Understanding the 3 major financial statements Pt 2 – Presenting The Big Picture

In part one, I gave an overview of the 3 major financial statements, what they are and their function.  I defined the balance sheet as the “what?” statement, detailing what you own (assets), what you owe (liabilities), and what your equity is.  I defined the income statement/profit and loss as the “how much?” statement, showing how much you made over a particular period minus expenses, which gives you your net profit over that period.  And lastly, I defined the statement of cash flows as the “where?” statement, showing where your money came from and where it went over a period of time.  Of course all of these statements on their own are extremely important, but their importance is truly felt in how they are used together.  These statements should not only be used to keep score on the finances of a business, but the information in these statements should be understood, analyzed and interpreted, and the information must be used effectively by the business owner to make your business more profitable.  This is where the value of the 21st century bookkeeping professional shines through.

It goes without saying that entrepreneurs tend to lead very busy lifestyles.  In the middle of the hustle and bustle of attempting to turn your business into the powerhouse brand of your dreams, it can be quite easy to forget to see the bigger picture, sit with the cold hard numbers and make intelligent decisions based on your analysis.  Your financial statements are without a doubt the greatest tools to do this, and since us as the bookkeeper are tasked with the responsibility of drafting these statements, it is also imperative for us to develop the analytical ability to become a true asset to our clients through these statements.  It is what separates us from the “bean counter” stereotype of the bookkeepers and accountants of yesteryear, into the 21st century bookkeeping professional who becomes an indispensable asset to whomever they are working with.  This is what we refer to when we at Heru Bookkeeping speak of providing maximum value.

While bookkeeping is extremely important and necessary for any serious business, simply keeping the books in and of itself will not make your business more profitable.  It’s the proactive guidance that comes from the analysis of the information provided by your financial statements drafted by your bookkeeper, as well as the client taking heed to the information and adjusting accordingly, that will really move the needle on your profitability.  It’s easy for a business who doesn’t keep a keen eye on their expenses and liabilities in comparison to their income and assets to dig themselves into a hole.  But with proactive guidance, this is far less likely, and with the business owner listening to the proactive guidance, staying on top of and taking heed to the data provided by these statements while adjusting their practices accordingly, it’s virtually impossible

At Heru Bookkeeping, we make it a monthly standard practice to not only present you with the previous months financial statements, but to also go over these statements with you and analyze them to determine the overall financial picture of your business within the first 10-15 days of the following month.  We will examine how much you have made for that time period, how much you’ve spent, what you spent your resources on, what services or products that you offer that are the most profitable, what you owe, who owes you, etc.  This proactive guidance is guaranteed to make a huge difference that you can not only see in the numbers, but most importantly in your bank account and in your pockets.

If you want to take advantage of the proactive guidance as well as the thorough and accurate bookkeeping provided by the professionals at Heru Bookkeeping, contact me at herubookkeeping@gmail.com or give me a call or text at (267) 314-7223 and book a free consultation.  I can guarantee that you absolutely will not regret it and will see the difference in your business!  Let us make your business our priority and serve you!

Terrence Satchell

Heru Bookkeeping LLC

Understanding the 3 major financial statements Pt 1 -What? How Much? Where?

In bookkeeping, being up to date and accurate with recording transactions and general bookkeeping is obviously a huge and essential part of the job, but it is not the only important part of the job.  In fact, some would quite accurately say that this is only half of the job.  As a 21st century bookkeeping professional, being able to analyze and interpret the recorded transactions to guide your clients financially in the right direction is imperative. 

The best tools at our disposal to do this are the 3 major financial reports, the Balance Sheet, the Income Statement (also sometimes referred to as the profit and loss or the “P & L”), and the Statement of Cash Flows.  I describe the importance as well as the difference of these statements by referring to these statements as the “What?” statement (the Balance Sheet), the “How Much?” statement (the Income Statement), and the “Where?” statement (the Statement of Cash Flows).  Let’s break these 3 different yet equally important statements down.

The Balance Sheet – What?

The Balance sheet has been described as a snapshot of the business at a given time.  It is a cumulative report that shows what the businesses financial standing is for the year up to the end point of the time period that the balance sheet covers. I refer to this as the “what?” statement, because the purpose of the statement is to show what you own (your assets) as well as what its value is, what you owe (your liabilities) in total, and what your total equity is in the business over the time period that the statement covers.  The Balance sheet is very closely related to the next statement that I will be discussing, the income statement.

The Income Statement – How Much?

The income statement is sometimes interchangeably referred to as the profit and loss or “P & L”, but for clarity I will call it the income statement. I refer to the Income Statement as the “how much?” statement, because it, as the name suggests, shows how much your income or net profit is or was over a specific time period.  The income statement is a summary of your gross income minus your expenses, which produces your net income.  The statement is concluded by whatever is your total net income (or net loss) for that time period, which carries over and reflects in the net income field on the Balance sheet for that same time period.

Statement of Cash Flows – Where?

Rounding out our summary of the 3 major financial statements is the Statement of Cash Flows.  I refer to this as the “where?” statement because it answers the question, “from where did my money come from, and where did it go?” over the specific time period that the statement covers.  This statement is divided into three categories, showing where your money came from and went to in your day to day operations (operating), your businesses investment activity such as acquiring assets to help you make more money, and your companies financing activity which, for example, would cover any loans that your business may have taken out to acquire those assets.

In part two, I will cover our role as a bookkeeper in producing, interpreting and analyzing these statements, as well as how these statements should be used together to present the big picture of the financial health of your business.

Please look around the website, and if you are interested in making that very intelligent and necessary move to get an experienced and very thorough bookkeeper to help your business grow to the next level, contact us here at herubookkeeping@gmail.com.  Producing, interpreting and analyzing financial statements so that we make a difference in our clients business’ lives is what we specialize in and what we love to do!

Terrence Satchell

Heru Bookkeeping LLC

Bookkeeping: Creating order out of chaos

When you think of everything that a bookkeeper does for a business, many things come to mind.  Bookkeepers keep track of all income and expenses, classify transactions into the right accounts, create financial statements, advise, assist with payroll and help with tax preparation among other things.  These are the specific tasks that are a part of the regular daily/weekly/monthly life cycle of a bookkeeper.  But if one were to ask me to sum up what a bookkeeper does in one sentence or less, my best answer would be that bookkeepers simply create order out of chaos.

Generally if a company is in the market for a bookkeeper, it is because a problem has arisen that only someone that is a thorough, sharp eyed bookkeeper can fix.  These problems can either be “good problems” or situations that are less than ideal, but either way, a solution to their problem is needed. Perhaps the business is growing to a point where a business owner no longer has the time to effectively keep the books by themselves, and/or they simply can now afford to outsource the job.  These are “good problems”.  Or perhaps the business has never kept accurate books (or had any bookkeeping at all) before hiring a bookkeeper, which would require a massive clean up.  Maybe a business wasn’t happy with whomever previously had the job and would like someone more detailed or professional.  These situations are obviously less than ideal situations to be in for a small business.  

Whatever the reasons, generally bookkeepers are always stepping into a chaotic situation (to varying degrees). Whatever that situation may be, bookkeepers tend to take the ultimate pride in being problem solvers.  Providing value by contributing a calming presence and providing knowledgeable, astute and practical solutions to calm stressful situations, as well presenting those solutions in a relatively simple, easy to understand manner are the hallmarks of a good bookkeeper.  When there are questions that need to be answered about a company’s financial standing, a bookkeeper should have the answers on deck.  This demonstrates our dedication to providing maximum value, which is so important for both clients as well as for our company and for all bookkeepers.  

Simply understanding credits and debits, although crucial and fundamental to sound bookkeeping, is a relatively small part of the job of serving a business.  A great bookkeeper helps the business owner navigate through the difficult terrain that they are sure to come across when attempting to grow and scale a business.  A good bookkeeper is a partner in a sense, and a friend to the businesses in which they serve, taking complete ownership of the job that they are tasked with.  This is another way in which our stated purpose of providing maximum value reveals itself.  A great bookkeeper makes your business their priority.

Make that investment in a great bookkeeper who specializes and takes pleasure in serving and assisting business so that they are the best that they can be.  At Heru Bookkeeping, we put a huge premium on embodying the correct values in business, as well as going above and beyond to do the most thorough job possible. Contact Heru Bookkeeping, and let us create order out of chaos in no time!

Terrence Satchell

Heru Bookkeeping LLC

Heru Bookkeeping, LLC

Entrepreneurs, get rid of that “I can do it all myself” syndrome!

Being industrious, proactive, independent, hard working and (let’s be honest) having a fairly high opinion of one’s own abilities are tell-tale signs of the entrepreneurial type.  These are qualities that can be found in most business owners, as they would not have made the decision to set out on their own and start their own business in the first place without them.  However, there are traps that an entrepreneur can fall into because they possess these generally good qualities that can lead to less than ideal results.  A perfect, and very common example of this is what I refer to as the “I can do it all myself” syndrome.  

Although running a business will always be challenging, many of the day to day tasks that must be performed for a business to be successful can be seen as fairly mundane or even menial.  Of course this is not to say that these tasks are unimportant, as any task that must be performed in order for a business to be run smoothly is important.  These are usually tasks that beginning business owners generally have to do themselves, as many start their business either by themselves or with a very small group of people.  

However, as one’s business begins to grow, and the number of tasks that a business needs to be done also begins to grow, it becomes more and more inefficient for one or two people to, for instance, personally answer every email, while at the same time tending to their growing brand and focusing on activities that directly lead to growing their wealth. This is when the separation between businesses that are ready to grow into powerhouse brands for which the sky’s the limit, and businesses that have ceilings begins. 

Forward thinking business owners generally see this as an opportunity to expand, a chance to bring more people into the fold to help them manage and maintain their growing business while they focus on the things that will grow it further. On the other hand, the more cautious business owner simply sees this as more work that they have to do in order to maintain the business that they have built.  The problem with that way of thinking is summed up with this question; “if you spend most of your time simply maintaining your business, when will you have time to actually grow your business and by extension your wealth?” 

Bookkeeping is one of those activities in which many business owners falsely feel as though they can simply do themselves.  And while some who do their own bookkeeping do a passable enough job, it can be very unwise to take on that task without at least consulting with a professional bookkeeper, who is trained in that area and knows exactly what they are doing.  This is even more true in the situation of someone whose business is growing at a rapid pace.  At some point it simply makes more sense to trust a professional, who not only knows what they are doing, but specializes in all aspects of bookkeeping and takes pride in being the best.

Not only is the extra time saved that can go into, growing the business, vacationing with family or simply enjoying the fruits of your labor however you wish a direct benefit, but you also benefit from working with a professional who from doing the books and generating the financial statements, can then analyze the data and help form effective business strategies and solutions.  This has a direct impact on your profit by either saving you money or making you more money.  Having a sharp eyed bookkeeper also helps tremendously in organizing your records for tax purposes, so that everything is in order. By investing in a bookkeeper, a business owner turns a task that they do to simply maintain their business over into the hands of experts who help grow their business.

If you want to join the ranks of the forward thinking business owners who want to preserve and manage their time more efficiently while growing their business the intelligent way, then you have come to the right website!  Contact the talented and knowledgeable professionals at Heru Bookkeeping LLC at herubookkeeping@gmail.com or give us a call at (267) 314-7223 and let’s schedule a free consultation.  I can give a personal guarantee that you will not regret that decision and will see the benefits of making such a wise decision almost immediately.

Terrence Satchell

Heru Bookkeeping LLC

Establishing your brand! (Persistent and Consistent)

One of the most interesting things about attempting to run a successful business is getting more familiar with the concept of branding, and making your particular brand stand out and actually mean something. This is generally done through your actions within your business, as well as through clever marketing techniques. For me, branding is not just a name, logo, color scheme, and a slogan, but it is the overriding philosophy that you employ that makes your business unique.

The way that you connect and engage with customers and clients, whether they are ongoing clients/ customers that you have had for years or still in the prospect stage. Your willingness to provide maximum value and to go above and beyond to make sure that your clients are happy with your work. Your ability to project a sense of something bigger and more personal than a simple business relationship or a transaction. Your ability to inspire loyalty. These are all things that are very crucial to branding, and establishing a long term brand that lasts.

Of course the big challenge is finding out exactly how to go about establishing these things in the minds of those who you are trying to attract. As a business who is still trying to find their way, this is perhaps the biggest breakthrough that must take place if it is to become successful. The best way to establish a brand that has integrity is to be two things at all times: persistent and consistent!

Be persistent in understanding that long lasting brands that have integrity are not built in a matter of days or months, but sometimes over a period of several years and even decades. It is very important to be persistent in the sense of never quitting on yourself, or your brand (first and foremost), and never wavering from your ideals, even when it is the easier choice to do exactly that. There will always be moments where it would be easy and beneficial in the short term to go against your ideals and to do things that either you don’t agree with or you initially set out specifically not to do. There will be times when things are moving slower than you want and the temptation to fold will be there. It’s extremely important to hold firm and stay the course that you’ve set for yourself.

And you must be consistent in your ideals at all times. Once you begin to establish a certain (positive and productive) aesthetic or culture within your business, it is always best to stick with it so that when people see your logo and your colors, they know what it represents, and what to expect (hopefully nothing but the best!). and when they hear your voice or even see your promotional material, they know that what they hear and see is sincere and not just you trying to sell you something. As the popular saying goes, it’s important to “keep that same energy”, in good times and in bad times. Consistency is the cornerstone of trust, respect and in my view, building a powerhouse brand.

Terrence Satchell

Heru Bookkeeping LLC