Home Forums Money matters bad with numbers. what to do?

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  • #1189377
    IanMac
    Member
    • Total posts: 6

    Hey Jim

    If you’ve got some specific questions then fire away, happy to help out.

    II am a management accountant and this is an area I help business owners with. Having worked in large organisations and government departments (where nearly all management accountants reside) most of my career, I now focus on small businesses.

    Your issue is a common problem – bookkeepers are mostly focused on the transactional level while tax accountants are mostly focused on regulatory matters.

    A management accountant helps business owners make better business decisions by focusing on numerical information derived from operational needs.

    Here are some of the areas that management accountants look at:

    Costing & pricing products/services
    Profit & break-even calculations
    Cash flow forecasting & management
    Performance analysis (at company and customer/product levels)
    Budgeting & forecasting

    For some general info on my work you can check out http://www.thefinarc.com

    But as I said, if you have any specific questions let me know on the forum.

    Cheers
    Ian McCarthy

    #1189378
    Kelly Exeter FS Editor
    Member
    • Total posts: 241

    Hey Jim – I am very much you. Zero. Interest. In. Numbers.

    And since my mum took over the books of our business … even less so! Every month she send this beautifully detailed monthly report and all I do is head straight for the bottom line: did we make a profit?

    I have always taken a similar approach to our household accounts. We have amazing finance guys and accountants and they keep an eye on everything for us and ensure that we’re making more than we’re spending.

    But recently, circumstances dictated that I pay a bit more attention to what was happening with both our business and household accounts. And I was dragged to it kicking and screaming. But after a very very painful day or two getting my head around everything, I now know the key things that I need to be keeping an eye on on a daily basis … and I feel much more in control of that side of our business/home life … but without the need to be totally across ALL of it.

    I guess the key is to sit down with the right person and have them point out to you the bits that should be most important to you.

    Another area of business that is VERY worth tracking is incoming enquiries vs conversions. This great podcast from James Schramko explains why.

    #1189379
    16k_zx81
    Member
    • Total posts: 43

    Hi Kelly

    Thanks very much for your thoughtful reply. Your experience reaffirms my thinking in starting this thread, and its nice to hear from someone who totally gets where I am at :)

    So far I have had one sit-down with my bookkeeper, which was really illuminating. We will be meeting again in 2 days, and probably will continue for some number of sessions till we are both able to see things the same way (fortunately she’s a patient soul, which I am grateful for, given my slow-on-the-uptakeness with anything to do with digits)

    I have also met with a potential accountant.

    Basically the way the conversation occurred mostly with her looking at my tax documents, and shaking her head, with a concerned expression

    Her “oh.. they’re bad”

    Me “yes I know that. I was hoping you could shed some light on things. Thats why I am here”

    Her “Oh and this (a number) – this is bad”

    Me “yes. I am aware”

    Her “This… is bad” (some other numbery thing)

    Me “mmm…”

    Basically this went around and around for about 30 minutes, and she suggested I consider a business coach.

    So not an entirely unproductive meeting, and I emerged worried, but more determined than ever to figure all of this stuff out

    Anyway, thats where Im at so far.

    Jim

    #1189380
    BradTurville
    Member
    • Total posts: 55

    Hey Jim, well I’ll be a bit contrarian to this thread, I love numbers (being a 3rd generation accountant will do that to you)

    Here’s the thing, you are not alone, as you can tell by fellow FS members comments. I’ve rarely met a business owner that is naturally good at numbers but I also rarely meet a successful business owner that doesn’t know their numbers. That doesn’t mean doing an MBA but more-so knowing the key drivers in your business. This could be average hourly rate, website visits per month, conversions, gross profit %, free cashflow etc.

    For example, I’ll nail these down with a client, setup a financial dashboard (just like your car has) that is linked to Xero and updates every few hours. You just check out the dashboard showing the important things and we setup alerts just in case “you know what” hits the fan. That means I’ll know when your GP% goes through the roof, jump on the phone, say hey Jim this has happened and this is what it means and this is what you need to action now before it gets worse. We’ll also chat once a month using the dashboard as a foundation of conversation.

    Now I’m not here for a shameless plug but I believe this is how your accountant should be working with you. For me, I’d be doing my clients a complete disservice if I only just did their tax year on year.

    Your bookkeeper does everything on a detailed transactional level including BAS and payroll (note: xero, receiptbank and deputy now automate a massive chunk of this) so you only need to jump on Xero to do your invoicing, but I’d suggest you delegate that job too. Remember, don’t get good at the small things.

    I’ve got a tonne of content on my site that I’ve personally written or shot on video, so feel free to go nuts. Maybe the FS team might even get me to do an article for their site!?

    If you like, there is an ebook checklist on my website of the 11 things your accountant should be doing for you. Feel free to use it on the potential accountants you chat to. I’d love to hear how they stack up :)

    (Hey [USER=63738]@Kelly Exeter FS Editor[/USER] great mention of James Schramkos content. I’ve implemented much of his advice and haven’t looked back)

    #1189381
    InvizBiz
    Member
    • Total posts: 3

    Hi Jim,

    Your story is a familiar one… and the reason I started my business more than three years ago. I am a Management Accountant and having worked in the corporate world for 25 years, decided to change the way I worked!

    Working with Small Business is far more rewarding, helping business owners take control of their finances.

    As you said, Your Tax Accountant is primarily concerned with two things, your statutory obligations and minimising your liability. Your book keeper completed the transactions. Interpreting the information in your business and using it for strategic purposes is the role of a Management Accountant.

    I provide this service to small medium business owners. The challenge you face in doing a course, is that the learning will not be tailored to your business. You don’t want to be an Accountant you want to learn how to use the information to back your instinctive decisions, create budgets, set prices etc.

    If you want to know more check out http://www.ibsgc.com.au

    Thanks Helen

    #1189382
    Kelly Exeter FS Editor
    Member
    • Total posts: 241
    BradTurville, post: 223415, member: 37911 wrote:
    (Hey [USER=63738]@Kelly Exeter FS Editor[/USER] great mention of James Schramkos content. I’ve implemented much of his advice and haven’t looked back)

    Seriously one of the smartest people I’ve ever met. And I’ve met a LOT of smart people!

    #1189383
    Evertrue
    Member
    • Total posts: 10

    Ok, so I AM a numbers person, always have been. But while I may not know what it’s like to NOT be a numbers person, I do know lots of people who struggle with basic business skills because of it.
    You don’t have to be good at maths or numbers, you just need to trust that the numbers will never lie when it comes to making decisions, and as the business owner, you need to know what those numbers are saying. Bookkeepers and accountants can guide and assist, but at the end of the day you need to see it for yourself.
    This is my business now. I have left being a bookkeeper to focus on educating business owners to develop their skills in understanding the numbers in their business, via email training programs and online workshops. These platforms cater to business owners who have no idea where to start, through to experienced owners who want to dig a bit deeper.
    I am really passionate about helping all you “non-numbers” people that it’s not as scary as you think, you just need to change the approach to something that works for you. Everyone’s brain works in a slightly different way, but numbers never lie, and every business owner should be able to trust them to develop their business.
    My website is: http://www.evertrue.com.au, and in light of seeing this post for the first time today, I will host a free webinar early next week to further explain what I mean.

    #1189384
    getcontented.com.au
    Member
    • Total posts: 136

    I’d recommend a slightly different approach.

    People tend to be very afraid of numbers. Honestly this is probably due to a lot of reasons, one of which is being exposed to disinterested adults at formative periods in our lives when we begin to work with numbers.

    The other thing that can turn us off numbers and math is that they’re abstract tools. This makes them very useful, but very hard to understand. People who are “good at math” are just good at connecting the abstract back to the concrete.

    I don’t think it has to be this way. If we take charge of our own understanding and learning, and don’t care about “seeming dumb” (even though it sucks to seem dumb), then we can learn just about anything, given enough persistence.

    When I was a kid, my math teacher at the time couldn’t “ground my understanding” of quadratic equations. I was very interested in math as a kid. This teacher couldn’t give me a practical example of quadratics. Now, this wasn’t really her fault, per se, but perhaps what she should have done is encourage me to find out an answer myself rather than give me a “bull” answer. She was probably giving me an answer so she didn’t feel dumb, but also because they’re a fairly abstract thing that’s quite tricky to find a simple example of in real life (working out where a ball will land when you throw it on an angle is *kind of* an example).

    I’d like to encourage you by saying you *can* learn the numbers. Find out a little every day. Start today. Do it bit by bit. Use Khan academy, use wikipedia, and do a lot of googling, and you’ll find the answers pretty easily. Break it down, always into smaller pieces. A lot of what people consider “the numbers” is actually just learning the names for things, particular when talking about finance-based math.

    If you don’t understand the “numbers” at least to some degree yourself, then you don’t understand the core of your business, and that would be a shame! If you don’t understand the numbers, how do you make decisions about how much you can discount something without it costing you money? Not to mention hundreds of other decisions?

    Hope to help.

    #1189385
    Accolution
    Member
    • Total posts: 61

    Hi Jim,

    You’ve received some great advice – here’s one more quick perspective to help you with the numbers.

    Build a few key Financial Metrics!

    You need to understand what financial metrics or key numbers drive your business and focus on improving them – period.

    You don’t need to understand all the numbers (that’s what your bookkeeper and accountant should do).

    That’s what I did as CFO for public company division – now I do it for small business.

    Happy to help.
    Dan.
    0404 766 285

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