Get the full length (over 3 hours of instruction) recording on How to Forecast Your QuickBooks Statements in MS Excel in my Knowledge Store for only $57.
My wife asked me a while back when we happened to be getting in a bunch of new clients who all had financial disasters on their hands how they got into that situation in the first place?
One of the most important aspects of running a business is planning. My wife was not being mean, she was coming honestly from a place where she watched me spend hours upon hours setting up budgets in excel and tracking everything daily in QuickBooks and looking at our financial information 6 ways until Sunday before making any moves. When I transitioned myself from a full time job into self employment I knew that I was able to live comfortably on what I was earning in salary. So it was a fairly simple formula for me. I just had to look at what I could charge in terms of an hourly rate and then see how many hours I needed to be billing consistently in order to make it work. I wanted to be sure it was an EASY target because I was so afraid of not making it – not being able to pay my bills – and in those days I was renting, didn’t even have a mortgage.
So my answer to my wife was that not everyone is an accountant. In fact most people aren’t, but many people have a great idea or an amazing skill and they have the same desire for real freedom that I have. So they set out and often start making money right out of the gate. As long as the money is coming in it doesn’t concern them to have any real tracking of it. That is until the tax bill comes and then they see how much money they made and have to pay taxes on it, and now they’re wondering where all the money went.
The first thing everyone should do when they start a business is consult with an accountant and a lawyer to find out everything they need to know. As far as projections go, they are critically important at the beginning and they become more important as you go. Once the business is going then you want to plan on setting aside money so you have capital to fund your new ideas and the general growth of the company. The only sure way to do this is to have some projections and to monitor them in comparison with the actual results every month.
This week’s web cast will show you how using a simple tweak you can start to analyze your existing Profit and Loss statement in a way that many people don’t, and should. Then I show you how you can take that a whole lot further once you export the QuickBooks report into excel.
