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How to Manage your Cash Flow and Books when you’re Not Good with Numbers

By February 21, 2022February 27th, 2022Cash Management, Profit First

You’ve probably felt it at times looking over your financial statements. “Um… I can read the numbers, but are they good or bad? What are they trying to tell me?” Then you’re told by financial experts to perform a deep analysis so you can run projections and create a budget. That’s a whole slew of more numbers and complicated calculations on top of still trying to simply understand the basic financial statements. So how do you manage your cash flow and your books if you’re just not good with numbers?


“I’m Just Not Good with Numbers.”


Let’s nip this in the bud right now. If you own a gym, you probably got into it because you were a great coach, or you enjoyed helping people get healthy, not because you wanted to do accounting on the side. If you own a real estate business, you likely got into it to help people achieve their dream of being a homeowner, not to be a part-time bookkeeper.


So first off, you’ve set the bar too high. You don’t need to understand accounting at the same level as an accountant. You just need to be comfortable enough to analyze a spreadsheet and determine if this month’s numbers are higher or lower than last month’s numbers. If you can at least do that then you can see trends and make good business decisions.


Second, don’t be so definitive with your statements. Give yourself more credit. Say instead, “I’m not good with numbers, yet.” You can always learn something enough to run your business profitably.


Now we’ve got your confidence up, you don’t have to be left in the dark when it comes to your business’s numbers. We’ll go over the two best options where you don’t need to be a numbers expert to get what you need to out of your financial management.


Easiest Option


Well, it’s always best to hire a professional accountant. It’s our job to help you understand your numbers. Be aware that not all accountants are created equal. They have varied types of expertise and well as levels of experience. For a small business where you kind of need a little bit of everything, it’s best to outsource to a firm that can manage your cash flow, do your monthly bookkeeping, and file your taxes.


But we also understand you may not have the money to hire someone to do it all for you and that’s OK. Like I said before, the most important thing for you to know about your numbers is spotting trends.


Whether you hired an accountant or doing it yourself, spotting trends in your numbers from month to month is vital to understanding your business. If you notice a trend, ask yourself one of two questions… “Why is it trending down?” or “Why is it trending up?” Now you’re getting to the heart of what your numbers are trying to tell you and you can make the best business decisions possible.


DIY Option


Using the Profit First system is the simplest DIY method to manage your cash flow. It basically takes having to be good with numbers out of the equation. The idea is you have all your income go into one account. Then twice a month you allocate or transfer a specific percentage of the balance in your income account to the other accounts. And now whatever the balance is in those accounts, that’s all you have to spend on whatever that account is designated for.


That’s obviously oversimplified, but you get the idea. The hardest part is coming up with your allocation percentages and then dividing up your income by those percentages twice a month.


You would first run a quick Cash Flow Assessment and figure the percentages to allocate from your Income Account to the other accounts. Then twice a month on your allocation day you just have to input the dollar amount that’s in your Income Account into the Allocation Spreadsheet and it will do the math for you.


To make things super easy for you, we’ve created two spreadsheets that will do all the math for you. You simply need to input a few numbers.


For the first two steps below you will need to download the Cash Flow Assessment spreadsheet and Profit First Allocation template, both of which can be found on our Grow Your Wealth Resources page which also happens to have a ton more tools and resources for you.


Here’s a step-by-step breakdown.


Step 1 – Cash Flow Assessment


Get the spreadsheet by clicking the link below and when you have access, you’ll find it in the Cash Flow Management section. You are only inputting numbers into the 8 light green cells on the first tab. Seriously don’t change any of the other cells. The second tab is a reference of generally good percentages for each account based on your revenue number. The percentages on the first tab will change automatically to match the revenue you put in.


Pull up last year’s income statement and put in the numbers it’s asking for. You do not need to get super detailed. Just a decent idea of what you have spent in those categories and then the spreadsheet will compare your actual percent to the more ideal Profit First percent and give you an action on the far right. Make whatever adjustments you can to get as close to the Profit First percentage as possible and then those percentages you came up with will be used in the next step.


Step 2 – Profit First Allocation Day


Get the template by clicking the link below and when you have access, you’ll find it in the Cash Flow Management section. You’ll only need to worry about the first tab for now. You’re done with the other spreadsheet. This one you’ll use every allocation day. Take the percentages you came up with in step 1 and put those in the corresponding place in the template. Only put numbers in the gray cells.


Check out the Allocation Day video below for a walkthrough of this template.


Step 3 – Adjust Percentages as needed and WATCH YOUR PROFIT GROW!


Quarterly, take the time to see where you’re at and adjust the percentages as you’re able to, to stay as close to the ideal percentages as possible. That way as you expertly manage your cash flow, your profit will naturally increase as your revenue does.


If you happen to not be good with numbers, remember, you’re not good with numbers… yet. And you likely already know enough to manage your cash flow successfully and make educated decisions for your business.


Are you feeling like you need some help with bookkeeping, or cash flow, or taxes, or all of the above? Perhaps you’re thinking you can DIY it. But maybe you need a one-time consulting call with a cash flow expert to make sure you have the optimal system in place. Incite wants to help with whatever you need.



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