ACCOUNTING FOR THE NUMBERPHOBIC A Survival Guide for Small Business Owners

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ACCOUNTING FOR THE NUMBERPHOBIC A Survival
Guide for Small Business Owners

• Professor Dawn Fotopulos
• Founder, Best Small Biz Help.com

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• What's a
• "numberphobe"?
• Terrified of numbers!

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• You Read Numbers Every Day
• Weight scales
• Thermometer
• Bank account balance
• You know how to read numbers
• Small business owners never look at their numbers
  
• Accountants will do not read them for you
• Does your mechanic drive your car?

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Do you drive your
• car with your eyes closed?No!
• Then don't run your Small Business without
• knowing how to read your financial dashboard.

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• What If
• You could work half as hard and make twice the
  money?
• What if you could run your small business free of
  debt or meddling outside investors?
• What if you could finally get a return for all
  your sacrifices and sleepless nights?
• You can.

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Who Has Benefitted?
• Jewelry Designer who avoided bankruptcy
• Reduced expenses, cut products, increased gross
  profit
• Photographer who showed her largest profit ever
• Changed target audience, prices, marketing
  strategy
• Interior Designer who tripled earnings
• Changed prices, focused services, improved
  collections
• Dreamers who launch small businesses

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Did You Know
• Less than 2 know that a Net Income Statement is
  the same as PL?
• Less than 1 know they run their business on
  gross margin, not revenues?
• Not a problem an epidemic.

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• The 3 big questions
• Are you making a profit?
• Is there enough cash to run the business?
• Is the business building wealth or destroying it?

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Your financial dashboard
• Three Key Gauges Chapter 1
• Net Income Statement
• Cash Flow Statement
• Balance Sheet

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Net Income Statement
• Chapters 2 3
• Making a profit or showing a loss
• Money in Money Out
• Money In Net Revenues from sales
• Money Out Expenses to run the business
• Ratios help keep the business in balance
• Net Income Ratio
• Grocery store example
• Whats your industry norm?

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Gross Margin
• Ratio must be 30
• or higher to stay in business

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ACCOUNTING FOR THE NUMBERPHOPICA Survival Guide
for Small Business Owners
Your Business Could Be Showing A Profit While
Going Bankrupt
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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Cash Flow Statement Chapter 5
• Checkbook- starting cash, cash in, cash out,
  ending cash
• Gas in your tank-
• how far you can travel
• how long you can run the business w/o needing
  more cash
• Gas gauge doesn't tell you to buy gas
• You must interpret where the needle is

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Why Revenues
• And Cash Arent the Same
• Delays in payment
• Discounts to payment
• Bankruptcies
• Book Net Revenues when they happen for accurate
  sales cycle reporting
• Book cash in when it arrives- accurate cash cycle
  reporting

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Its Easy to Improve
• Cash Flow Chapter 6
• Invoicing policies
• Collections policies
• Relationship building with clients
• All affect cash flow- keep it healthy

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Whats the Value
• of the Business?
• Just the salvage value of the desks, computers?
• Do businesses have terminal value?
• Can they be sold for more than annual revenues?
• Yes!

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• How to Win Friends and Influence Bankers! Chapter
  8
• Balance Sheet- Net worth statement of the
  business
• Personal net worth- business net worth
• Relationship between what you own what you owe
• Same for the business relationship between
  assets (own) and liabilities (owe)

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Net WorthOwners Equity Chapter 9
• Positive Net Worth or Net Worth that increases
  over time
• Negative Net Worth or Net Worththat degrades
  over time
• Something must change to avoid
• bankruptcy
• How?

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Our Mission to Save
• Struggling Small Businesses
• Not just read, interpret, make course corrections
• Anticipate what will happen
• You're running the business
• The business isn't running you!

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Interview with
• Norm Brodsky
• Chapter 10
• A business is all about the numbers.
• Most businesses could make it if the
• owners knew even the very basics
• of reading their financial dashboard.

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Comments on NUMBERPHOBIC
• So much fun to read!
• Fascinating.
• I'm tired of being a starving artist..
• It should be required reading before anyone goes
  into business. It's so empowering.
• Women entrepreneurs especially need to read this
  book. They're afraid of debt but if they knew how
  to manage it, their businesses would be much more
  successful.

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Remember
• The financial dashboard is your GPS
• Net Income- showing profit, break even, loss
• Cash Flow- enough to run the business/ how long
• Net Worth-building or destroying wealth
• Understand your dashboard reduce risk

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Available
• Amazon.com
• Barnesandnoble.com
• Indiebooks.com
• Twitter _at_dfotopulos _at_bestbizhelp
• www.bestsmallbizhelp.com

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ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide
for Small Business Owners

• Join Dawns Mission
• Twitter knowyournumbers
• Live Stream Tues. Oct 7th 7PM EST The Kings
  College, NYC
• https//new.livestream.com/TheKingsCollege/Account
  ingfortheNumberphobic
• Test Yourself http//www.bestsmallbizhelp.com/kno
  w-your-numbers/
• Ask questions
• Thank you!