Episode A1.008 Record Keeping Basics (Monthly, Quarterly, Annual schedule)

Introduction
As a startup in the dream phase, your business is as strong as its foundation.  Record Keeping is one of the most important aspects of that foundation.  Using a series of monthly, quarterly and annual reports can allow you to create a dashboard that will guide your business through whatever the world has to offer.

My guest today is Wayne Coughenour, of My Tax Pilot.  Contact Wayne and his team by phone 804-740-6742, or via his website: https://www.mytaxpilot.com.

Have a great business week.

IBGR - RESULTS Radio Network. Everything a business owner needs to start, grow or exit a business. COME GROW WITH US.

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Show Objective
Learn what numbers need to go into the reports.
Know what report you need to generate each month.
Know what quarterly reports will act as signposts - and what each is trying to tell you.
Know how the monthly and quarterly reports come together for the annual reports and why that matters.

 
Key Concerns:
Without the information gained from each report, founders miss out on opportunities to pivot, avoid pitfalls and capitalize on the funding that investors, acquirers and bankers can offer.

Take a look at these terms and get cozy with them. EY has a great guide that you may find helpful:  The Ultimate Guide To Financial Modeling For Startups
https://www.ey.com/en_nl/finance-navigator/the-ultimate-guide-to-financial-modeling-for-startups

Profit & Loss (P&L), Balance Sheets (BS), Cash Flow Statements (CF)
The profit and loss (or income) statement is basically an overview of all the income and costs your company has generated over a specific period of time and shows you whether you are profitable or not. (EY, Chapter 3)
 
The balance sheet is an overview of everything a company owns (its assets) and owes (its liabilities) at a specific point in time. . (EY, Ch.3 )
 
The cash flow statement shows all cash going in and out of a company over a specific time period. The cash flow statement consists of three different parts: the operational cash flow, the investment cash flow and the financial cash flow. The separation between these three categories provides you with insights on where money is going in and out of the company. (EY, Ch.3 )

For those of you in the US, you may find this helpful:
https://www.sba.gov/business-guide/manage-your-business/manage-your-finances

For those of you in Canada:
https://www.canada.ca/en/services/business/maintaingrowimprovebusiness/managingfinances.html

In India:
https://www.startupindia.gov.in/content/sih/en/search-listing.html?source=managing%20finances

What You Need to Know
Monthly, quarterly and annual reporting allows you to collect the information you need to make strategy corrections, pivots and avoid pitfalls.  Know your numbers.

Build a financial dashboard with CF, COGS, BS, and Income Statements.
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“How to Choose Business Accounting Software”, Inc., by Elizabeth Wasserman.
https://www.inc.com/guides/choosing-accounting-software.html

Know where the gaps are between accounts payable and receivable.  Identify and try to mitigate the lag in payments versus expenses.  It is critical to strategize to bridge this gap.

What You Need to Do:
What’s the safest formula for you to use?
Try Trevor Blake’s from his new book, Secrets to a Successful Startup: A Recession Proof Guide To Starting, Surviving, & Thriving In Your Own Venture.

Double your estimated budget.
Double your expected complications.
Double your project timeline.
Add up those costs in  time and money and then, halve your sales forecast.

What you need to do is be realistic.  Manage your own expectations.  Use a growth mindset and monitor your financial dashboard.


Previous Show: Episode A1.007 Tax & Money Management Systems
Next Show: Episode A1.009 Business Deductions

Written by Wendy Dickinson

* I am not a CPA and the recommendations given in this show do not constitute legal or financial advice. Seek professional advice for all legal and financial matters. 

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