cash-flow

Bookkeeping 101: Managing Cash In Your Business, Pt. 1

Cash Flow is the financial life blood of your business.  It’s important to have a very good understanding of how much money you have at a given time as well as a firm grasp on how much and when money is coming in and going out every month.

One of the three major financial reports is the Cash Flow Statement.  This report is beneficial & I will cover it soon, but I think that the “Cash Sheet” is a better day-to-day tool for managing your cash flow.

The “Cash Sheet” is a report that you can keep up with daily or weekly to know exactly how much money you have available.  See, two of the biggest financial mistakes I see business owners make relate to cash management.  First, they don’t have a system for paying bills.  Second, they use their bank balance as a guide to making decisions.

There may not be a perfect system for paying bills but I have found that paying bills twice a month works really well.  That means picking 2 days roughly 15 days apart and only paying bills on those days.  It also helps to get your automatic drafts to come out on those days as well.  For example, your two days could be the 5th and the 20th or the 15th and 25th.  The benefits of this systems are: (1) You save time only paying bills twice a month rather than throughout the week/month (If you read Tim Ferriss’ “4 Hour Work Week”, this is what he refers to as batching).  (2) You can see how and when cash moves in and out of your business.  Cash comes in through deposits and accumulates.  Then cash goes back out as you pay your expenses.  It’s similar to an ocean tide…you see the high tide and low tide twice a month.

Getting this system set up takes a little bit of work on the front end but it’s well worth it in the long run.  Some things you need to do are communicate with your employees and vendors and anybody else who may be effected by the change.  Let them know about your new system and when to expect payments.  If you have any automatic drafts, you will need to change those.  You will have to stay disciplined and not cave in anytime a vendor requests payment.

Your bank account should not be used to make financial decisions mainly because it may not tell the whole truth.  Your bank account might show that you have plenty of money to pay your bills but it doesn’t show you that you have a bank draft and uncleared checks.  This is where the “Cash Sheet” comes in really handy.  It tracks the actual cash that you have available plus shows you what drafts you have coming up.

So, what is a “Cash Sheet”.  There are different formats that you can use but here’s the one I made for my gym.  Feel free to steal it or adjust it to fit your liking.  If you are in fact following the twice a month system mentioned above, you could probably make this a weekly report that you update every Monday.

Grab my cash sheet here.

If you need any help setting up your cash sheet or managing your cash flow, reply to this message and let’s chat.

Here’s that link again: https://drive.google.com/file/d/0B7l18ITYRsbvSHpYV3p0MkZrNXc/view?usp=sharing

 

success

Measuring Success For Your Business

Owning and running a business involves a lot of moving parts.  From a broad perspective, your business effects the lives of you and your family, you staff, your clients, your community and potentially investors as well.  That can make it difficult to define what success means for  your business means TO YOU.

That is the beautiful thing about success.  It can mean whatever YOU determine it to mean.  You may be fine working 16 hour days and not making a ton of money as long as you are changing the lives of your coaches and clients.  On the flip side, your idea of success might be having a $1,000,000 gym with little concern for your staff and clients as long as they continue to help you make money.  In reality, we want it all and typically the two go together (the more you take care of your staff and your clients, the more money you will make).

Since success can mean what ever you want it to mean for you, it is important to define what that is.  If you fail to determine what success is for you, you will ultimately remain unfulfilled.  Here are a few categories to help prioritize what success means TO YOU for your business:
– Great results for your clients
– Financial security and freedom for you and your family
– Having a lot of members
– Never working a 9-5 job again
– Being in control of your schedule and being able to take vacations when you want

Now it’s likely that your definition of success is some combination of these – and that’s fine.  But take the time to go through this list (and come up with others) to define what will make you feel successful in your business.

After you have defined your big picture of success – your ideal business – it’s important to map out what it will take to get you to that point.   You likely are not where you ultimately want to be…and that’s ok; that doesn’t mean that you are not successful.  It does mean that you need to work on being successful a majority of  your days until you reach that point (and beyond to keep your success up).  You need to begin following the success cycle.

The success cycle begins with an activity.  That activity will give you a result.  If it’s not the desired result, then learn from your mistakes and go at it again until  you get the desired result.  That result leads to success.  Success gives you more confidence which makes you more active and you get more results and feel more success.  This process continues, picking up more and more momentum as you go.  The important thing is to start small with the success cycle.  For instance, when I work with gyms to get their profit where it should be, we start off very small.  I want that first step to be easy.  Once they have success on the first step, we’ll take a little bit bigger step and so on until they reach their goal.  I’m sure you do the same thing with clients.  Do you start with 1 new habit until they master it or do your throw the whole book at them?  You are familiar with the success cycle as it relates to training clients, now just apply it to your business.  Starting off, pick 1 thing that will move your business towards your definition of success and do it every day.  Here are a few examples:

Example 1:   If you get your client great results but you have trouble getting new members in the gym, then set a daily goal of asking 2 members for referrals.  After a week or so, this will become easy and you may want to increase it to 4 or 5 members per day.

Example 2:  If you have had trouble developing your systems, set a daily goal to get a systems manual or videos completed.  30 minutes a day would be a great way to start (as long as it was a focused 30 min.).  Make sure you do that every day and you should have your entire business documented in about a month.

You get the idea.  Figure out where you need to improve the most or what will have the biggest impact on your business and work daily to get there.  You will feel successful on a daily basis and you will make great strides towards your ideal business.

A final note about success: Remember that YOU choose success.  Just because somebody has a bigger gym or more clients than you does not make them more successful.  Also, because somebody on Facebook says that successful gyms all do X, does not mean that you are unsuccessful if you do Y.  YOU define what makes YOU successful.  But YOU have to define it or other people will.