[00:00:00] the truth that nobody ever told you before you started your business. If you [00:00:05] don’t know your numbers, you don’t own a business, you have a hobby, [00:00:10] and hobbies don’t pay. The bills. So let’s talk [00:00:15] about a few things when it comes to knowing the numbers. And I think [00:00:20] that, as an entrepreneur and as you are in your entrepreneurial endeavors, [00:00:25] building and growing your personal brand, whether it’s within a business or it’s completely aside of your [00:00:30] business. [00:00:30] There’s some things that are fundamentally important, and I think the numbers [00:00:35] are a huge part of what people tend to shy away from, and it’s whether because they don’t understand [00:00:40] them or they’re not the fun and exciting part of the business, or they’re [00:00:45] confusing, and it doesn’t matter which category those fall into, those are dangerous places to be [00:00:50] as you’re growing and scaling a business or a personal brand. [00:00:53] So there’s a couple of quick things that [00:00:55] I wanna talk about. As a business owner, congratulations, you are also now A [00:01:00] CFO. And that doesn’t mean you shouldn’t replace yourself one day, but at the end of the day, this is your [00:01:05] business. And it’s your business to know your numbers. You don’t have to be a spreadsheet [00:01:10] wizard. [00:01:10] You don’t have to be a CPA and you didn’t have to go, to school and finance and [00:01:15] accounting to know how to run your business. But you do have to know what’s going on. So here’s a couple of [00:01:20] things. A quick checklist. Here are three things that you should be asking yourself and the most [00:01:25] simplest standards of, making sure that you have your ducks in a row when it comes to knowing your numbers.[00:01:30] [00:01:30] Number one, how much money came in last month. Now I know that is seemingly [00:01:35] basic, and I cannot tell you how many six, seven, and eight [00:01:40] figure businesses that I know personally where the owner of their business could [00:01:45] not tell me how much money came in last month, basic and [00:01:50] important. Number two, how much money went out, right? [00:01:52] So how much came in? [00:01:55] How much went out? And that’s IE expenses. So how much did [00:02:00] you bring in? How much did you spend? And then thirdly, how much is [00:02:05] left over. Right. That’s called, uh, revenue expenses net [00:02:10] profit. Right? But that’s simplest way to think about it. And at the very, very, very [00:02:15] basic level, those are the three things that we have to know is how much came in last month, [00:02:20] how much went out last month, and how much. [00:02:22] What’s left over. This is not about, [00:02:25] uh, doing it all yourself, but it is about knowing what to do with the financial numbers [00:02:30] and not outsourcing that and not looking at it because you don’t want to, right? So that’s step [00:02:35] one. Uh, number two, you gotta have a system. All right, so these are four [00:02:40] quick systems checklist items that I will give you about how to get more [00:02:45] intimately acquainted with your numbers in your business. [00:02:47] Uh, number one, make sure that as a business [00:02:50] owner, that you have separate business and personal accounts. That’s the first big [00:02:55] no-no, when creating some simple, basic financial guidelines in [00:03:00] your business. Personal and business accounts have to be separated. I [00:03:05] would say the same thing for credit cards. [00:03:06] If you’re gonna choose to have credit cards in your business, then you need personal cards and [00:03:10] you need business cards, you need a business account, and you need a personal account. Make it easy on [00:03:15] yourself for reconciliation. Do not mix and mingle the two. I don’t care how small you are. I don’t [00:03:20] care if you brought in $10 last month. [00:03:22] Have it in a separate account. Okay. [00:03:25] Second quick system to make sure that you have clean financials, uh, is make sure that you have monthly [00:03:30] bookkeeping. If you have to start with something as simple as a spreadsheet to track what came [00:03:35] in, what went out, and what we have left over, great. Uh, then you can elevate to simple [00:03:40] systems like HoneyBook, or we use QuickBooks online. [00:03:43] Um, you don’t have to have [00:03:45] a bookkeeper, but you have to have bookkeeping. Now, at some point, it’s going to behoove [00:03:50] you to start with an outsource bookkeeper. Then you can hire a full-time bookkeeper. Then you can [00:03:55] hire a controller and you can start building the financial engine of your company. But until then. [00:03:59] [00:04:00] You are the bookkeeper, you are the CFO. Um, and so you’ve gotta take control of this. You [00:04:05] can fractionally outsource it. You can hire someone for 20 hours a week. You can hire a company, an [00:04:10] individual, it doesn’t matter. Um, and you’ve got to have a bookkeeping system. Could be a [00:04:15] spreadsheet, could be QuickBooks, but you gotta have a system. [00:04:17] Number three, you have to have a [00:04:20] tax. Planning strategy, not just a tax filing strategy. There [00:04:25] is a difference between tax planning and tax filing, right? Tax [00:04:30] planning has more to do with your entity structure. [00:04:35] And, what are the different ways that we use the money, right? So it’s making sure that you’re [00:04:40] set up the right way. [00:04:40] It’s making sure that you’re best optimized to pay [00:04:45] taxes and only the amount that you owe. So let me be clear here about taxes. I am not [00:04:50] against taxes. I’m an American who lives in America and gets the great [00:04:55] privilege of paved roads, paramedics, police officers, [00:05:00] teachers, the fire department, red lights, stoplights. [00:05:03] Those are things I [00:05:05] greatly love about our country, and I am all about paying my fair [00:05:10] share of taxes. I call it America’s money, right? This is America’s money, and I am happy to pay [00:05:15] it, and I do not want to pay 1 cent more than I am [00:05:20] supposed to. That is the difference between tax filing and tax [00:05:25] planning. I want to pay every good cent that I owe to America to enjoy all the benefits [00:05:30] that I get as an American, and I wanna make sure that I’m not overpaying, [00:05:35] I don’t wanna underpay, I wanna pay my fair share, but I most certainly don’t want to overpay [00:05:40] because I didn’t hire the right person. [00:05:41] I didn’t know, uh, what counted. I didn’t know what was a [00:05:45] deduction. I didn’t know that I didn’t have the right entity. Those are all things that are tax [00:05:50] planning, right? And as someone who files your taxes and someone who helps you with tax planning [00:05:55] are two different people, you have to have two different thought trains on that. [00:05:59] So what’s my tax [00:06:00] planning strategy versus who’s just gonna file my taxes? That’s the third. And then the fourth is your [00:06:05] profit, right? What’s your plan for profits? Are you trying to make profits, right? I [00:06:10] imagine you are if you’re in a for-profit business. Um, but you have to have a real [00:06:15] monthly budget. [00:06:16] With revenue goals and expense limits, right? Um, [00:06:20] you likely won’t hit your financial goals if you don’t plan for them, and you [00:06:25] likely won’t hit the plan if you don’t track it, right? So there, there has got to be a [00:06:30] target of what we’re going after. There has to be a budget. Um, and that’s, that’s a well-defined [00:06:35] budget and lots of different arenas. [00:06:36] And like I said, uh, even if the budget is, Hey, next month I can [00:06:40] only spend a hundred dollars on my personal brand for X, Y, and z [00:06:45] reasons. That’s a budget. Budgets don’t have to be huge, but everyone [00:06:50] needs a budget to make sure that you’re spending and earning in ways that [00:06:55] allow you to grow. The number one reason that most companies fail is they simply run out of [00:07:00] money. [00:07:00] Don’t let your mission fail because you didn’t plan for the basic fundamental [00:07:05] essentials of financial planning. Okay. Now last but not least, I wanna [00:07:10] share just a couple of quick things of what smart, entrepreneurs do. [00:07:14] Not the only [00:07:15] things, but a few things that they do to really help with this. Number one. Make sure [00:07:20] that you have, this is a best practice. Make sure you have monthly financial review time in your [00:07:25] calendar, right? I’m very much of a believer if it’s not in your calendar, it won’t happen, it won’t get [00:07:30] done. [00:07:30] So make sure that you have monthly financial review time to review what came in, [00:07:35] what went out, and what was left over to make sure that you have time to evaluate. Do I [00:07:40] have enough set aside for taxes? Right? That’s a part of the plan is budgeting. [00:07:45] Uh, like, hey, when money comes in, I have to set aside some for taxes. [00:07:49] ’cause nobody wants to be [00:07:50] hit with that surprise bill at the end of the year plan in advance. That requires [00:07:55] time. So make sure that that time is in your schedule in advance every single month. [00:08:00] The only reason that things get out of control is that you who is in control of the money, [00:08:05] stopped looking at the dollars and cents. [00:08:06] So make time for that every single month. Number two, [00:08:10] hire a bookkeeper to help you keep things straight, right? Uh, that [00:08:15] comes at varying levels within your business, but with all the things that you have going on, uh, [00:08:20] I would say making sure that there is someone. Protecting the financial [00:08:25] realms of your business, which is what helps you keep going, is one of the most important things for you to [00:08:30] start with, right? [00:08:31] It doesn’t have to be full-time. Maybe you start with five hours a week and then you grow [00:08:35] from there. But most people think, oh, I need a va. Right. That might be true. [00:08:40] Um, but you also may wanna look at, Hey, I gotta make sure that I have money [00:08:45] coming in and I’m limiting money going out so there’s money left over so that I can continue to do this next [00:08:50] month. [00:08:50] Right. So weigh the pros and cons of who are the first [00:08:55] people that you hire. In order to keep the business intact. Uh, number three, make sure that you’re saving [00:09:00] at least 20 to 30% of everything that comes in for taxes and also hopefully some [00:09:05] profit leftover, right? So a good rule of thumb, based on what you are projecting [00:09:10] come in, you can start with 20, uh, we put aside 30% every single month of what’s left [00:09:15] over for taxes. [00:09:16] Right, and that is to make sure that we don’t get hit with [00:09:20] surprise bills and that we always have operating capital and that we never put ourselves in a cash flow [00:09:25] crunch ’cause we spent all the money that actually belonged to America, right? So make sure that you have those [00:09:30] financial practices in place and that last but most certainly not lease, is make sure that you [00:09:35] actually have a monthly p and l to review. [00:09:37] Right. Part of that time that you’re gonna set [00:09:40] aside is going over your profit and loss statement, your p and l, but you actually have to have one, [00:09:45] right? And if you don’t know how to make one and you can’t, then that’s why those initial, maybe first five [00:09:50] hours that you hire out could be a bookkeeper, because this is what keeps you in business. [00:09:53] This is what keeps you in [00:09:55] motion. This is what allows your message to get out into the world, is that you have enough funds coming in that allow you to [00:10:00] keep doing the thing that you feel like you’ve been called to do. Right? There’s the art. To [00:10:05] this, and then there’s the business side of this, right? [00:10:08] And they’re both [00:10:10] necessary. And you don’t have to, like I said earlier, you don’t have to be a finance major. You don’t have to be a [00:10:15] CPA and you don’t have to be a spreadsheet wizard to know the basics, but you gotta know the basics [00:10:20] because the basics are what are gonna keep you running so that your message can get out to the people that [00:10:25] it’s meant to help.