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Accounting System a Mess? Fix it Fast!

By November 25, 2020Accounting, Profit First

Mindset Change

 

“Accounting is a necessary evil.”

Geez! That sounds like a prison sentence where you are stuck having to do something even though you hate it. We can never get excited about something if we think it’s evil.

Accounting is necessary. Not evil.

When it’s approached properly…

  • Your accounting efforts will produce financial statements that give you insights into your cash flow.
  • It can help you see if your gym is making enough off its services compared to what you are paying the coaches to perform the service.
  • Accounting is going to show you trends in your expenses. Seeing bad trends makes you aware of spending habits that need to be adjusted.

Using accounting as the tool it should be will help you experience a financial awareness worthy of your noble purpose.

Software such as QuickBooks makes accounting so easy.

When using QuickBooks, a gym owner doesn’t need to know debits and credits and T accounts or understand if assets increase with a debit or a credit or how the balance sheet is connected to and affects the profit-and-loss statement.

Because software makes bookkeeping easy, you can develop the skills to do your own accounting. Just like your members don’t really need to go to your gym to get their fitness. They can do it at home.

There is a better way.

You know that those members get a more efficient workout at your gym than they could coming up with their own thing at home. They also free up time spent trying to decide what they should actually do—at your gym they can just show up and follow directions.

I believe your time is better spent focused on higher-value activities than on day-to-day bookkeeping.

You can do all the coaching yourself, too, but most microgym owners know they need to let other coaches take over in order to grow a sustainable business.

Further, I’ve found that gym owners who “can” do it themselves don’t do the accounting regularly enough to get any use out of it. It is the task that is most often set aside for other higher-value activities.

Here’s a typical scenario…

During tax season, I let a microgym client know we can get started on their tax return as soon as they get us their financials. They proceed to tell me they need a couple of weeks to get the data to me because they “got behind” on keeping their books up to date.

If this situation feels familiar to you, I strongly recommend getting this task off your plate.

Hire an in-house accountant, or… better yet, outsource to a tax genius.

If “I can do my own accounting” is one side of a coin, the other side is “accounting doesn’t make sense.”

This is just an excuse to give up on trying to learn anything about it.

I’ve only done one muscle-up in my life. They just don’t make sense to me. Then again, neither did linking pull-ups or double-unders, but now I can do both because I had proper guidance and instruction as I progressed and put effort into it.

You can learn enough about accounting so that it makes sense to you.

Leaving Money on the Table

 

“But I just need to do enough accounting so I can file my taxes”—if you believe this paradigm, you probably only update your accounting once a year.

Do you remember every dollar you spent last week? Unless you didn’t leave your house, chances are you can’t. How are you going to remember what you spent 11 or 12 months ago?

You end up doing yourself a disservice when you only focus on accounting for tax purposes.

For one, as tax geniuses, we know from experience that you end up leaving tax deductions on the table. They are completely missed. Office supplies, internet, travel and auto expenses are some common ones.

Missing deductions means you overpay on taxes.

If you’re of the mindset, “I don’t need accounting. I’ll just look at my bank balances,” know that the Profit First system leverages this behavior so that you can indeed just look at your bank balances and get a feel for things.

That said, a better paradigm is: “I do need accounting and I can just look at my bank balances.”

With Profit First in place in your business, you will be able to look at your bank balances to help make decisions.

Without Profit First, just looking at bank balances leads to lots of overdraft charges. It can also give you a false sense of security when you see a high balance and forget about the checks you wrote or large expenses that are coming up soon.

We can always find an excuse to put something off.

Maybe you don’t feel like your accounting knowledge is good enough.

Maybe you don’t feel like your bookkeeping records are clear enough.

Maybe you feel like your business is too small to worry about a formal cash-flow management system.

So you procrastinate and settle on “thinking” about doing something.

Maybe you think about carving out some time in your already-too-busy schedule to become an accountant.

Or you just simply plan on waiting until the business hits some unknown magical revenue number.

The past doesn’t have to affect what you do in the future.

Following the Profit First system will let you create a future of owning a profitable gym, with sound accounting, healthy cash flow and great take-home pay.

Schedule your Free Planning Session today for practical advice customized for you.

 

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