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Key Idea: Face The Facts Often

Hattie introduces Jim Schell and the first of the seven key ideas within this episode.  How do you answer the question, "How's business?"    More...

Questions for this clip: 1 | 2 | 3 | 4

Think about it

Do you have software that makes it easy for you to create financial statements often?

Clip from: Learn to Use Your Financials; Track your Numbers

USA and around the world:  Let us all get our houses in order!  Keeping track of business... it is the job of everyone in a business  The best way  to do it is to read, grasp and act on those monthly financial statements. If you share that information and give everyone bottom line accountability through the key ratios, your business will rally. You'll see an impact immediately!

In this episode you meet three small business owners. Two have gotten control of their financials and one is working to do better.

Unfortunately, most of us do not work closely with our financial data.  We all must.  With all the features built into today's accounting software programs (be sure you have your latest upgrades), any owner should have the numbers they need to run their business with the push of a button.

Opportunity Knocks, LLC

The Staff of Opportunity Knocks,

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Year Founded: 1996

Face The Facts Often

HATTIE BRYANT: (In the Studio) Hi, I'm Hattie Bryant. Today you will meet Jim Schell. He started and sold four businesses and in his "retirement" he stays busy advising business owners. He is the author of six books and the co-author of Small Business for Dummies. His newest book, Understanding Your Financial Statements, is my favorite. (Voiceover) We'll also take you inside three very small companies that have a fully automated accounting system.

JIM: If you are, let's say a cabinet maker and you decide you can make the best cabinets in your community you open a business. Yet, you don't understand that cabinet making is a very small part of opening a business. Once you open that door and hang out your shingle, you are no longer a cabinet maker. You are a business owner who happens to make cabinets. It's part of the DNA of a small business owner or entrepreneur. Ask a small business owner, "So how's business." He will always tell you, "Sales are up." So how big is your business? He will always say, "A million dollars in sales." He will never say, "Made $100,000 dollars last year." Or, "I made a return on sales of 10%." Never hear that.

HATTIE: That's one of your goals then as a mentor, teacher, coach to small business and that is to get us to measure ourselves with more real numbers.

JIM: Yes, focus on return on sales for instance. How much are you making? When you sell a dollar do you make a nickel, a dime, fifteen cents? Focus on your current ratio which is your balance sheet figure. Focus on debt to equity to increase what you own. You have to pick something to focus on. And the reason you have to do it is because you talked, Hattie, about making a game out of it. A game is watching these numbers improve. And everybody understands it.

HATTIE: You've told me I need to close my books every month. When then do I need those numbers available to me?

JIM: Approximately right now is better than exactly right later on. What that means is that the fresher your figures are the more useful they are to you. The typical small business probably generates those numbers maybe 15 to 20 days after the end of the month. By then the numbers are cold. The knowledgeable small businesses will generate approximately right numbers 5 days after.

HATTIE: (voiceover) Now, let's meet Noel Hanson a 35-year veteran business owner who told us about his experience with new software.

NOEL: I don't have a CPA in this company. I don't ever want one. I don't need it. It's kind of like running a car. I just need to know how to turn it on and drive it. I don't need to know how it works. And I feel the same way about this software. I just want to be able to turn it on and use it and have it give me what I want.

HATTIE: (Voiceover) Located in Pasadena, California, Noel's business, Hanson and Company, provides consulting to non-profits with a team of four on the payroll.

NOEL: I'm actually going to set up a separate set of books which I can do with this. I can track it which is good for auditing purposes. I can give it to my accountants and they can perform the audit on it. And I can provide the audit to the city. This is a very, very useful tool for me.

HATTIE: (Voiceover) Chris Schatte and his wife Joni started their business, Texoma Lawn and Garden in 1994 and now have 5-10 employees depending upon the season. Located in Vernon, Texas, they recruited their son Michael to install new accounting software.

MICHAEL: It only took about an hour to get it all down. Then after that the wizards help you a lot. It's just fairly simple and they can do it without a kid like me.

HATTIE: One of the things I did read in the book is you made the comment that no consultant is worth their salt in working with small business unless the first thing they do is walk in the business and say, let me see your financials.

JIM: Right.

HATTIE: What if you say "Let me see your financials." And they say, "here's my sack of invoices and here's my sack of bills," it's a cash register mentality, what would you say to me?

JIM: This has happened. I guess I would figure out if I really wanted to help you or not and if I didn't I guess I would say I really can't help you without your financial statements.

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