Q: My current clients 50% of them are low volume; another 25% either non-paying or making delayed payments. 10% client’s monthly volume is reducing due to their business situations. Due to these I am not meeting my monthly expenses and not taking any withdrawals from Business.

This is the reason I took up your training and already know going through and implementing your training will transform my situation completely. I have also signed up for the Sales Bootcamp Aug 8-10th.

Completing the training and putting your ideas into practice and changing to Niche specific clients all going to take some time (few months), any encouragement/advise you can provide to go through this transition joyfully – from loss making to profit and from non-niche, non-paying to clients paying upfront!

I was writing about this today about…

What advice I would give someone who’s just getting started in accounting…

So someone that I don’t remember if they said a student or someone that’s at the beginning of their accounting career or something like that…

And I said a number of different things in there…

But one thing I said…

Which I think is huge…

I went through university, I went through and worked a job in accounting.

I got a CPA license, all that crap…

And still I really did not understand…

I really did not actually understand the way that money sort of works…

And the way that debits and credits work…

The way that the income statement works…

The way the income statement flows into the balance sheet…

The way the balance sheet works…

Like I didn’t really understand that until I actually did my personal finances…

So if you’re ever like…

People don’t understand that the personal situation…

The personal income statement…

And the personal net worth statement…

Is exactly the same in principle as the business income statement and the business balance sheet.

I actually think about it like…

I remember when I was in school, I always learned like…

Assets equals liabilities plus equity.

And I always thought that was weird.

Assets equals liabilities plus equity, right?

But I never, I never think about it like that.

I always think assets minus liabilities equals equity…

Really that’s kind of from a business perspective.

But then also, you know, I also think about like…

Assets minus debts equals net worth.

So I mean, and honestly it’s the same.

It’s all the same thing, right?

This is just a way to say it for business, right?

These are using the business terms, assets, liabilities and equity…

Assets and people do kind of say assets and personal life or they might say money…

Really assets I think still works for personal life…

And then average person calls a debt…

Money that they owe other people which gets them to their net worth.

And that’s really personal.

But I mean like when you look at your business…

Like in your example, you’re like, I’ve got a lot of clients but some of them are low paying, some of them are here…

I’ve also got contractors, like you’ve got all these levers, right?

So if you don’t actually go through and do this in your personal life…

This is where I actually learned how to do accounting…

And this is where I actually learned what it meant and how, like what things in reality affect these numbers.

Because that’s the big problem is…

Sometimes accountants want to manage the numbers, they don’t realize that the numbers are just a reflection of actions in reality…

And the best place where you can learn this sort of exercise is just your personal situation because if you go through…

You look at your assets, you look at your debts, you look at your net worth and then you think, okay, what kind of behaviors increased my assets…

Lower my debts and increase my net worth…

And so that’s kind of on the balance sheet, net worth statement side.

But then you’ve also got the income statement…

So you’ve got income and we’re going to just simplify it…

And then we’ve got basically profit…

And this is kind of on the business side, right?

So the business side, like I said…

And then on the personal side…

And this is huge for clients too…

But honestly like this is just until I really understood this…

I didn’t know anything about accounting.

I can read a 10K and I could do journal entries and stuff…

But I didn’t ever feel it because it was never really real…

And I never knew how it worked…

What do I change to actually get these numbers to change?

It just didn’t make as much sense.

And then here we’ve got income expenses and then I mean maybe you could call it discretionary income…

Or you could call it savings…

If you actually actually save it…

But if you’re having problem in your business…

And you’re having problems getting the numbers to work…

Getting your income statement to work your costs…

Because I had this problem too, when I look at my business last year…

Last year we grew the business huge, but we didn’t have a good profit margin.

We just focused on growth, growth, growth, growth, growth, but we didn’t make good profit margin.

Now I’ve restructured the business.

I’ve totally restructured the way we are doing sales, the way we are doing marketing.

I’ve also restructured the way that we’re hiring and even though we had probably five times as many people this year as last year…

Our profit margins have tripled from what they were in the past.

So I figured out how to do that in my personal life when I was first getting out of debt…

And then I figured out how to get sales and then I took everything I learned before about cost cutting and everything like that.

Put it into my business and also started to hire people the right way.

Started to restructure the way we did marketing…

And started restructuring.

We did sales and so…

But I take the principles that I learned in my personal life and I applied them to business…

As opposed to like trying to help people with business…

So whenever someone’s an accountant and I want to help somebody with their finances…

I want to be a financial coach, and I find out they’re broke.

I’m like, dude, take your own medicine. Take your own freaking medicine.

So in your situation, I would really sit down and go through all four of these financial statements.

One, two, three, four.

Go through all of them and then start to make a plan on each of them.

What do I need to do to in my actual personal?

I pay myself more and spend less money and have a higher over overall income and higher savings.

What do I need to do in the business?

Do I need to get rid of some contractors?

Do I need to restructure some of these client accounts?

Do I need to get more clients?

Do I need a higher quality of revenue, higher pricing for the work that I’m doing, am I just lumping everything in together and I’m not splitting out sub account management with monthly accounting and outsource CFO or controller work?

Am I not splitting out tax planning and tax prep and I’m just lumping it all in with low end prep fees?

Like we can dig into all this, but what is the problem on the income side and then on the expensive side?

Is it the contractors?

I think in your case you have an office.

Is the office too expensive?

Is it needed at this point?

What are the other things that we’re spending our money on where it’s not…

It’s not contributing to income growth and profit growth…

Because as you increase expenses guys, I’m always looking increased expenses.

I’m always looking to increase expenses but they got to be on things that are growing income and growing profit.

So when we look at that, that’s what I’m thinking about is…

Make a plan on each of these…

And then going up into here, same thing, assets, debt, net worth.

How long is it going to take us to pay off any debt that we have?

Student loans, house, like what’s the timeline specifically?

And then, you know, in the business as well…

If we have debt, what kind is it, how long can we pay it off?

What are we doing to grow assets other than just the…

Is it just really like the net that we’re bringing in from the business?

Is there anything else?

Also, can we turn some of this more into cash if we’ve got AR or something like that.

Can we start billing upfront instead of billing at the end?

I think we talked a little bit about that.

I would go down and list out for each.

I would list, go through each of these financial statements.

And then for each of these financial statements, I would list out the key problems with each…

What is the problem that we’re having here?

List out the problem that we’re having here…

List them out.

And then if you go through in week one, that new way of thinking training…

And you start actually prioritizing them for each of these financial statements…

You should have key problems that you need to focus on fixing…

That are gonna make the biggest impact on doubling your income…

Doubling your revenue…

And that’s how I would think about it…

Because to be honest, everything that you’re dealing with right now…

And we’ll go into this more when you come down to the bootcamp…

I’m happy to walk through some of the stuff with you as well.

Everything that you’re dealing with right now has a simple answer…

Because I know you’re doing enough in sales, right?

To be able to make a good net.

But you’ve misorganized that.

You’ve hired too many contractors.

You’re overpaying people.

People think that contractors are so great and they are, if you’re looking to stay small…

But they’re not…

It doesn’t make as much sense as hiring people on full time, on a W-2 basis.

And then you actually will get a much fairer deal and much more committed people if you do that.

But in the beginning it’s great to do it…

It seems like we’re probably overpaying with what I know you’re doing in sales…

And then the quality of revenue is too low and we need to work on redoing that.