Are You Financially Savvy? You Need 20/20/20 Vision

Posted by | November 19, 2014 | Accounting, Entrepreneurship | 7 Comments

The following is a guest post by Emily Chase Smith, Esq., the author of The Financially Savvy Entrepreneur.

Emily can be found at EmilyChaseSmith.com and on Twitter at @EmilyChaseSmith.

Emily Chase Smith

Know Your Numbers: Have 20/20/20 Vision

By Emily Chase Smith

 

Remember that Middle School feeling of finding out the cute boy sitting next to you in Math liked the same obscure emo band you did?
“You like My Chemical Romance??? Me too!!”

Fast forward a few decades and shift to accounting and you’ll know the joy I experienced talking to Kahuna Accounting. It’s a nerding out of a different stripe, but nerding out all the same.

Kahuna and I agree that having your finger on the financial pulse of your business is just as important as marketing, sales, leadership, staffing, culture, and systems – perhaps even more so because it allows you to do all those things. Money is the pavement under your Ferrari. Without it, you’re just spinning out in the dirt.

Kahuna helps you gather, organize and prepare your financial information in a way that you can use. The question arises: how do you use this fantastic information? The answer: one consistent hour a month divided into 20 minute blocks. I call this 20/20/20 Vision. Here’s how it works.

Each and every month Kahuna gives you
– Profit and Loss Statement
– Balance Sheet
– Income Statement
– Cash Summary

The First 20

When your appointed hour arrives, start with the Profit and Loss Statement (P&L). Set your timer for 20 minutes. This first 20 minutes is the review and circle time. Look over the categories and numbers. Circle anything that stands out – either in a good way or a bothersome one. Spend the full 20 minutes even if you think you don’t need them.

The Middle 20

For the middle 20, set your timer again, turn over the P&L, put your pen down and let your mind tiptoe through the tulips. Really let it run. You’ve just spend time learning your numbers, let your mind make the connection between the plain data on the page and the real full-color reality of your business. What’s working? What’s not? What can be shifted? What’s taking time, but not delivering? WHO is taking time, but not delivering? This is you and your financials masterminding. Again, take the full 20 minutes to just let your mind think – no notes, writing – just thinking.

The Last 20

For your last 20, pick up your pen and set it to a fresh piece of paper because you have some ideas itching to become reality. Write like the wind. Here’s where it gets really good. At the end of this 20 minutes, guess what you have? An action item list. Based on the financial realities of your business.

POWERFUL!

One hour a month. Ratchet it up to one hour a week if you’re new or you have big decisions to make. This is the most life-giving time you will spend on your business – and it’s all derived from the financial reality of what’s happening in your business.

Note: There’s no prize for making it tough. If you find yourself dreading the hour when you see it on the calendar, what can you do to make it more enjoyable? Can you do it in a beautiful natural setting. I’ve been knowing to review more than one P&L beachside. How about adding a glass of your favorite wine or a bowl of ice cream?

Will you do me a favor? After you’ve engaged in your first life changing 20/20/20 Vision session, will you tell us in the comments what you learned about your business so we can all learn from each other?
 
GET A FRESH FINANCIAL START FOR 2015  

About Emily Chase Smith:

Emily Chase Smith, Esq. is an author, speaker and financial business coach.

She’s is the author of The Financially Savvy Entrepreneur: Navigating the Money Maze of Running a Business with Career Press and the host of Money Morsels: Small Bites of Money Wisdom for Business Owners.

Emily’s a former practicing bankruptcy attorney bringing the lessons of from the financial morgue, The United States Bankruptcy Court, to help business owners avoid financial peril by clearly understanding the financial elements of their business to create increased profitability and financial security.

Emily can be found at EmilyChaseSmith.com and on Twitter at @EmilyChaseSmith.

  • I love this simple and strategic approach to developing an action plan based on the start reality of the numbers. Too many entrepreneurs and business owners make never-ending to-do lists based on their gut instead of hard data. Good stuff from Emily here!

  • Brilliant! Nice and simple yet totally focused. Awesome post!

  • Josh brown

    Awesome post, Emily! I would expect nothing less 🙂

  • Thanks for stopping in Josh! Agreed – Emily is the real deal!

  • Great comment James, and I love your website! We’ve seen a lot of entrepreneurs who get anxious about the numbers and Emily is probably better than anybody at helping us think about numbers while actually providing some freedom and peace of mind. Glad to see you here!

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