Basic Accounting

My wonderful friend, Sally Massagee, who is a CPA and I recently began periodic meetings to discuss our businesses and to support each other with business growth. Our first meeting was wonderful and we both came away with some great ideas for moving forward. I am definitely not an accounting person and so our very different viewpoints made for an interesting discussion.

I have a bookkeeper that handles most of the tasks related to financial record keeping for me. She inputs my receipts, expenses and income into QuickBooks. Every coach needs to have a system for logging income and expenses and I believe QuickBooks to be the best. Aside from a bit of complicated setup, the software is so simple I can use it myself if I have to! But CPA Sally was not content with what I already had in place. She wanted – no – she insisted, that I start reviewing my financial statements with her each month. Because I am the coach who works with other coaches to be better business owners, it’s a little embarrassing to admit to her and to you, I had no idea what those financial reports meant.

Sally was not put off by this confession at all. She says, “Your financial statements are trying to talk to you. They have many pleasant things to tell you in their own little voices”. She pledged to teach me to understand their language. The most important financial statements to review each month are the balance sheet and the profit and loss statement. The balance sheet tells you about your assets, liabilities and equity for the designated period of time. The profit and loss statement tells you how you did overall in making money during that period. I had to agree that sounded important.

If you don’t have an accounting system set up yet, you need to get one as soon as you can. You aren’t really a business without one. If you have your system in place, I challenge you to get those two financial reports for last month or the year to date and see what the little voices are trying to tell you.

My first session with listening to my reports with Sally was fascinating. This gal should be a coach! We sat down with the balance sheet and the profit and loss statement for my business for last month and she proceeded to have me get quiet and “listen to whatever the reports might say to me”. She was very cool with no agenda attached to it as though she had coached for years.

The first things the reports said to me were all emotional – they said “this is very complicated stuff” and “you’ll never really get all this” and “you don’t even know what some of this stuff means”. Slowly, by not letting me off the hook with that, Sally helped me hear other things as well. They also said – “this part of the business made more of the income than the other two parts last month.” They said – “the equity in the business (the stuff that I own) is much bigger than the liabilities (money that I owe)”. They said – “at this rate, the amount of gross income I am making this year is more than I realized”.

Then we talked about how to use the reports to track goals over time. You can make a decision based on the financial information and check at the end of the month for results. For example, the sales of my e-book were a “low hanging fruit” this month – meaning I could spend a little time to make a significant income return in that area. Next month, you can compare how much time you spent on the project to how much income was generated by the activity. Through this process, you will learn over time the key indicators of your business that help you decide how to most productively use your time to generate income. I know that doesn’t sound very coach-like, but it does sound like an entrepreneur. It is vital to tap into your inner entrepreneur in order to continue to do the coaching work that you love – even if it means learning to hear the voices in the financial reports.

Janet Slack of Life Adventure Coaching is a specialist in helping new coaches, therapists and consultants create the thriving business of their dreams. Find more business building ideas and learn all the details that you need to know as a coaching entrepreneur at http://www.biztipsforcoaches.com/blog/. She recently released Mind Your Own Biz: Discover the Secrets to Creating a Successful Coaching Business a step by step guide to starting your coaching business right.

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