporting for BIG big businesses and public companies.
But if you are a small business, your most important measurements for the next 3 months or so have to do with cash:
So don’t be fooled by “the establishment” into thinking “profit, profit, profit.”
Think: “Profit with sustainable cash flow!”
Let me know if “profit without cash” is a new concept to you, or if it’s not, how you learned about the concept!
No money to pay your bills? Don't borrow money, just don't pay your bills.
You have to pay them at some point, but there are tactics to slow down money flowing out of your bank account.
But FIRST... here are some bills you need to pay on time:
Anything that puts you in breach of contract and puts your business, your home, or your health at risk.
Other than that, most bills can be postponed past the due date without dire consequences.
Look at bills that you owe large corporations, who are used to delays. Telephone, internet, utilities, insurance companies. You may be able to wait up to 60 days without consequences. Let them know when you'll be paying.
Suppliers: Make sure that you talk with them. Make payment arrangements. Don't surprise them. Make a partial payment. Many times your relationship is more important than delaying payment.
Mortgages and rent: Most have a no-penalty grace period. Use it when you need to.
Please, be careful with solo-entrepreneurs and...
Are you a cost center or do you provide a documented return on investment (ROI) for your clients?
Most companies, non-profits, and government institutions view accounting, bookkeeping, tax preparation, and financial analysis as an expense that needs to be endured. Because of this, they often look for a low-cost provider that meets a minimum standard, like a certification.
Examples would be a QuickBooks Advisor, accounting degree, or CPA or Chartered Accountant.
There are literally millions that have certifications of each type.
What if you could show an ROI to clients?
Show them that for every dollar, pound, Euro, lira, or peso they spend they get to save or make 5x, 10x, 100x, or even 1,000x what they spent?
The best way to do that is through advisory services which help improve a company's financial performance.