April 3, 2025 • 31 mins
In this episode of Peace Luv Biz, Steve and Mary tackle one of the biggest stressors for business owners: Understanding Financial Reports. If you've ever felt overwhelmed by profit and loss statements, cash flow reports, or balance sheets, this episode is for you.
They break down why these reports matter, how they impact your decision-making, and how mastering them can help you run your business with confidence. No more guesswork, just clear, actionable insights to help you achieve financial peace of mind.
Key takeaways:
✅ How to read and use your profit and loss, cash flow, and balance sheet reports.
✅ When to invest in growth...and when to hold back.
✅ How financial trends can help you adjust your strategy.
✅ The power of setting realistic budgets aligned with your goals.
Be sure to subscribe and visit www.peaceluvbiz.com for more expert business and financial insights!
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:02):
Hey everybody, welcome to another episode of Peace Love Biz.
I'm your host Steve Higgins.
I've just been connecting and trying to encourage communication so my name's a littlefunny today.
What did I end up going with?
Yakety Yakason?
no!
Olive Branchman, that's right.
We're connecting.
Yeah.
(00:22):
Reach out that olive branch.
Yeah, that's good.
Mary, how you doing?
I'm hanging in there, I'm hanging in there.
We've got, ooh, 11 days, 11 days, and then I get to sleep.
April 15th, tax deadline day, it's coming up.
(00:47):
Anybody now we're doing extensions for.
I think I'm at...
I have a total of 16, 18 extensions right now.
So definitely not a tax year.
Love that.
Yep.
That's not to say that anybody that needs help and will need an extension reach out to us.
(01:09):
Go to peacelovebiz.com, submit mission form in and we'll take care of it and you know, getyou squared away.
Yeah.
Today's theme, dude, yeah.
Honestly, I was just thinking about how...
(01:29):
anxious stressful and I'm not the one that's doing the taxes I'm the guy on beating thestreets kind of thing so yeah I think I I've already decided that I am getting taxis and
osmosis through Mary but some of some of the client stories are a little crazy this weekthat we're probably not going to touch on too much but the theme for this
(01:59):
weeks episode is on understanding your numbers for peace of mind.
Which it's an important topic and there's way too many people out there that are justgoing blindly.
They don't look at any reports and they don't have any accounting software.
There's so many different examples and I'm getting stressed and anxious just thinkingabout them.
(02:25):
And we're not even in that position.
So.
you know, if people are avoiding looking at numbers if they don't know where they are inthe business and they're just going blindly, that's a...
I love how we keep going to red flags.
is, this is what they're doing is they're looking at what their balances and their bankstatements.
(02:47):
They're thinking about what outstanding invoices are coming in and going, okay, I can makethat work.
that's not, yeah, I don't, you're, you're asking to have mental health problems.
You're asking to have physical health problems.
Cause the stress of that.
(03:09):
is insane.
It's the stress of not knowing and just running on that objective or that thought process,it's gonna take its toll on you physically, but on the business, you can't run a proper
business that way.
That's like you have the business having a cold or having a more serious illness and younot treating the symptoms and just trying to...
(03:40):
You just using Tylenol or other brands are available obviously.
Taking out aspirin to, you know, clear out an infection.
Like, I don't know, like, you're you're not diagnosing the problem.
well, and for me, that's a red flag for me.
Cause I go, okay, what shady shit are they doing?
(04:02):
Mm-hmm.
You know, what shady shit are you doing?
And we've seen it across this week, I would say this week, in the last two days, we haveseen it where we have people expensing their loan payments.
That's not an expense.
So you doing your own books and expensing loan payments, and we have multiple people thatwe've caught this, and I'm like, that's not a thing.
(04:30):
That is not a thing.
You're doing your own books.
There you go.
There you go.
Yeah, and all their undoing work that we've already done to go and fudge numbers andthat's just an even bigger red flag but...
It...
(04:51):
Craziness.
How...
You said physical.
I'm just thinking about the ulcers that people probably have, the lack of sleep.
We know there's clients that have said that they aren't sleeping.
yeah.
We try and prepare people as best we can, but they have to implement the advice or theyhave to talk to us so that we can help.
(05:15):
There's no other way about it.
So.
Obviously we generate tons of reports month on month, year on year.
Talk to me a little bit about how an everyday business owner will make use of variousreports, statements and how that can give a little peace of mind or it can paint a better
(05:46):
picture in their brain of where they are in their business.
So, profit and loss.
That's the first one, right out the gate.
Why is that important?
Well, you want to know your gross revenues.
what you're doing and and we produce for our monthly clients we produce a report when weproduce a profit and loss we don't just show the month of what are we closing we're
(06:07):
closing March so we won't just show March of 2025 we're going to show you March toFebruary so month over month to see if your sale what your sales and and your expenses are
looking like month over month if you've increased if you've decreased you know so we cananalyze why what's happening but also we look
at year over year.
(06:28):
So we look at March 25 to March 24.
So that you can see as a business, is there a trend month to month and is there a trendyear over year?
You want to be able to examine the trend.
You want to be able to examine how that's showing up.
And then the expenses.
(06:49):
And then of course the net.
You want to see where the net is at.
because obviously you're not in business to not be profitable.
So, you know, that's important.
We've got to make sure that, you know, we're profitable.
And if you're not profitable, were you profitable last month?
Well, what happened this month that you weren't?
You know, so we compare that.
(07:11):
That also, the P &L is a vital part of your financial statements because when you go for aloan,
the banks want to see your trend of the last, they'll go, hey, I need your bank statementsand your P &Ls for the last four months.
Is that matching up?
Is what you're claiming in gross revenue in also being received in your bank account?
(07:37):
People don't think that people check that.
Banks check that.
They're trying, you're trying to get a loan.
Anybody can put a number into a P &L.
It's fraud, but you can do it.
You gotta make sure that the bank account is showing that you're receiving this money too.
So that's P &L, that's just Pete, that's just the surface of a P &L.
(08:02):
Cash flow.
Mean do you have cash flow is vital not I mean cash was important don't get me wrong Butwe're we focus a lot on P &L balance sheets because it's so messed up most of time when
people come to us Cash flow is important because you want to know what your cash flow iscoming in You want to know how much is coming in how much is going out you want to know
(08:24):
your liquidity you have to know your liquidity Mainly because and I this is no joke
So many businesses fund or fund their expenses through credit cards.
It's amazing.
(08:45):
Like someone this week, I probably have out of the 70 some of clients we have, I would saytwo thirds of them have at least nine credit cards associated with.
They're QuickBooks.
So that's great.
You have 25 transactions.
So, it's super easy.
I only have 25 transactions a month.
(09:06):
Okay, in your bank account, but you're supporting everything else through your creditcards and all those have to be also recorded.
And that leads to then your debt to income.
And if you're using a personal credit card to back your business, not advise, co-mingling,but then make sure that nothing personal is going on that credit card.
(09:33):
And that ties back to cash flow, because if you're funding the business, the expenses, allwith that credit card, then your cash is constantly going out to pay it off.
And you don't have a true budget.
I know we've said it before but numbers tell a story and they paint that picture.
(09:57):
the more people get to understand it and they can...
We don't expect people to be accountants.
We don't want people to be accountants.
That's what you've trained your whole life for.
It's what I've got a degree in.
It's what we've got going on.
We just want them to be...
Active business owners and care about the numbers enough so they know where they are inlife what they're doing where Where to improve you know if if you can see deficiencies if
(10:30):
you can see red flags in In your numbers then that's huge
Well, like, I mean, we say a lot, like, we talk a lot about our problem children, so tosay, and the red flags and what we look out for.
I will say we do have some amazing clients.
They've been with us, they've been with us, but they've learned.
(10:53):
They were coachable, so they learned.
Before I could even review their financials for ending March,
I already had my client email yesterday go, hey, I looked at the financials and she had aloss, a legit loss.
Not as much, but she had a loss and nobody wants a loss.
(11:15):
She said, so I'm thinking this, this and this.
And I went, perfect, let me work on that.
Let me come up with the best strategies.
Let me meet with Steven and we'll come up with some other possibilities.
And we got to work on it.
But she went, she was active in it.
She went, hey, I need to do something.
What do you think about this?
(11:36):
And kudos to her.
She understands it.
It makes a massive difference because you're either driving your business or your businessis driving you.
Whether you have control or not, knowing the numbers is an important part because I...
(11:58):
and this isn't necessarily business but from when I was working for a media company andnumbers was important, I got...
Arguably overworked and stressed, anxious, constantly thinking about it.
I got sick and then I started to underproduce because of the anxiety that lived insidebecause of the need for numbers.
(12:26):
Yes, it's a different type of numbers as a salesperson, but the stress that pressure putson the body, on the mind, it's not healthy.
So if this is a way that you can alleviate it, it's massively important.
Absolutely.
(12:47):
Well, and that's this that to your point and not necessarily numbers, but this is howPeace Love Biz began with you and I is because I I let go of a client last August and and
it was it was the stress from it was just insane.
(13:10):
It was I am not a micromanager.
I hate micromanaging.
If I have to micromanage you, you should not work for me.
And we tell every single person when they onboard with us that and they don't believe it.
And then after like a week or two, they go, well, you really don't micromanage.
(13:31):
I said, you're an adult.
I'm not going to micromanage you.
I give you a task, do it.
If you don't do it.
And if you don't do it, you better have a good reason why.
Ask a question, give me information, but I'm not your mom.
Yeah, and it's funny that we have to tell clients that too.
(13:53):
Yeah, like I literally had a client say that to me today and I went, dude, I'm done withkids.
I don't have that job anymore.
So trust me, this is the only time that you're gonna hear me talk to you like I'm yourmom, because I can't stand having a micromanage.
I can't stand having to be someone's mama.
I ain't someone's mama.
(14:13):
My kids are gone.
My other kid, she's grown.
I don't have to be here.
I don't have to tell her what to do.
I am not in the business of being someone's mama.
Nope.
And that's it.
We have two types of clients here.
That's what we've always said.
We have adult clients and we have kid clients.
The kid clients are the ones that need their hand holding.
(14:36):
They need to be coachable.
That's the thing.
Kids should learn over time, but they have to be open to it.
And those that aren't just, they're drivers bonkers.
Well, they don't, the ones that are not coachable, mean, everybody when they first startwith us are like our adult children.
And, you know, we navigate, we teach them what we do, we teach them what they need to beaware of.
(15:01):
We coach them on all these things and they eventually graduate and they're solid.
It's the ones they...
They really take themselves out.
The ones that are not coachable, they show their ass within six weeks of it.
And we know it, honestly, when we meet with them, we know out the gate that they're gonnabe a problem.
(15:27):
You can feel it in your stomach straight away and...
We've talked about it before but it's the...
I do my own books.
I'm good.
I...
Ugh.
And I'll say to Steven, I don't want this.
I don't want it.
And Steven will be like, Mary, Steven's the forever ending give him another chance person.
(15:49):
And God bless you for it because you're a hell of a lot nicer than I am on any day.
And I'm like, screw that.
That's gonna be a headache.
I know it's gonna be a goddamn headache.
And it is, it ends up being a headache and I always wanna be wrong and I'm normally not,but we do it.
(16:11):
But...
Yeah, I know.
And there's me saying but straight away.
But...
BUT!
I Yeah.
Lipstick on pigs.
Rings a bell.
I dunno.
That's my problem as a salesperson.
(16:32):
As a business development person.
As somebody that was always taught, you always make that one more phone call, you alwaysmake that one more try.
If somebody wants to come aboard and they want...
You know.
You get three strikes in my head.
The third strike you're out, like, that's it, but...
(16:54):
You know, they have to be pretty egregious problems to want us to have them gone.
So.
Well, I mean, it's just if if you if I'm starting to stress out, like I can't if you're astress for me all the time consistently, you got to go like.
(17:19):
I just.
That you cannot put a price tag on peace, you cannot.
I don't care if you're paying me a thousand or a hundred dollars, I don't care.
I will not have you stress me out.
on and there's no emergency in accounting so that's why we shouldn't have the stress likenothing is a do or die situation so it people need to figure that out
(17:52):
Sorry, but thanks for saying that because, you know, there are very few times where I'mlike, we gotta talk now.
And I did it today to a client, but we had to, it was important.
Because they were closing on something this week, and I had to make sure everything wasstraight for that closing.
(18:15):
And it's either today or tomorrow, I can't remember.
But.
Then I have somebody else that literally, okay, I need my taxes done, go through the wholething, get all the information, not tech savvy, so I'm getting text messages of stuff and
God forbid we use email.
Email is, I use email to create the paper trail, but you know, that's too much.
(18:39):
And all of sudden it was, okay, well I can't proceed, I gotta stop everything.
fine and that's okay we stop everything wait now they want to proceed so now it's anemergency for them that's not the way this that's not how relationships work and we're not
we're not transactional if you want to be transactional go to somebody else it's not us
(19:01):
I have plenty of people I can recommend that are transactional, but if that's what peoplewant because they do their own books and stuff, I'll give you that recommendation, no
problem.
let us know.
Realistically going back, you know, we, we're talking about understanding numbers.
(19:23):
Numbers help people make decisions in business and in life in a lot of ways.
We know that people have goals and things that they want to do in life.
So what are some of the ways that people use PNL statements, balance sheets to makedecisions?
What would you say are a few things that people can do?
(19:45):
the balance sheets speak volu...
The balance sheet's important as well because the balance sheet's showing what yourassets, your liabilities, and the equity, meaning the basis of your company is.
You want a positive basis.
So if you're taking out more money than you're putting in, that's a problem.
(20:05):
That doesn't work.
If you have more loans than you have assets, that's a problem.
The balance sheet takes a picture of what your business is over a certain time period,what that looks like, and it basically says, hey, you have equity and this is working in
your favor, or you have a crap load of debt.
(20:27):
That's what it's telling you.
The P &L's important because the P &L then tells you on your net side how much, and onyour net side, but.
All of it's important.
On the net side, what you're able to pay off to lower that liability, because both ofthose are needed for you to continue to grow.
(20:50):
And I say grow meaning expand.
We have a client that she really didn't want to expand, and then we went, well, if we dothis, your revenue,
you can hit a million dollars in revenue or 500 within the first year and a million withintwo or three years.
(21:11):
And then you're actually doing far less work by expanding your business.
And we explained that to her and she went, my God, yup, that's what I want to do.
She has good balance sheet, she has a good P &L, she takes care of her personal credit.
We're working another shameless plug, but we're working on establishing.
(21:31):
building and repairing personal and business credit, but that then helps you get in lineto then buy that brick and mortar, like she's gonna end up doing.
All those matter because the bank is gonna need it.
You want to, whether you're buying a fleet of cars, you're buying a brick and mortar,you're buying three brick and mortars, regardless of what it is, you need all those
(21:55):
because they tell the bank the financial health of the company.
important because you see people struggling along in their business.
like, I'm on my own, I don't have enough time to do this stuff.
(22:15):
And then you look at the balance sheet, you look at the statements and it's like, well,you've got the money, why don't you hire somebody to do the task that you don't want to do
so you can focus on doing what you're at.
We've always been big advocates of being the expert in what you do.
Mm-hmm.
the numbers tell the story.
(22:36):
It's a paint by numbers in a lot of ways so if your assets and your liabilities are liningup so that you have the equity that you can put in the right places then it's gonna make
sense.
Absolutely and to your point is do what you do.
So yeah, like when we brought on my executive assistant, it was hard for me to transition.
(23:01):
But then I was like, I mean that took all of like two hours and I was like, my God, Idon't have to do all this.
I just said, now I'm just like yours.
This is yours.
This is yours.
This is like, I don't even touch crap.
I love it.
was literally a different person a week later, it was amazing.
It was like she'd been on a crash course weight loss program.
(23:26):
yeah, lost a million pounds just in brain weight.
like her and you have to have that connection.
Like that's just like our clients, but like I met with her and I was like, this is how Iam.
And people really either.
It's hard when you meet a transparent person, which that's my name this week, Ms.
(23:50):
Transparency.
If you are not used to a transparent person, it is really hard.
I'm a very transparent person, so someone that is always full of crap, I can't deal with.
It's really hard, I won't get used to it, just get the hell out of my life.
I can't deal with it.
I can't.
And...
(24:11):
I was super transparent with Emily, love my Emily, and she was like, yeah, and she waslike, you really don't like her marriage.
No, I don't.
Let me know if you have a question, and she'll ask.
Then she realized, yeah, she really means it.
Like, if I have a question, I can ask, and she's not gonna go off on me.
(24:31):
No, you can't know what you don't know, so ask the question.
Yeah, well that's it.
The stupidest question is the one that you don't ask.
That's always been the way.
So yeah, massive believer of that.
You mentioned it at the start of that little section about how you know where you are andyou can establish trends.
(24:59):
And that allows you to adjust, which is massively important, especially the way that we dothe reporting where you can see
the comparative year by year for each month.
You can see how those go.
If you start to recognize those trends, can make plans in accordingly.
(25:20):
If you know you're gonna have a shitty, a shitty winter because weather dictates yourbusiness, that means you, you've got to double down in summer.
Like you have to put those strategies in place so that you're not eating ramen noodles forChristmas dinner.
(25:41):
Like, which I wouldn't knock it.
I'd do it if I had to.
And I'm laughing maniacally, not because I'm completely insane.
There is a reason.
I'm laughing because we literally had this conversation with somebody telling us how theycouldn't because it's winter time.
I was like, right.
(26:03):
So why didn't you sell last summer?
Well, but the other thing is why don't you adjust?
If you can't work outside, why don't you go in home and use the skills that you have?
Like there's ways of doing it.
And I talked to other people in the industry who have experience up north, wherever it isthat's affected by weather and light.
(26:27):
this guy goes to a lot of conferences and the people in those areas, they...
Right.
(26:52):
Well, it's do better.
I mean, that was our theme this year, that we've stuck with it.
Do better!
Yep.
think we're kind of wrapping up.
I think that we've kind of covered it but last thing really is set realistic budgets.
(27:20):
If you think that you need the help, set a budget, find somebody that can help, find apiece of equipment that can make your life easier, whatever it is and you know what?
Talk to your accountant about it.
They probably have a connection, whether it's us or whether it's somebody else.
(27:42):
the transparency is huge if you are struggling get with somebody that can help even ifeven just the talking about it sometimes mary will call me she'll say i've got this going
on what do i do i don't even say anything but mary's come up with the solution because shesaid it out loud and we've i've just been a sounding board sometimes you just need a
(28:07):
sounding board
But yeah.
(28:33):
Yeah, my, I said it last week.
My dad always said, there's no point having a five figure salary and a six figurelifestyle.
Like it, my dad's going to have to come on one day.
(29:12):
Yeah.
I wonder if that's why the price of groceries has gone up because nobody's buying in storeand cooking themselves anymore.
Just supply and demand.
Demand's not there so prices have got to go up.
(29:35):
We got to a point where we felt guilty for ordering takeout and it's like, feel...
And we were doing it maybe once, maybe twice a week if we'd had a busy week.
And I was just drained and I couldn't do it.
Like last night, I think last night I was like, my God, I'm exhausted.
And I cooked it in a light, but I cooked it.
(29:55):
It didn't make it through the rest of the night because I went and played basketball, butthat's another story.
And I'll let everybody else decide what visual they want to take from that But I gotta getin shape and round is not an acceptable shape anymore Yeah, I need I need to go more go
(30:20):
more rectangular Like I used to Last last thing
Like Mary said, live within your means, but when you really understand your PNLs, all ofyour different reports, then it allows you to make decisions with confidence.
You will constantly second guess yourself in life.
(30:43):
You'll wait 20-20, hindsight is 20-20, and that's great.
But the more you know your numbers, the better sense of...
You know, you'll know that you're doing...
something that you can do with confidence.
You'll be okay in the decisions you make.
(31:04):
No more sleepless nights, no more surprises and no more wondering if you can cover yourown expenses and your bills.
Last of all, guess, is if you want to figure out what your reports look like and if youdon't understand your reports, that's okay.
Get with a professional.
We're here to help.
(31:24):
Go to peacelovebiz.com, comment.
Anybody that shares this, we have some cool little swag items now.
Anybody that comments and shares, I might be sending goodie bags out too, so.
Yeah, we'll help you guys however we can, so.
I guess until next time, have a peaceful week.
(31:53):
Yep.
See ya.
Hey everybody, welcome to another episode of Peace Love Biz.
I'm your host Steve Higgins.
I've just been connecting and trying to encourage communication so my name's a littlefunny today.
What did I end up going with?
Yakety Yakason?
no!
Olive Branchman, that's right.
We're connecting.
Yeah.
(00:22):
Reach out that olive branch.
Yeah, that's good.
Mary, how you doing?
I'm hanging in there, I'm hanging in there.
We've got, ooh, 11 days, 11 days, and then I get to sleep.
April 15th, tax deadline day, it's coming up.
(00:47):
Anybody now we're doing extensions for.
I think I'm at...
I have a total of 16, 18 extensions right now.
So definitely not a tax year.
Love that.
Yep.
That's not to say that anybody that needs help and will need an extension reach out to us.
(01:09):
Go to peacelovebiz.com, submit mission form in and we'll take care of it and you know, getyou squared away.
Yeah.
Today's theme, dude, yeah.
Honestly, I was just thinking about how...
(01:29):
anxious stressful and I'm not the one that's doing the taxes I'm the guy on beating thestreets kind of thing so yeah I think I I've already decided that I am getting taxis and
osmosis through Mary but some of some of the client stories are a little crazy this weekthat we're probably not going to touch on too much but the theme for this
(01:59):
weeks episode is on understanding your numbers for peace of mind.
Which it's an important topic and there's way too many people out there that are justgoing blindly.
They don't look at any reports and they don't have any accounting software.
There's so many different examples and I'm getting stressed and anxious just thinkingabout them.
(02:25):
And we're not even in that position.
So.
you know, if people are avoiding looking at numbers if they don't know where they are inthe business and they're just going blindly, that's a...
I love how we keep going to red flags.
is, this is what they're doing is they're looking at what their balances and their bankstatements.
(02:47):
They're thinking about what outstanding invoices are coming in and going, okay, I can makethat work.
that's not, yeah, I don't, you're, you're asking to have mental health problems.
You're asking to have physical health problems.
Cause the stress of that.
(03:09):
is insane.
It's the stress of not knowing and just running on that objective or that thought process,it's gonna take its toll on you physically, but on the business, you can't run a proper
business that way.
That's like you have the business having a cold or having a more serious illness and younot treating the symptoms and just trying to...
(03:40):
You just using Tylenol or other brands are available obviously.
Taking out aspirin to, you know, clear out an infection.
Like, I don't know, like, you're you're not diagnosing the problem.
well, and for me, that's a red flag for me.
Cause I go, okay, what shady shit are they doing?
(04:02):
Mm-hmm.
You know, what shady shit are you doing?
And we've seen it across this week, I would say this week, in the last two days, we haveseen it where we have people expensing their loan payments.
That's not an expense.
So you doing your own books and expensing loan payments, and we have multiple people thatwe've caught this, and I'm like, that's not a thing.
(04:30):
That is not a thing.
You're doing your own books.
There you go.
There you go.
Yeah, and all their undoing work that we've already done to go and fudge numbers andthat's just an even bigger red flag but...
It...
(04:51):
Craziness.
How...
You said physical.
I'm just thinking about the ulcers that people probably have, the lack of sleep.
We know there's clients that have said that they aren't sleeping.
yeah.
We try and prepare people as best we can, but they have to implement the advice or theyhave to talk to us so that we can help.
(05:15):
There's no other way about it.
So.
Obviously we generate tons of reports month on month, year on year.
Talk to me a little bit about how an everyday business owner will make use of variousreports, statements and how that can give a little peace of mind or it can paint a better
(05:46):
picture in their brain of where they are in their business.
So, profit and loss.
That's the first one, right out the gate.
Why is that important?
Well, you want to know your gross revenues.
what you're doing and and we produce for our monthly clients we produce a report when weproduce a profit and loss we don't just show the month of what are we closing we're
(06:07):
closing March so we won't just show March of 2025 we're going to show you March toFebruary so month over month to see if your sale what your sales and and your expenses are
looking like month over month if you've increased if you've decreased you know so we cananalyze why what's happening but also we look
at year over year.
(06:28):
So we look at March 25 to March 24.
So that you can see as a business, is there a trend month to month and is there a trendyear over year?
You want to be able to examine the trend.
You want to be able to examine how that's showing up.
And then the expenses.
(06:49):
And then of course the net.
You want to see where the net is at.
because obviously you're not in business to not be profitable.
So, you know, that's important.
We've got to make sure that, you know, we're profitable.
And if you're not profitable, were you profitable last month?
Well, what happened this month that you weren't?
You know, so we compare that.
(07:11):
That also, the P &L is a vital part of your financial statements because when you go for aloan,
the banks want to see your trend of the last, they'll go, hey, I need your bank statementsand your P &Ls for the last four months.
Is that matching up?
Is what you're claiming in gross revenue in also being received in your bank account?
(07:37):
People don't think that people check that.
Banks check that.
They're trying, you're trying to get a loan.
Anybody can put a number into a P &L.
It's fraud, but you can do it.
You gotta make sure that the bank account is showing that you're receiving this money too.
So that's P &L, that's just Pete, that's just the surface of a P &L.
(08:02):
Cash flow.
Mean do you have cash flow is vital not I mean cash was important don't get me wrong Butwe're we focus a lot on P &L balance sheets because it's so messed up most of time when
people come to us Cash flow is important because you want to know what your cash flow iscoming in You want to know how much is coming in how much is going out you want to know
(08:24):
your liquidity you have to know your liquidity Mainly because and I this is no joke
So many businesses fund or fund their expenses through credit cards.
It's amazing.
(08:45):
Like someone this week, I probably have out of the 70 some of clients we have, I would saytwo thirds of them have at least nine credit cards associated with.
They're QuickBooks.
So that's great.
You have 25 transactions.
So, it's super easy.
I only have 25 transactions a month.
(09:06):
Okay, in your bank account, but you're supporting everything else through your creditcards and all those have to be also recorded.
And that leads to then your debt to income.
And if you're using a personal credit card to back your business, not advise, co-mingling,but then make sure that nothing personal is going on that credit card.
(09:33):
And that ties back to cash flow, because if you're funding the business, the expenses, allwith that credit card, then your cash is constantly going out to pay it off.
And you don't have a true budget.
I know we've said it before but numbers tell a story and they paint that picture.
(09:57):
the more people get to understand it and they can...
We don't expect people to be accountants.
We don't want people to be accountants.
That's what you've trained your whole life for.
It's what I've got a degree in.
It's what we've got going on.
We just want them to be...
Active business owners and care about the numbers enough so they know where they are inlife what they're doing where Where to improve you know if if you can see deficiencies if
(10:30):
you can see red flags in In your numbers then that's huge
Well, like, I mean, we say a lot, like, we talk a lot about our problem children, so tosay, and the red flags and what we look out for.
I will say we do have some amazing clients.
They've been with us, they've been with us, but they've learned.
(10:53):
They were coachable, so they learned.
Before I could even review their financials for ending March,
I already had my client email yesterday go, hey, I looked at the financials and she had aloss, a legit loss.
Not as much, but she had a loss and nobody wants a loss.
(11:15):
She said, so I'm thinking this, this and this.
And I went, perfect, let me work on that.
Let me come up with the best strategies.
Let me meet with Steven and we'll come up with some other possibilities.
And we got to work on it.
But she went, she was active in it.
She went, hey, I need to do something.
What do you think about this?
(11:36):
And kudos to her.
She understands it.
It makes a massive difference because you're either driving your business or your businessis driving you.
Whether you have control or not, knowing the numbers is an important part because I...
(11:58):
and this isn't necessarily business but from when I was working for a media company andnumbers was important, I got...
Arguably overworked and stressed, anxious, constantly thinking about it.
I got sick and then I started to underproduce because of the anxiety that lived insidebecause of the need for numbers.
(12:26):
Yes, it's a different type of numbers as a salesperson, but the stress that pressure putson the body, on the mind, it's not healthy.
So if this is a way that you can alleviate it, it's massively important.
Absolutely.
(12:47):
Well, and that's this that to your point and not necessarily numbers, but this is howPeace Love Biz began with you and I is because I I let go of a client last August and and
it was it was the stress from it was just insane.
(13:10):
It was I am not a micromanager.
I hate micromanaging.
If I have to micromanage you, you should not work for me.
And we tell every single person when they onboard with us that and they don't believe it.
And then after like a week or two, they go, well, you really don't micromanage.
(13:31):
I said, you're an adult.
I'm not going to micromanage you.
I give you a task, do it.
If you don't do it.
And if you don't do it, you better have a good reason why.
Ask a question, give me information, but I'm not your mom.
Yeah, and it's funny that we have to tell clients that too.
(13:53):
Yeah, like I literally had a client say that to me today and I went, dude, I'm done withkids.
I don't have that job anymore.
So trust me, this is the only time that you're gonna hear me talk to you like I'm yourmom, because I can't stand having a micromanage.
I can't stand having to be someone's mama.
I ain't someone's mama.
(14:13):
My kids are gone.
My other kid, she's grown.
I don't have to be here.
I don't have to tell her what to do.
I am not in the business of being someone's mama.
Nope.
And that's it.
We have two types of clients here.
That's what we've always said.
We have adult clients and we have kid clients.
The kid clients are the ones that need their hand holding.
(14:36):
They need to be coachable.
That's the thing.
Kids should learn over time, but they have to be open to it.
And those that aren't just, they're drivers bonkers.
Well, they don't, the ones that are not coachable, mean, everybody when they first startwith us are like our adult children.
And, you know, we navigate, we teach them what we do, we teach them what they need to beaware of.
(15:01):
We coach them on all these things and they eventually graduate and they're solid.
It's the ones they...
They really take themselves out.
The ones that are not coachable, they show their ass within six weeks of it.
And we know it, honestly, when we meet with them, we know out the gate that they're gonnabe a problem.
(15:27):
You can feel it in your stomach straight away and...
We've talked about it before but it's the...
I do my own books.
I'm good.
I...
Ugh.
And I'll say to Steven, I don't want this.
I don't want it.
And Steven will be like, Mary, Steven's the forever ending give him another chance person.
(15:49):
And God bless you for it because you're a hell of a lot nicer than I am on any day.
And I'm like, screw that.
That's gonna be a headache.
I know it's gonna be a goddamn headache.
And it is, it ends up being a headache and I always wanna be wrong and I'm normally not,but we do it.
(16:11):
But...
Yeah, I know.
And there's me saying but straight away.
But...
BUT!
I Yeah.
Lipstick on pigs.
Rings a bell.
I dunno.
That's my problem as a salesperson.
(16:32):
As a business development person.
As somebody that was always taught, you always make that one more phone call, you alwaysmake that one more try.
If somebody wants to come aboard and they want...
You know.
You get three strikes in my head.
The third strike you're out, like, that's it, but...
(16:54):
You know, they have to be pretty egregious problems to want us to have them gone.
So.
Well, I mean, it's just if if you if I'm starting to stress out, like I can't if you're astress for me all the time consistently, you got to go like.
(17:19):
I just.
That you cannot put a price tag on peace, you cannot.
I don't care if you're paying me a thousand or a hundred dollars, I don't care.
I will not have you stress me out.
on and there's no emergency in accounting so that's why we shouldn't have the stress likenothing is a do or die situation so it people need to figure that out
(17:52):
Sorry, but thanks for saying that because, you know, there are very few times where I'mlike, we gotta talk now.
And I did it today to a client, but we had to, it was important.
Because they were closing on something this week, and I had to make sure everything wasstraight for that closing.
(18:15):
And it's either today or tomorrow, I can't remember.
But.
Then I have somebody else that literally, okay, I need my taxes done, go through the wholething, get all the information, not tech savvy, so I'm getting text messages of stuff and
God forbid we use email.
Email is, I use email to create the paper trail, but you know, that's too much.
(18:39):
And all of sudden it was, okay, well I can't proceed, I gotta stop everything.
fine and that's okay we stop everything wait now they want to proceed so now it's anemergency for them that's not the way this that's not how relationships work and we're not
we're not transactional if you want to be transactional go to somebody else it's not us
(19:01):
I have plenty of people I can recommend that are transactional, but if that's what peoplewant because they do their own books and stuff, I'll give you that recommendation, no
problem.
let us know.
Realistically going back, you know, we, we're talking about understanding numbers.
(19:23):
Numbers help people make decisions in business and in life in a lot of ways.
We know that people have goals and things that they want to do in life.
So what are some of the ways that people use PNL statements, balance sheets to makedecisions?
What would you say are a few things that people can do?
(19:45):
the balance sheets speak volu...
The balance sheet's important as well because the balance sheet's showing what yourassets, your liabilities, and the equity, meaning the basis of your company is.
You want a positive basis.
So if you're taking out more money than you're putting in, that's a problem.
(20:05):
That doesn't work.
If you have more loans than you have assets, that's a problem.
The balance sheet takes a picture of what your business is over a certain time period,what that looks like, and it basically says, hey, you have equity and this is working in
your favor, or you have a crap load of debt.
(20:27):
That's what it's telling you.
The P &L's important because the P &L then tells you on your net side how much, and onyour net side, but.
All of it's important.
On the net side, what you're able to pay off to lower that liability, because both ofthose are needed for you to continue to grow.
(20:50):
And I say grow meaning expand.
We have a client that she really didn't want to expand, and then we went, well, if we dothis, your revenue,
you can hit a million dollars in revenue or 500 within the first year and a million withintwo or three years.
(21:11):
And then you're actually doing far less work by expanding your business.
And we explained that to her and she went, my God, yup, that's what I want to do.
She has good balance sheet, she has a good P &L, she takes care of her personal credit.
We're working another shameless plug, but we're working on establishing.
(21:31):
building and repairing personal and business credit, but that then helps you get in lineto then buy that brick and mortar, like she's gonna end up doing.
All those matter because the bank is gonna need it.
You want to, whether you're buying a fleet of cars, you're buying a brick and mortar,you're buying three brick and mortars, regardless of what it is, you need all those
(21:55):
because they tell the bank the financial health of the company.
important because you see people struggling along in their business.
like, I'm on my own, I don't have enough time to do this stuff.
(22:15):
And then you look at the balance sheet, you look at the statements and it's like, well,you've got the money, why don't you hire somebody to do the task that you don't want to do
so you can focus on doing what you're at.
We've always been big advocates of being the expert in what you do.
Mm-hmm.
the numbers tell the story.
(22:36):
It's a paint by numbers in a lot of ways so if your assets and your liabilities are liningup so that you have the equity that you can put in the right places then it's gonna make
sense.
Absolutely and to your point is do what you do.
So yeah, like when we brought on my executive assistant, it was hard for me to transition.
(23:01):
But then I was like, I mean that took all of like two hours and I was like, my God, Idon't have to do all this.
I just said, now I'm just like yours.
This is yours.
This is yours.
This is like, I don't even touch crap.
I love it.
was literally a different person a week later, it was amazing.
It was like she'd been on a crash course weight loss program.
(23:26):
yeah, lost a million pounds just in brain weight.
like her and you have to have that connection.
Like that's just like our clients, but like I met with her and I was like, this is how Iam.
And people really either.
It's hard when you meet a transparent person, which that's my name this week, Ms.
(23:50):
Transparency.
If you are not used to a transparent person, it is really hard.
I'm a very transparent person, so someone that is always full of crap, I can't deal with.
It's really hard, I won't get used to it, just get the hell out of my life.
I can't deal with it.
I can't.
And...
(24:11):
I was super transparent with Emily, love my Emily, and she was like, yeah, and she waslike, you really don't like her marriage.
No, I don't.
Let me know if you have a question, and she'll ask.
Then she realized, yeah, she really means it.
Like, if I have a question, I can ask, and she's not gonna go off on me.
(24:31):
No, you can't know what you don't know, so ask the question.
Yeah, well that's it.
The stupidest question is the one that you don't ask.
That's always been the way.
So yeah, massive believer of that.
You mentioned it at the start of that little section about how you know where you are andyou can establish trends.
(24:59):
And that allows you to adjust, which is massively important, especially the way that we dothe reporting where you can see
the comparative year by year for each month.
You can see how those go.
If you start to recognize those trends, can make plans in accordingly.
(25:20):
If you know you're gonna have a shitty, a shitty winter because weather dictates yourbusiness, that means you, you've got to double down in summer.
Like you have to put those strategies in place so that you're not eating ramen noodles forChristmas dinner.
(25:41):
Like, which I wouldn't knock it.
I'd do it if I had to.
And I'm laughing maniacally, not because I'm completely insane.
There is a reason.
I'm laughing because we literally had this conversation with somebody telling us how theycouldn't because it's winter time.
I was like, right.
(26:03):
So why didn't you sell last summer?
Well, but the other thing is why don't you adjust?
If you can't work outside, why don't you go in home and use the skills that you have?
Like there's ways of doing it.
And I talked to other people in the industry who have experience up north, wherever it isthat's affected by weather and light.
(26:27):
this guy goes to a lot of conferences and the people in those areas, they...
Right.
(26:52):
Well, it's do better.
I mean, that was our theme this year, that we've stuck with it.
Do better!
Yep.
think we're kind of wrapping up.
I think that we've kind of covered it but last thing really is set realistic budgets.
(27:20):
If you think that you need the help, set a budget, find somebody that can help, find apiece of equipment that can make your life easier, whatever it is and you know what?
Talk to your accountant about it.
They probably have a connection, whether it's us or whether it's somebody else.
(27:42):
the transparency is huge if you are struggling get with somebody that can help even ifeven just the talking about it sometimes mary will call me she'll say i've got this going
on what do i do i don't even say anything but mary's come up with the solution because shesaid it out loud and we've i've just been a sounding board sometimes you just need a
(28:07):
sounding board
But yeah.
(28:33):
Yeah, my, I said it last week.
My dad always said, there's no point having a five figure salary and a six figurelifestyle.
Like it, my dad's going to have to come on one day.
(29:12):
Yeah.
I wonder if that's why the price of groceries has gone up because nobody's buying in storeand cooking themselves anymore.
Just supply and demand.
Demand's not there so prices have got to go up.
(29:35):
We got to a point where we felt guilty for ordering takeout and it's like, feel...
And we were doing it maybe once, maybe twice a week if we'd had a busy week.
And I was just drained and I couldn't do it.
Like last night, I think last night I was like, my God, I'm exhausted.
And I cooked it in a light, but I cooked it.
(29:55):
It didn't make it through the rest of the night because I went and played basketball, butthat's another story.
And I'll let everybody else decide what visual they want to take from that But I gotta getin shape and round is not an acceptable shape anymore Yeah, I need I need to go more go
(30:20):
more rectangular Like I used to Last last thing
Like Mary said, live within your means, but when you really understand your PNLs, all ofyour different reports, then it allows you to make decisions with confidence.
You will constantly second guess yourself in life.
(30:43):
You'll wait 20-20, hindsight is 20-20, and that's great.
But the more you know your numbers, the better sense of...
You know, you'll know that you're doing...
something that you can do with confidence.
You'll be okay in the decisions you make.
(31:04):
No more sleepless nights, no more surprises and no more wondering if you can cover yourown expenses and your bills.
Last of all, guess, is if you want to figure out what your reports look like and if youdon't understand your reports, that's okay.
Get with a professional.
We're here to help.
(31:24):
Go to peacelovebiz.com, comment.
Anybody that shares this, we have some cool little swag items now.
Anybody that comments and shares, I might be sending goodie bags out too, so.
Yeah, we'll help you guys however we can, so.
I guess until next time, have a peaceful week.
(31:53):
Yep.
See ya.
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