Get Your Company FIT & Your Bottom Line FAT

Issue #18 - June 2007     

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Coming in 2007, brand new DVD edition of our internationally renown Profit Mastery Seminar















"Just the Road Map alone was worth the price
of attending."

-Gary Hill, Leo Hamel & Co

"We saw measurable improvements in one month."
-James F. Sunderland Jr., 
James and Sons 

  "It was fun and interesting. I never knew numbers could be this fun." 
-Ray Bleser, Northeastern Fine Jewelry.


New! BRS Bookkeeping Service
  Call 877.279.1231

More information on the BRS Bookkeeping Service can be found here.

"For the first time I feel as though I'm in control. I have the information I need, when I need it, in the format I need to proactively manage the performance of my business and I've seen improvement from day one.” 
Janet Kusler, Kusler Pharmacy
Snohomish WA 

How to Review Financial Statements Like A Real Pro...
Even If You're Not

In our line of work, we see a lot of ugly financial statements.  Not ugly in the sense that the business is performing poorly (well, we see some of those too!) but ugly in the sense that they contain glaring bookkeeping errors.  We suspect there are several reasons for this. One is the proliferation of software that makes “doing the books yourself” attainable for almost anyone with basic computer skills. Answer a few interactive questions, choose from the drop down list of industry choices and you're off and running with your very own profit and loss statement.  Press a few more buttons, and voila, instant balance sheet.

The other reason is that many business owners only consult accounting professionals at year-end to figure out how to reduce taxes.  While we're usually all for saving money (and paying no more taxes than absolutely necessary), this approach can cost dearly in the long run.  First of all, if you're waiting until year-end to do tax planning, you might be waiting too long to take pro-active steps.  In addition, if you do the books in-house, you'll mostly save a lot of time (and not a little heartache), if you bring in a professional to help get you set up correctly from the start, and periodically review your statements to ensure accuracy.

And finally, most business owners, if they're not doing the bookkeeping themselves, are most likely in the difficult position of having to hire, train, and then manage a person in a position about which they themselves might have little or no knowledge. Not an ideal situation.  Then, periodically, you get to review the output of this person, again not really knowing what you should be looking for (or at).

We have entire workshops around reviewing the numbers part of financial statements to use them to diagnose the financial performance of your business.  Here, however, is a brief primer for the “non-numbers” business owner on how to review statements to help determine if they are, at the very least, an accurate reflection on what's happening in your business:

Balance Sheet

Are there any unusual balances, such as:

  • Negative amounts (only accumulated depreciation & amortization should be negative)
  • Negative cash – should be in the form of a note payable (or bank overdraft) on the liabilities side
  • Inventory – amount should vary from month-to-month according to actual inventory levels (if inventory is off, then your cost of goods, net profit and retained earning amounts will be off as well.)
  • Accounts receivable – should have a balance (assuming you sell on account)
  • Accounts payable – should have a positive balance (unless in the unlikely event that you've paid off every one of your suppliers by month end)

Profit and Loss

  • Sales and cost of goods sold detailed for each category
  • Sales should be greater than cost of goods sold for each category
  • Cost of goods should vary every month to reflect actual expense, not estimate
  • Estimated depreciation should be entered monthly, and then reconciled to actual amount at end of year

Overall Look:

  • Profit and loss expenses should be grouped by expense category, for example: sales & advertising expenses, employee expenses, general and administrative, and not just listed by alphabetical order.
  • Add a column that shows expenses as a percentage of sales, along with year-to-date and year-to-date from prior year so you can see trends and determine real changes in your expenses, not just changes due to sales increases or decreases.

And finally:

Be curious, don't be afraid to ask questions, and if it doesn't seem right to you, get to the bottom of it! If you (or whoever you use to do your books) can't produce both an accurate profit and loss and a balance sheet on a monthly basis, think about outsourcing or upgrading your bookkeeping services. And if your accounting professional isn't available for large portions of the year due to tax work or isn't capable of providing this type of advice, find one who is. We promise they're out there.

Profit Mastery Workshops for Business Owners

Over 97% of the people who attend our workshops say they've substantially increased their understanding of the health, strengths and weaknesses of their companies. Change the way you manage your business, increase your cash flow, and find profits you never knew existed. This Seminar Schedule is for general sessions.

2007 Profit Mastery Dates for Jewelers
Check it out!


FIT Software 
Like having a trusted financial advisor at your fingertips – 24x7. Let FIT do the "what-if" so you won't do the "if only." Get your fully functional evaluation version here

Take the guesswork out of pricing your products. With this Profit Finder wheel, you select a target profit margin and it automatically helps you find the right price every time. $10 purchase

Road Map to Success  - Great Management Tool!
We've taken our Road Map, enlarged (22x28) and laminated it so you can write on it over and over again. At only $26.95, it's a great investment. 
More Info  |  Purchase

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