Momentum Podcast: 406

Finance And Accounting Certainty

by Alex Charfen

Episode Description

Let's get real, when you saw that this episode was about finance and accounting, you probably thought about skipping through it. The vast majority of small business owners can't stand talk about the numbers and don't have clean financials on a monthly basis.

Not knowing exactly where you stand financially is one of the biggest foundational issues in business. You need to know where your money is going, down to the very last cent. That knowledge will absolutely change the way you run your business.

Full Audio Transcript

This morning, I signed on to one of our coaching calls, and I had a client tell me that she had hired a finance and accounting company last November, so about a month and a half ago, to get all of her books caught up and everything else. In November and all of December, they did nothing. The excuse they gave her was that they weren't clear on the setup. No only is that unacceptable, it will kill your business. When it comes to finance and accounting, this is a place where no news is the only way you know that it's good news.

I'm Alex Charfen, and this is the Momentum Podcast, made for empire builders, game changers, trailblazers, shot takers, record breakers, world makers, and creators of all kinds. Those among us who can't turn it off and don't know why anyone would want to. We challenge complacency, destroy apathy, and we are obsessed with creating momentum so we can roll over bureaucracy and make our greatest contribution.

Sure, we pay attention to their rules, but only so that we can bend them, break them, then rewrite them around our own will. We don't accept our destiny, we define it. We don't understand defeat because you only lose if you stop, and we don't know how. While the rest of the world strives for average and clings desperately to the status quo, we are the minority, the few who are willing to hallucinate there could be a better future. And instead of just daydreaming of what could be, we endure the vulnerability and exposure it takes to make it real. We are the evolutionary hunters. Clearly, the most important people in the world because entrepreneurs are the only source of consistent positive human evolution, and we always will be.

All right, let's be honest, you heard the introduction to this podcast. You heard me talking about finance and accounting, and you at least for a moment considered switching this off, or changing to a different episode, or changing to a different podcast, or turning to music or something else because, let's get real, small business owners can't stand the discussion around finance and accounting. The vast majority of small business owners, and I'm talking 80%, probably 90% plus, don't have clean financials on a monthly basis, don't have reconciled bank accounts, aren't clear on exactly where their numbers really are. This is one of the biggest foundational issues in business.

I talk to small business owners all week, every week. I go out and I speak to hundreds, sometimes thousands at a time, and when I ask, “How many of you have clear reconciled financials on a monthly basis?” It's typically less than 10% depending on the room that I'm in. If it's a big room with a lot of entry-level people, it's way less than 10%. If it's a smaller room with some higher-level businesses, then it usually can exceed 10%. But here's the challenge: the vast majority of business owners do not have clean financials, they don't have clean books, and there's a challenge with how we look at this entire process.

It's the same challenge my client had this morning. She's hired somebody to fix this for her, and it hasn't happened, and she's making excuses for the person. Why? Oh, here's why: because when it comes to finance and accounting and doing books, you don't want to do it, I don't want to do it. Let's be real, we don't even want to talk about it. So when we hire somebody to do it, we approach that person with the same attitude we have towards the work.

I want to help you reframe how you look at this. See, when it comes to finance and accounting, I absolutely recommend successful small business owners if you're making money, you need to go find somebody to take care of your books, to give you clean financials on a monthly basis, reconcile your credit card statements, your credit card receipts, your bank accounts, and make sure all of your money is in the right place, period, end of story. You've got to have it. It's going to change the way you run your business.

Here's the problem with most finance and accounting services: they're not that good. Let's be real about what finance and accounting is in a small business, this isn't advanced calculus or trig, this is addsies and take-aways. There is a finite amount of information in finance and accounting, and you're either done, or you're not done. It's either right, or it's wrong. It's either complete, and everything's reconciled, or you didn't do it. It's binary. You either did your job, or you didn't.

So when it comes to this world, when it comes to finance and accounting, here's the advice that I give my clients: don't chase finance and accounting. Here's what I tell every person who's ever worked with us in finance, every person who's ever kept our books, every person who's ever done any of this work for me: I make it very clear that if I don't have to talk to them, they're doing things right. If I don't have to reach out, then things are great. If I don't have to give any direction, then we're all moving in the right direction.

But the second that I have to get involved with finance and accounting because I didn't get something, because my books weren't done on time, because reconciliations didn't happen, there's a major, major issue. Because my expectation is, if I contract with somebody to fix this issue in my business, it will be done 100% of the time. I make it very clear to the people that I work with in this regard.

My company has a outsource finance and accounting company called [Consero 00:05:09]. I've explained to Consero on more than one occasion that the way I look at finance and accounting is it should just automatically happen. I should get my financials on a monthly basis. Any questions they have should be resolved with simple emails or phone calls. There should never be any ambiguity as to where my company stands financially, and that is my expectation of a passing grade of success. That doesn't make you excellent, that doesn't make you incredible, that doesn't make you a great finance and accounting department, it just is a passing grade of success because you've done the work.

So for you, if you're not getting clear financials on your business right now, if you don't have clear book keeping, if you have somebody who's doing it for you, but they're behind, or they're backed up, or they're not getting it done, you have a major red flag in your business. You have blind spots that you can't understand.

Take it from someone who knows. In fact, take it from someone who's lost more money than they would ever want to admit: me. I've made a ton of mistakes, and that's where a lot of my knowledge comes from, that's where a lot of my advice comes from. On more than one occasion, I've been embezzled from in my businesses. In fact, there was a point where we had one person responsible for all our finance and accounting, we didn't have checks and balances in place. This was in 2011. We found out we had over a million dollars embezzled from our company.

Not only did we find out, we went through a two-year federal prosecution and put our CFO behind bars, Michael [Goldberg 00:06:36] from Boca Raton, Florida. Just in case you're ever listening, Michael. Stole over a million dollars from Cadey and I. He was a trusted friend, he misallocated over another million dollars. This is why I am so protective, and adamant, and insistent when it comes to finance and accounting because if you're not doing the right things in this world in your business, it will crush you.

Now I want you to know something, I'm just like you. In fact, in my 20s, I ran a massive corporation with incredible world-changing multinational clients. I worked with some of the biggest brands in the world. Every finance and accounting meeting that I sat through, I had no idea what was going on. I was doing the 'fake it until you make it', only there was no way I was going to make it because I was just faking it. I would sit there in discussions, and I would think to myself, “What does debt mean again? What does credit mean? Is it net or gross? What are the two, and how does this really work?”

I swear, there would be sweat going down my back into my underwear because I was so uncomfortable in those meeting. As I share this with you now, I'm experiencing that same level of body discomfort because I felt exposed, and vulnerable, and like a fraud. I felt like I didn't know what I was talking about in those meetings because, quite frankly, I didn't. And I felt like it was so much more complicated than it actually it.

But here's the fact about finance and accounting in your business, let's make it really easy. Let's just back away from debits, and credits, and balance sheets, and cash flow statements, and all of those other things. Each month your business takes in a gross amount of money, and each money your business pays out a amount of money. The different between what you take in and what you pay out is your profitability, and that's what you need to see on a monthly basis to understand what's going on. When you work with a finance or accounting company, you need to starts seeing a 6 to 12-month rolling P&L, which will show you your profit and loss month after month so that you can see with perspective what's happening on a monthly basis. You will start to understand your numbers at an entirely different level.

In fact, just by getting those numbers, and going over them every month, and having whoever is doing them for you explain to you what they saw, and what perspective they have, and where they saw increases and decreases will help you more than you ever thought possible. Here's what I ensure you: if you get someone to do your books who knows what they're doing, if you start getting the six-month rolling P&L, if you start having a one-hour monthly meeting with that person so that they can explain to you what they saw in your financials, that's all you need to understand enough in this world to have massive perspective around your business and create progress when it comes to the foundational understanding of what your business' main purpose is.

And that is making a profit happen, having money created every month that remains in the business, that is there so that you can have a profit. Once you understand this at a surface level, you start making better decisions. Once you've had this information for a few months, it will totally change how you look at your business. Once you understand this information, and you've had it for a few months, and you develop perspective around it, you will increase the profitability of your business. You will do better as a business person, and you will make better decisions.

I know, I've helped hundreds of business owners go through this process. Here's the key: when it comes to finance and accounting, find someone who gets it done 100% of the time. If you have someone who's not getting it done 100% of the time, it's probably time for a change. If you're interviewing for people, or services, or companies to take over your books, let them know that there's only one thing you'll accept, your books done on a monthly basis 100% completed with clear financials, and every one of your accounts reconciled 100% of the time. That's your expectation, is that their success rate is 100%.

Here's why: it's not like they're a salesperson that has conversions and have to rely on other people. It's not like they're an operations manager that functions in a dynamic environment where things are changing, and business is changing, and competition is changing. They deal with numbers, addsies and take-aways, putting them in the right columns, giving you the right information so that you can start to develop perspective over time. It's the only way that it works.

I want you to make 2019 one of the biggest years you've ever had. I want this to be explosive for you. I want you to build the foundation, grow your business, scale it further than you ever have. One of the most important things you'll do in getting there is getting clear financials on a monthly basis and making sure you understand the numbers in your business. Do not compromise when it comes to getting your numbers. Do not make excuses for the person who's doing your accounting if they're not getting your stuff on time. Do not accept anything less than 100% success rate when it comes to finance and accounting because it's the one department in your business where you can get 100% success rate every single month, unless there's major issues or something that throws the entire business off. Don't let anyone in finance and accounting make your life more difficult by not being done 100% of the time and giving you the information you need so you can build new perspective.

If you'd like to start not just building new perspective but growing your business, scaling your business, if you want 2019 to be the biggest year you've ever had, let's do this. Let me show you how to create a strategic plan in your business that everyone in the company understands. Let me show you how to create the right process so that you communicate in a way that your entire team is moving forward at maximum velocity. Let me show you how to get the right projects done at the right time in your business and build the infrastructure of people and processes around you so you grow without delaying anything and you hit your maximum potential. I want you to grow and scale your business bigger than you ever thought possible.

If you're ready, go to, answer a few questions for me and my team, and we'll get you on a call with one of us so that you can understand how we can help you grow, scale, and create the biggest impact you ever have or maybe a bigger impact that you ever thought possible.

Thank You For Listening!

I am truly grateful that you have chosen to spend your time listening to me and my podcast.

Please feel free to reach out if you have a question or feedback via our Contact Us page.

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With gratitude,


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