I'm definitely a right-brained sort of gal. That's probably why I'm a writer. But as a business owner, I have to channel the powers of my left brain to run the accounting end of my business.
This makes my whole brain hurt.
Enter SCORE Peoria. SCORE (Counselors to America’s Small Business) is a national nonprofit association dedicated to entrepreneur education and the formation, growth and success of the nation’s small business. I attended an awesome workshop at their offices today (located in the Heartland Partnership building) called Financials: Mastering Cash Flow and Profits. In preparation for the two-hour seminar, I drank an extra cup of coffee and took four ibuprofen. Turns out, I really didn't need it (well, the coffee, maybe).
David Mills is a CPA and the owner of Business Management Solutions, an accounting and financial services firm with offices in Peoria and Morton. Don Rohn, SCORE Peoria Chapter Chair and an old friend of mine, referred me to him personally a few weeks ago when I had questions about the checks and balances for Kennard Communications. He spent over an hour with me going over self-employment tax ramifications, dumbing down accounting terms and answering even the most basic questions that my right-brained mind just couldn't get my head around.
I was thrilled to see that David was one of the speakers at this workshop today. While last time we met I was looking for answers to questions I had, today he gave me not only valuable information regarding the accounting side of my business, but questions to ask myself to enable me to stay on track financially from here on out.
Among those questions were:
Did you create a job for yourself or a business?
Do you have good advisors around you who have your best interests at heart?
What's the biggest money maker of your business and how can you capitalize on that?
Do you have a budget?
In addition, David took the time to painstakingly explain four very important (yet sometimes grossly overlooked) bookkeeping aspects of a business, no matter how big or how small:
1) Profit/Loss Statement. This document summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year. These records provide information that shows the ability of a company to generate profit by increasing revenue and reducing costs. The P&L statement is also known as a "statement of profit and loss", an "income statement" or an "income and expense statement".
2) Balance Sheet. This is basically a snapshot of a business’s financial condition at a specific moment in time. It's called a balance sheet because the two sides balance out. This makes sense: a company has to pay for all the things it has (assets) by either borrowing money (liabilities) or getting it from shareholders (shareholders' equity). I'm not quite sure how to transition this to my business at this time because I am so small, but at least I know how to do one now.
3) Statement of Cash Flow. Otherwise known as, "Where'd all the money go?" This piece of accounting records the amounts of cash and cash equivalents entering and leaving a company. The three main components of a cash flow statement are 1) operations, or how much cash is generated from a company's products or services; 2) investing, or any changes in equipment, assets or investments, and 3) financing, or changes in debt, loans or dividends.
4) Budget Sheet. Since my work bottom line is so closely tied to my personal bottom line, this is (in my opinion) one of the most important and useful things for ME as I grow my business and support my family. David's advice was key: even if you don't know for sure what some of your expenses are that first year, get a ballpark figure and from then on out, keep diligent track of ALL business and personal expenses. From what I gather, the budget sheet is key and feeds into the other financial paperwork mentioned above.
I'm not going to pretend that I completely understand all these bookkeeping nightmares (I mean, tools...) after a two-hour workshop. I'm sure the majority of business owners out there are much more well-versed in the accounting side of their businesses than I am right now. But after meeting with David, I feel as if I have received enough advice to build at least a skeleton of a bookkeeping practice for my own little copymarketing firm.
If any of you are in the same boat as I am, I highly recommend that you contact David Mills. We right-brained people are easily frustrated by numbers and I am truly thankful to have a left-brained person in my corner who is able to explain the basics to me without me leaving with a huge migraine.
Thanks to David and to SCORE for providing a great workshop!
For more information on SCORE, visit their website HERE. You can contact David Mills, CPA at 309-266-5700, or visit his website HERE.