Get Better Financially Organized in the New Year

Jan 25

Welcome to 2022, my subscribers and friends!

REFLECTING ON PAST BUSINESS EXPERIENCES

I hope you enjoyed a fabulous start to the new year as well as opportunities to reflect upon your experiences from last year. Because, as we well know, the lessons learned from the past inform how we approach every fresh start afforded to us in life.

I’m trying to take my own advice on multiple levels by reflecting upon the health of my business with the help of my financial statements. I’m using them to identify financial trends, hardest-hitting expenses, and top profit margins so I can figure out where in the coming year I should lean into what’s working, or where I need to pivot away from what’s holding me back.

I’m also taking time to reflect upon my own health as the business owner. Not necessarily my physical health, though that’s important too, but on my levels of stress vs. satisfaction induced by the process of running my business. I’m looking at where I can get more efficient or better at delegating in order to save myself some time and overthinking, as well as where I want to park and spend more time in order to experience more joy. FYI, it’s with y’all–authentic face time with clients where we get to learn and problem-solve together is my favorite.

And speaking of clients, one of mine is engaging in this exact process herself.

A CLIENT’S EXPERIENCE GETTING A MORE ORGANIZED FINANCIAL START TO THE NEW YEAR:

I shall now hand the reins over to this client and friend, who will remain anonymous, but will give you a window into her mind as she begins her new year.

“Hello, friends and fellow female business owners! I’m rooting for all of you, though anonymously, as you aspire to grow and push yourself in business within the coming year. What follows is a snippet of what the reflection and preparation process has looked like for me, and I hope you’ll find it helpful and relatable.

“I’m a service provider, fairly new to business since mid-2020. What a time to go into business for yourself, am I right?

“Anyway, I’ll be honest and say that I’ve been pretty diligent about tracking my financial situation from the beginning. My struggle is not with negligence of bookkeeping and the like; it’s more so with the willingness to invest the mental energy and resources necessary to make those back-end processes run efficiently and accurately.

“So, since the origin of my business, I’ve run the entire financial side through this very complex Google Sheet that I must admit I’ve felt quite proud of and married to. But it dawned on me that since I was the one who made it, there’s no fail-safe to it. There’s no way to verify that it’s pieced together and functioning correctly–there are labels and boxes and equations freaking everywhere at this point.

“Plus, I’m having to manually enter all of my transactions, calculate my quarterly tax payments, and project my future cash flow, which gets tedious.

And what’s the point of my ‘diligence’ if my manual calculations are incorrect or costing me an excessive amount of valuable time? I needed to make a change.

“So I decided to finally (she’s probably shaking her head as she reads this) follow Stevie’s advice and open a Quickbooks subscription.

“My goals for doing so included:

Verifying the accuracy of my quarterly tax estimates and cash flow projections
Enjoying clean, organized reports on the financial details impacting my business
Actually saving receipts safely and digitally so that I might be protected in case of an audit
Efficiently invoicing my clients and being notified regarding the payment of those invoices and the arrival of money in my bank account, which would require connecting my business bank account, which would require opening a business bank account. Yeah, I hadn’t even done that yet.

“Anyway, I did indeed open a new bank account to be used strictly for business, from which I paid my Quickbooks subscription fee, and then immediately entered Stevie’s famed Quickbooks Masterclass because I instantly felt confused when I landed on my control dashboard. Then I felt relieved when in her course introduction video, she said she typically ignores the Quickbooks control dashboard. Phew!

“Stevie first explained how to verify that I’d chosen the correct Quickbooks subscription. Between the Simple Start Plan and the Plus Plan, I chose the first. Even while its functionality is limited to financial situations taking place in real time, it has all the stuff I need. My business is fairly simple–I’m a sole proprietor with no inventory and few expenses. But even if that’s not you, you can always begin with the Simple Start Plan and later upgrade to the Plus Plan if you find that its ability to deal with future and recurring financial things, plus track inventory and time, better suits your needs.

“Then, before officially getting into the Quickbooks nuts and bolts, Stevie introduced two financial statements that would be important for future reference as we proceeded through the course: the Balance Sheet and the Profit and Loss Statement.

“In this course segment, I learned:

The Balance Sheet lists the business’ liabilities and equity.
Liabilities are amounts the business owes to someone else.
Equity includes things like owner investment, owner pay, retained earnings, and net profit, which, according to Stevie, commonly get misunderstood, but she’d explain it all later–’phew!’ again.
The Profit and Loss Statement is a detailed examination of that last section of the Balance Sheet, the net profit.
The Balance Sheet reports on the financial history of the business since its origin, and the Profit and Loss Statement reports on the year to date.

“Cool cool cool. With all that information stowed away in my head for later, it was time for account set-up. I’ll walk you through my experience with all that in the next blog of this series. Until then, friends!”