How to Manage CASH FLOW & BOOKKEEPING when you're Just Not Good With Numbers

How do I manage my cash flow and books better when I'm just not good with numbers? I love this question and I hate this question. The reason I hate it is because whether you tell yourself you can or you can't, you are right. Now, don't take that to an extreme. I'm not saying if you have zero medical training and you say, I can have— I can perform the surgery on this person, that you can. I'm not saying that. Obviously, there's skills that we may need to learn, but attitude is a big deal. So I just don't love the idea of saying, I'm just not good with numbers. You wouldn't— I mean, if you're a gym owner, for example, you wouldn't let your members say something like that. You'd say, I'm not good with numbers yet. So just give yourself grace so that you're not making a definitive statement about what you're not good with, um, because we can always learn. So that's why I hate it. I love it though, because it does at least demonstrate that the person asking this question knows it's important to know their numbers. Now, knowing your numbers and being good with your numbers are 2 different things, and I believe if you're not trained accountant, your idea of what being good with numbers is, is probably a bar that's too high. I would argue it's simpler than what you think it is. So, um, let me start with the easiest one. If you can afford to, it's always just better to hire a qualified accountant who can help you with the numbers. Because they're good with numbers, and then you're going to be able to interpret them. Because there's an element of your financials that you can never outsource, you should never outsource, and that's analyzing them and looking at them so that you can make business decisions based on the numbers that you're seeing. Now, you don't need to have the skill set of understanding debits and credits and how to use QuickBooks and import your bank transactions, and you don't necessarily need to know any of that, but you do need to be comfortable looking at the statements, being able to make a decision. A couple things that come to mind there: just because they're a member, uh, of your gym maybe, or a client of your business, and you want to swap services doesn't make them qualified just because they're willing to help you with their books. It's one thing to understand a software, which even a lot of those people don't even understand the software, but they could be QuickBooks certified. And I'm just referencing QuickBooks because they dominate the market and they pretty much are the most effective accounting, small business accounting tool out there. But I can understand the software and not know a darn thing about accounting itself and screw up your numbers. You have to have an understanding of accounting. I promise, very important. That's the biggest qualification that you should be looking at. Not if it's someone who's willing to do it. That doesn't make them qualified. Same with, look, your spouse. I can't tell you how many times I see the spouse doing the books, or a child, an adult child, or even maybe an adolescent child, just because they're a family member. Doesn't make them qualified. Even though you want them to learn it, doesn't necessarily mean that's going to make them qualified in the future. Because what I see is the spouse does it, or the son or the daughter does it, and there's no training that they get other than making the mistakes and maybe an accountant coming in and training things, or at least correcting what they did wrong. So A qualified accountant understands accounting and obviously the software that they use to do the books. But that's if you can afford it. Um, if you can't, then there's some DIY methods. But let me— I mentioned the bar. I think maybe it's a little lower than you think. If you can look at a number and tell that it's higher or lower than the same number at— in a different time period, you probably are good with numbers to the extent that you need to be good with numbers, because that's what you need to be able to do. And if you can do that, if I can see, oh, last month this number was 10, this month it's 15, that number's higher. That also means you have the ability to see trends. I know I just— it feels like I oversimplified it, but I promise That's the case. That's the most important thing I feel like as a business owner you can do with your financial statements is being able to catch the trends, to see the difference between the 2 numbers, whether it's lower or higher, and then ask yourself— I'll just give you 2 questions— why is it higher or why is it lower? Start with that. If you are one of these, um, business owners who feel like you're not good with numbers, you're just not good with numbers. First, you're going to add the word yet at the end. I'm just not good with numbers yet. Second, just do that. Is this number higher or lower? Why is it higher and why is it lower? That is a massive part of the foundation of knowing your numbers. Um, okay. Other than that, if you want to DIY it, one of the reasons we love the Profit First cash flow management system so much Is because it does take a lot of the whole, I need to know the numbers, out of the equation. It's very behavioral-based, and the numbers that you need to know really become pretty simple in, in the system. We recommend having at least 5 bank accounts: an income account, an account for owner's pay, for taxes, for income taxes, For profit sharing and then for operating expenses. If you're a gym owner, we also suggest having a team member expense and an equipment account. But as you get into the system, man, you can blow it up. I have, I think, like 10 or 11 accounts because I, I'm a Profit First professional and I love the system and I believe in it. And I— anyways, it works. But Never mind that. I want to keep it simple. At least the 5 accounts. And with these 5 accounts, money comes into the income account, and then based on percentages, you're going to transfer money from the income account. You're going to zero it out by transferring all the money in the income account into the other 4 accounts. How do you know what percentage you should be using? You should run a cash flow analysis. It's a simple process of putting in a couple numbers, and then if you use a template, which I'll tell you how to get a template, the template is going to do all the math for you and it's going to give you the percentages. And then from there, you know, we would recommend tweaking them. No one uses the initial suggested percentages, but then when you sit down once a week or twice a month and you're zeroing out your income account into the other accounts, you know the percentages that you should be using. So, um, we have a couple resources. We've talked about this one recently. The one is what we call the allocation spreadsheet. Uh, it's— it really makes it pretty simple. You— um, we actually probably have a video that will go way more in depth, so I won't spend too much time on it. But if you want that Uh, email Walter— W-A-L-T-E-R, just like Walter— walter@insightstax.com, uh, and he can get you that. Or if you just want the template of the cash flow analysis, which helps you determine the percentages, which really is the first step because it gives us a really great financial snapshot of where we are Uh, health-wise, financially fit-wise. Um, you put in a couple numbers, it'll kick back a percentage for you, and at least that's a starting point for you to use when you're transferring money to these different accounts. And again, at no point am I talking about debit to credit or bookkeeping or profit and loss statements and balance sheets. Uh, it's all pretty basic. You need to know your top-line revenue. You're going to need to know how much you spent on all your expenses. But we have a template. And again, if you want that cash flow analysis template, email us, walter@insighttax.com, and he can get that for you. walter@insighttax.com. So a couple of free resources there for you. Remember, profit is a choice. Have the courage and wisdom to choose it.