dluxSolutions Success Plan

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A little bit of well-loved data can go a long way in advancing your business.

If you treat ‘em right, your business numbers – all those invoices and bank statements and receipts – they’ll talk to you.  They’ll give you lots of useful and important advice – but first, you have to translate them.

Start with Consistent Data

First things first, stop using spreadsheets and get yourself a QuickBooks subscription (AND talk to me before you do – I can offer a wholesale rate and save you on the listed retail rate).  

In the beginning, QuickBooks is just an empty processor – but once you start feeding it consistent data over a span of several months, patterns and averages will start to emerge.

Just make sure that you update it at least once a month – unless you take the time to feed it the data it needs, the software simply can’t produce the info you need to make decisions in your business.  And the longer you go without updating it, the more likely you are to lose receipts, forget important items, and miscategorize unusual transactions.  

And if you feel like you need help with that level of consistency, just reach out.

Turn Data into Reports

As an accounting and bookkeeping professional, I LOVE the financial reports that softwares like QuickBooks create, but I know that the reports are only truly useful if the data gets entered correctly.  It’s way more than just entering your Staples receipts as “Office Supplies”.

Are personal expenses mixed in with business expenses?  Is there non-operating revenue lumped in with the operating revenue?  Those questions matter if you’re trying to get useful information from your reports – you’re trying to create a set of data ONLY about your business efforts.

Once you do that, you can turn all those receipts and bank statements into truly useful financial reports, like a Profit and Loss Report, that will be helpful for the future of your business.

Turn Reports into Plans

This is where the magic happens, where your carefully organized data starts to become the information you need for future plans and growth.

Are you trying to figure out which successful goods you sell that you should double-down on, or which less-than-lucrative services you should retire?  Maybe you need to find a category to cut expenses to increase your profit margin? You’ve now got a well-oiled data machine that will tell you all of that.

Not only that, but now you have an important baseline for collaborating with other professionals who can help you with your business planning.  

Having good habits for this stuff will keep your investors confident, your lenders at ease, and your tax preparers happy. And – bonus – consistently tracking your operating revenue is good for your company’s stock prices {think BIG GOALS}, too.Was this helpful? You can find even more in-depth information like this, and more, in the new Dlux Solutions online course.  Click here to learn more.

Operating vs Non-Operating Income

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I love being able to pull useful business advice from financial records and reports.

However, the trick to getting good reports is making sure that the data is organized correctly. One recurring problem I see that muddies the waters is a lack of division between operating revenue and non-operating revenue.

Let’s take a quick second to clarify what revenue is and isn’t:

  • It’s the number on the tip-top of your P+L report
  • It doesn’t factor in your expenses
  • And it’s not the same thing as profit (Profit = Revenue – Expenses)

Essentially, “revenue” is the word we use for talking about all the money coming in the door.

But it isn’t as simple as “just” client payments.

From there, revenue gets broken down into two types: the operating and the non-operating (or “other”) type.

Operating revenue comes from the regular money-making activities of your business; and non-operating revenue is pretty much the opposite – money that came from irregular or infrequent activities that aren’t core to your business. (Can you see how that might matter for future business strategies?)

Pretty straight-forward, but just for abundant clarity, here’s a few examples of both:

Operating revenue:

  • Sales of goods and/or services 
  • 3rd parties Licensing or Hosting
  • Interest earned on loans issued, late fees charged

Non-operating (“other”) revenue:

  • Interest earned by your bank account
  • Interest earned on company investments
  • Lawsuit proceeds
  • Rent revenue (if you aren’t a landlord)
  • Sale of an asset (like a building)

Maybe you look at your reports and your third quarter revenue was off the charts. You may start to get excited, trying to figure out how to replicate that success – until you realize that was the month you finally sold the old company building. It was an anomaly that had nothing to do with your day-to-day business activities.

Keeping non-operating revenue separate from your operating revenue is vital for strategic forecasting – if you want to make smart predictions and changes on your sales strategy for next year, you need to make sure you only factor in the money that comes from your operating revenue.

You still need to track the non-operating revenue (of course), but keeping it separate will really increase the accuracy and helpfulness of the rest of your financial reports.

Was this helpful? You can find even more in-depth information like this, and more, in the FREE Dlux Solutions Community. Click here to learn more.

Quick Bookkeeping Wins for the Entrepreneur

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Hey there! If you’re like most entrepreneurs I talk to then you’ve probably been avoiding your books for a lot of reasons. Maybe it scares you. Maybe you’re unsure of what to do when you check those books out. I get it. It can be a scary place to start when you have no clue what to do or what you’ll find so let’s dive in on how to tackle the books in a way that isn’t scary or overwhelming.

1.    Keep the finances separate

I feel like this is a no-brainer but keep your business finances and personal finances separate. “But Amanda, I pay myself from the business, riddle me that.” You should be setting aside 30% for taxes and 20% for business expenses. Feel free to pay yourself the other 50% if you’re a solopreneur. Now the numbers change if you have employees but generally the fresh, solopreneur can start here.

2.    Start with a system

You need a system in place. I cannot stress this enough. A lot of entrepreneurs just hand in bank statements but that’s not really helpful. The IRS cannot see what you purchased at Staples if you use a bank statement. Having a handy system will help you track all the expenses and what you actually purchased. This is great way to prevent an audit.

3.    Categorize all the things

You need to categorize the purchases and the incoming cash flow. Tracking credit card fees, types of services you sell and more will help you make better financial decisions in your business. You can see what sells, what is eating up your costs and more! This also helps when it comes to deduction time. Did the lunch bill come as a client lunch, personal lunch or an employee lunch? Determining what the money was spent on will help you save big time at tax time.

4.    Make it a habit.

Get into the habit of getting personal with your books. The more you know, the more empowered you feel. The more empowered you feel with the finances, the more the business can grow. It’s a win overall. Set aside time weekly or monthly to flesh out the books. I do not recommend doing it quarterly as that’s a ton of work to go through and you’ll overwhelm yourself. Block a day on the calendar and only work on the finances that day. Come tax time, you’ll be thankful you did.

If the idea of managing your books is overwhelming and still a little terrifying, we need to talk. dlux Solutions offers both training and done-for-you services when it comes to your books. You’ll never feel afraid of your books again. Book a consult with us today to discuss how we may be able to help you thrive.