Is your business as profitable as you want it to be? And what is the best way to assess whether it is as profitable as it should be?

It is very easy to get lost in the weeds as you diagnose (then work on fixing) any profitability problems you might have in your business. For example, when you begin assessing your profitability, you will have lots of questions run through your head. Questions like:

• Could I be more profitable?
• By how much?
• Says who?
• Based on what?
• Do I have a revenue problem?
• Do I have an expense problem?
• Should I raise my prices?

I have found that the best way to answer those questions is to use what I call the 5-minute profitability assessment.

Create the 5-Minute Profitability Assessment (to determine what your profitability should be).

The purpose of the 5-minute profitability assessment is to quickly determine if your business is as profitable as it should be.

For example, in one company the owner was frustrated because cash was always tight despite the fact that they had made big strides in becoming profitable over the last two years. After completing the analysis, it turns out that profits were only 4% of sales in a business where the norm is closer to 10%. At $4,000,000 in revenues, that meant their Profitability Gap was $240,000 (10% – 4% x $4,000,000).

Now that they had put a number on the profit improvement target (the opportunity), the mission became “closing the profitability gap”.

The goal of this 5-minute profitability assessment is to come up with an estimate of what your annual profit should be (or could be). Your estimate doesn’t have to be right. It just needs to be a number you can write down. You will have plenty of time later to explore your estimate in more detail to determine if it should become your new profitability target.

Here’s the exercise. Take 5 minutes to come up with an estimate of how much money you should make each year in your business. Here are the steps:

• Look at your pre-tax income (your profit before income taxes) for the last twelve months. Divide that number by your revenues (total sales). Jot that percentage down. Let’s say that revenues are $10,000,000 and pre-tax profit is $500,000. So the percentage is 5%.
• Look at your gross margin (gross profit dollars divided by revenues). Use that percentage to lookup your pre-tax profit target range in the chart below. Let’s say gross profit is $4,200,000. So the gross margin is 42%. The pre-tax profit range in the table is 15% to 20% of revenues.
• Pick a pre-tax profit percentage in the range and multiply that times revenues. Write that number down. In my example, I’ll choose 15% (to be conservative). That number times $10,000,000 in revenues is a pre-tax profit target of $1,500,000.

In this exercise, based on my example, the profit target is $1,500,000 and the actual profit is $500,000. The Profitability Gap is the difference, or $1,000,000.

Remember, it’s just an estimate… for now. You will have time to more fully analyze that number later.

Give it a try with your P&L.

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Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

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This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

Buy the hardcover at Amazon.

Buy the Kindle version at Amazon.

Buy the book at Barnes & Noble.

Buy the book at Bookmasters.

Buy the book at Google Play.

If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.

Imagine this. You walk out to your car first thing in the morning to drive to the office. You open the door… get in… put your seat belt on… and start the car.

You wrap a blindfold across your eyes and tie it around the back of your head so you can’t see anything. Then you put the car in reverse and begin your journey!

How far do you think you will go before you hit something? Not far, right?

But That’s What’s Happening in Many Businesses Today

What’s interesting is that the same entrepreneur or business owner that would never put a blindfold on while driving their car is essentially doing the same thing every day when it comes to running their company.

They are hurting their profitability and cash flow (and creating stress and frustration in the process) because they are cruising along on the highway of business with a blindfold wrapped across their eyes. The question isn’t whether there will be an accident. The question is how bad will the crash be… and will the business survive it.

A Reliable Financial Forecast to the Rescue

The cure for this problem is to implement one of the most powerful tools in business – a reliable financial forecast.

Creating the forward looking view of financial performance is a surprisingly effective way to transform the financial future of your company. It will:

• Help you drive growth, profitability and cash flow higher
• Create confidence and clarity about where your business is going financially
• Provide the roadmap for turning your vision and strategy for your business into a crystal clear view of what success should look like financially
• Enhance confidence and credibility with lenders and investors so they provide the capital and support you need to grow your business
• Help you make more confident, profitable financial decisions

In short, a reliable financial forecast will help you win financially in business.

Now Try This…

Stand up and cover your eyes with both hands so you can’t see anything in the room. Now walk to the other side of the room without uncovering your eyes.

That was uncomfortable wasn’t it? Even in a room you are very familiar with, it is uncomfortable trying to do a simple thing like walk to the other side of the room when you can’t see anything in front of you.

Now let’s try that same experiment again, but with a twist. This time separate your fingers just a wee bit so you can peek through your fingers. Now walk across the room.

Much more comfortable isn’t it? That little bit of visibility is enough to prevent you from running into something.

That’s what a reliable financial forecast (a financial projection) is all about.

Not providing complete visibility or certainty. Just providing a glimpse of what lies ahead so you can get where you are going safely.

Defining a Reliable Financial Forecast

By “reliable,” I’m referring to unbiased, reality-based expectation of financial results that is designed for decision-making (not precision).

By “financial forecast,” I’m referring to a full set of forward-looking financial statements (income statement, balance sheet, and cash flows) that includes a 2-minute summary.

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Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future. Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

A Quick Start Guide to Financial Forecasting, will help you create the view through the financial windshield of your business. Learn more here.

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 The Monthly Financial Rhythm

Let’s take a look at how financial forecasting fits into the monthly financial rhythm of business.

Business moves in a rhythm, a cycle. So does financial management.

I call it the TARGET, MONITOR, ADJUST cycle. It’s about setting financial goals and targets, monitoring forecasts and actual financial results, and making adjustments in strategy and execution inside the business when financial results differ from the target or expectation.

The cycle continues every month by making any necessary changes to the financial goals and targets and the resulting forecast/expectations. It’s a Monthly Financial Rhythm designed to help you focus on what matters most. It’s the key to turning financial information into insight… and improved profitability and cash flow.

10 Rules for Creating a Forecast You Can Trust

Creating a reliable financial forecast does not have to be a difficult process. It is really a matter of using a few basic principles together with your intuition and knowledge about the business. Here is a summarized version of the 10 rules for creating a forecast you can trust.

Forecasting Rule No. 1: Think Decision-Making, Not Precision. One thing stopping you from creating a forecast is thinking that you don’t know exactly what the future holds and what will happen if your forecast is wrong.

Transaction processing and creating historical financial statements is about being right. (Here, precision is your friend.) On the other hand, forecasting is about improving the company’s ability to make better business decisions. (Here, precision is your enemy.)

As you create and use forecasts and projections, think decision-making, not precision.

Forecasting Rule No. 2: Think Top-Down, not Bottom-Up. Forecasting uses big-picture drivers and assumptions to create a model of what the financial statements may look like based on existing trends and plans. You have to take yourself up to the 30,000-foot level and look down on the business financially as you forecast.

It’s about painting a picture of what the financial results will likely be based on your knowledge and intuition rather than actual transactions. Your forecast looks at the strategic view and direction of where the company is going—not the nitty-gritty bottom-up details.

Forecasting Rule No. 3: Model a Full Set of Financial Statements. A reliable financial forecast is a living, breathing tool that is updated monthly. The basic format should track with your existing financial statements (income statement, balance sheet, and statement of cash flows in the same format you use for monthly financial reporting) for at least the next six to eighteen months.

Forecasting Rule No. 4: First Look Back, Then Look Forward. One of the biggest mistakes entrepreneurs (and CFOs) make in creating a forecast is to start with a clean slate. They pull up a blank spreadsheet and begin thinking about what the first month in the forecast will look like. The problem is you unhook your forecast from reality when you do that.

The first step should be to drop in actual results for the last six to eighteen months (or more). Have the revenues and expenses been coming in the way you expected them to? Can you see a trend developing? Are you surprised by any of the numbers now that you are looking at the last six to eighteen months of actual results next to each other?

Once you have a good view of what the financial results have been over the last six to eighteen months, you want to look at some of the factors that can make the next six to eighteen months vary from the historical results. That could include things like seasonality, a change in service or product mix, whether you will be expanding geographically, etc.

Forecasting Rule No. 5: Understand the High-Level Company Strategy and Expectations. One of the benefits of forecasting is that it forces you to think about your company’s vision and strategy more deeply. For example, what are the three most critical goals or initiatives for the coming year? Is the company planning to grow slowly or aggressively? Are there plans to move into new markets or attempt to attract new customer segments?

Answering these types of strategic questions forces you to step back and think about the big picture. If you have a CFO it helps him or her “get out of the ledger” and talk to management about their division’s goals or their department’s strategies. It requires you to talk to your board and trusted advisors to get their input and perspective.

Forecasting Rule No. 6: Simplify, Simplify, Simplify. One of my favorite quotes, known as Meyer’s Law, says: “It’s a simple matter to make things complex, but a complex matter to make things simple.”

You will be surprised how difficult this advice is to implement once you begin creating, and regularly updating, your financial forecast. The number of potential rabbit holes you can dive into while forecasting is huge. With all the assumptions you have to make in creating your forecast, it is very important to think about one of the more counterintuitive facts about forecasting: The more detail you bring into the forecasting process, the more error you will create.

The key to success in forecasting is to be always thinking about how to simplify, simplify, simplify…and simplify some more. Simplify the key drivers, critical assumptions, and how you interpret and present the results of the forecast.

Forecasting Rule No. 7: Create a Repeatable Process. Because your forecast will be updated with actual results and the forecast adjusted every month based on current information, repeatability is very important to the forecasting process.

The software tool you choose will impact the success of your forecasting process. The tool must include the underlying logic for forecasting (modeling) a full set of financial statements and perform a number of additional functions. (Chapter 6 in my book A Quick Start Guide to Financial Forecasting is titled Choosing Your Software Tool–Spreadsheets vs. Forecasting Software. This chapter helps you evaluate the pluses and minuses of spreadsheets vs. software tools).

Forecasting Rule No. 8: Be Conservative. Because we know a forecast will not be perfectly accurate, the challenge is keeping it in the “ballpark” as a wildly inaccurate forecast will hurt your credibility. You do that by being conservative in your key assumptions.

It’s like meeting someone for lunch. You agree to meet a good friend at a restaurant at noon. You set noon as the time to meet so you will both be there at about the same time. But despite the precise time you set, you know that both of you will not show up at exactly noon. The only question is whether you will be there a little before noon or a little after noon. Will you be early or will you be late?

It’s the same for your forecast. Your estimates will not be perfectly accurate. You want to err on the side of being conservative. That way the surprises are pleasant rather than unpleasant.

Forecasting Rule No. 9: Condense the Results to a 2-Minute Summary. Creating a reliable forecast and effectively communicating it to your audience starts with making the forecast results simple and easy to understand. Here is a helpful exercise that works especially well when implementing a forecast process for the first time.

Imagine you will sit down with your board tomorrow morning. In that meeting, you will have two minutes to convey the essence of the forecast (key insights, implications, and assumptions) to him or her. That person will then step into another meeting with the company’s key shareholders and lenders to share his or her insight about where the company is going financially. Your mission: Ensure they can share the insights from the forecast with confidence and clarity.

This exercise will force you to distill the insights and implications of the forecast down to what matters most so that you can clearly identify and communicate the most important high-level drivers and assumptions.

Forecasting Rule No. 10: Start for Your Eyes Only. As you make progress in creating your forecast, it’s natural to want to begin sharing it immediately.  However, keep it “for your eyes only”—at least to start.

That means don’t sell your leadership team on the value of having a forecast, don’t talk to them about the assumptions or specifics as you create the forecast, and don’t send the results of the forecast to them—yet.

Instead, spend a few months “beta testing” your forecast to learn from and experiment with the process before rolling it out to the management team or the board. Create assumptions at the highest level possible to prove to yourself that you don’t need to forecast at the detail level. Create the forecast for the next three months, then com- pare the actual results each month. What worked out well? Are you surprised at the difference between your forecast and the actual results?

After running the forecast process for three months, you will become more confident and knowledgeable about the benefits of forecasting and how best to create and present the results. You will learn firsthand where the landmines are to avoid. You will develop a better sense of the kinds of monthly and strategic decisions that the forecast can help you answer and influence.

Creating a Brighter Future for Your Business

A reliable financial forecast can play a huge role in your journey to financial success in business. It will help you:

• Define where your company is going financially (and where you want it to go)
• Expose the danger and opportunities that lie ahead
• Create a road map to get you there safely and on time
• Monitor the pace and progress on the journey to financial success

Best of all, it is a surprisingly effective tool in helping you increase profitability and improve your cash flow.

And it all starts with a reliable financial forecast. 🙂

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Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

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This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

Buy the hardcover at Amazon.

Buy the Kindle version at Amazon.

Buy the book at Barnes & Noble.

Buy the book at Bookmasters.

Buy the book at Google Play.

If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.

 

Click Here – Your Free Membership Gets You Instant Access to the Rapid Learning Guide
(If you are already a member, you will get instant access to the guide. If you are not a member, you can sign up for the free membership. It only takes about 15 seconds when you click the link.)

The Problem

Your business is profitable… but for some reason your cash is always tight. It almost feels like there’s a cash flow leak somewhere in your business. But you’re not sure where the leak is… or why it’s happening… or how to fix it.

Maybe you had to put money into your business recently… and you’re concerned you may have to put more in soon. You’re frustrated because the business should be making distributions to you, not the other way around!

You asked your CPA to explain what’s going on. But their response just muddied the waters even more. They sounded like they were speaking in a foreign language which only made the problem seem even less understandable. (I can say that because I’ve been a CPA for over 30 years now. I know how accountants and CPAs were trained. And I know they were not trained to make financial information simple and easy-to-understand.) 🙂

Maybe the Problem Will Go Away

With no real answers or solutions, you try to get back to running your business. Yes, that nagging sense of doubt and confusion about your cash flow continues to float around in your head. But you try not to let it drag you down too much. And you try not to let your employees or customers see the worry you are feeling.

Take a minute to imagine this: Imagine you are a student in a college classroom. You don’t understand the material being presented to you in the class. When the professor speaks, it sounds like gobbledegook. You’re confused and frustrated… and a little scared. “How am I going to do on the tests? What kind of grade will I end up with at the end of the semester? What if I fail this class?”

You would either drop the class or you would find someone to help you figure out the material. Failing the class is not an option, correct?

In business, if there is a problem to be solved, and solving it is important to your success (and survival), you either get someone else to solve the problem for you or you solve it yourself. Those are the only two smart options available to you.

In this blog post, I’ll introduce you to step one to solving a cash flow problem (or a cash flow mystery).

The first step is to create a simple tool to help you understand what’s going on with your cash flow. Once you have a simple understanding of what’s going on with your cash (your money), the path to improving your profitability and cash flow will jump out at you.

When you truly understand your cash flow each month, you unlock the door to an amazing new world. You will find financial decisions become easier.

You will feel a weight lifted from your shoulders. It even makes it easier to see what’s about to happen financially in your business. You will feel a brand new sense of confidence and control.

And best of all, it will free up your energy and unique abilities so you can focus on what you do best in the business.

And it all starts with learning a simple approach to understanding your cash flow.

It’s Time to Simplify Your Cash Flow

If there’s a secret to understanding cash flow, it’s getting laser-focused on simplification. In a strange way, simplification has become a long, lost art in the CPA and bookkeeping community. The financial professionals providing financial statements and tax returns for entrepreneurs and business owners are inadvertently adding to the problem. They are complicating the picture rather than simplifying it.

The first step in simplifying cash flow is to ask and answer this one question every month:

“What Happened to the Cash Last Month?”

One of the beauties of asking a simple question like that is it deserves a simple answer (and very little work to arrive at the answer). As Albert Einstein said:

“If you can’t explain it simply, you don’t understand it well enough.”

Consider this. You are about to sit down with your banker or your business partner or an investor. You have 2-minutes to briefly explain to them what happened to your cash last month.

Not the nitty, gritty, greasy, grimy details. They just want a short, big picture discussion about your cash flow. Your mission is to provide them that understanding while also demonstrating that you know what’s going on in your business financially.

Do you stumble and struggle to explain what happened to the cash… and eventually suggest they talk to your accountant or CPA? If so, then they won’t get the basic information they want from you and you’ll look clumsy and weak in the process. That’s a warning sign you should pay very close attention to.

I’ll show you how to confidently and credibly explain what happened last month in a way they can understand and relate to… and help you look smart in the process? This is the secret to creating confidence and trust in the minds of those who can help you fund and grow your business.

Business Owners and CPAs Don’t Think Alike

The primary challenge is that the tools created to manage cash flow were developed with accountants in mind… not business owners. But that approach doesn’t work so well because entrepreneurs and accountants don’t think alike. They come at things from a very different perspective.

I learned that lesson very early in my career as a CPA and a CFO. I discovered the secret to becoming effective with entrepreneurs was to simplify cash flow down to a non-accountant, common sense, simple message that a business owner can relate to.

Here’s what I mean:

1. You should be able to explain what happened to your cash last month in a 2-minute conversation (to yourself, your business partner, your CEO, your banker or maybe even your spouse).

2. It should only take 10 minutes of work to get to that answer

To achieve both of those objectives you have to simplify the process (so it only takes 10 minutes a month) and you have to ensure the process provides information about your cash flow that is easy-to-understand (so you can explain what happened to the cash in a 2-minute conversation).

Here’s how you do that:

• Focus on only the three largest changes (drivers) in cash last month
• Write a one-line explanation of each change
• Determine whether each change is good or bad

You will be surprised the insight you get into your cash flow each month by following those three simple steps.

The Cash Flow Focus Report

The Cash Flow Focus Report provides the solution by bringing common sense principles together with a simplified presentation of cash flow. It provides the structure and format to help you keep it simple.

• It could fit on an index card (or even a Post-It note) so it helps keep the work to 10 minutes or less. (I prefer the spreadsheet version though so I can easily save it each month.)
• It provides three rows so you can enter the three largest changes in your cash for the month you are looking at. (I pull the three largest changes in cash from the standard Statement of Cash Flows report from your accounting system. You can grab the three largest changes then toss the Statement of Cash Flows report.)
• It forces you to think about what caused each change and write a one-line explanation. (Can’t provide a long-winded answer in only one sentence, right.)
• You evaluate and write down whether each change is good or bad. (Not all changes that reduce cash are bad and not all changes that increase cash are good.)

For one business owner, their 2-minute explanation (after completing the Cash Flow Focus Report) looked like this:

“We made $350,000 over the last six months but cash was down by $50,000. The reason for the reduction in cash (despite strong profits) was the new facility we purchased for the Texas expansion and an increase in accounts receivable based on landing ABC Co. as a new customer.”

Removing the Cash Flow Mystery

After you use the Cash Flow Focus Report for a couple months, something interesting will begin to happen. The mystery around cash flow will start to disappear.

You will find yourself spending less time worrying about what’s going on with the financial side of your business. You will begin making more confident decisions because you have a better understanding of how your day-to-day business decisions impact your cash flow (and your cash balance).

And best of all, you will free up more of your time to do the things you really enjoy in the business.

And it all starts with learning a simple approach to understanding your cash flow.

I have created a Free Rapid Learning Guide to help you put the Cash Flow Focus Report to work in your business. It’s titled Cash Flow Made Simple. You can download it from the free member area.

Using the Cash Flow Focus Report is the fastest way to zero in on what’s really going on with your cash flow. You will be surprised how quickly it points you to problem areas (and therefore to profit and cash flow improvement opportunities).

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Philip Campbell is a CPA, financial consultant, and author of the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to win financially in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange. He helps put the structure and tools in place so the financial side of your business is strong and provides the insights you need to make money, improve cash flow, and grow your business successfully.

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Understanding Your Cash Flow – In Less Than 10 Minutes

This online course goes deeper into the Cash Flow Focus Report and teaches you the step-by-step process for simplifying your cash flow. I walk you through each lesson while you watch, listen, read and try it yourself using your own cash flow numbers.

The course is very affordable. And there are also some coaching options available if you would like to get up and running fast.

It’s a fantastic way to learn the process.

I take all the risk out of your purchase because I include a 100%, no questions asked, money-back guarantee. You love it or you get your money back in full. Period.

There are two things that are very unique and exciting about this online course.

1. I’ll show you how to understand your cash flow in less than 10 minutes

2. I’ll show you how to explain what happened to your cash last month to your business partner or banker (or maybe even your spouse) in a 2-minute conversation.

I take off my CPA hat and I speak in the language every business owner can relate to. No jargon. No stuffy financial rambling. Just a simple, common sense approach that only takes 10 minutes a month.

Here is how one business owner describes the benefits of the course.

“I googled cash flow projections and found your website online and it appealed to me mainly due to the fact that you speak in laymen’s terms in a way that a non-financially trained person can understand.

The fact that you said you can understand your cash flow in less than 10 minutes a month was also a big reason I bought it.  And the fact that you acknowledge that most accountants and CPA’s speak in terms that the normal owner cannot understand and that you would be able to put things in understandable terms really got me.

The monthly cash flow focus report was the best feature for me because learning to do it helped me understand my cash flow statements and the biggest drivers of cash flow.

Another significant benefit is the definitions of cash flow drivers and descriptions of how a negative or positive sway in cash within those drivers affects cash flow.  Being able to see at a quick glance monthly what happened to your cash using the focus report is a huge benefit.”

Click Here to Learn More about the Cash Flow Course

 

Some words seem odd together. Here are some examples:

• Found missing
• Same difference
• Reality television
• Long shorts
• Adult male 🙂
• Silent alarm

Something about those words just makes you go Hmmmmmm?

So what about these two words – Financial Rhythm?

Sound strange? Or sound interestingly at home next to each other?

I Love the Words Financial Rhythm

For me, the words financial rhythm capture the essence of what financial management in a business is all about. As a seasoned CFO, the words financial rhythm paint a beautiful picture in my head of what driving profitability, cash flow and wealth is all about in a business.

A business with an orchestrated financial rhythm in place is a business that takes care of its owners financially. Profits and cash flow are strong. Wealth is being created. Value is being created. Music is being made. There is a pulse, a flow, a cadence at work in the business.

The opposite is a business that struggles financially. A business whose finances are disorganized and chaotic. The music it plays sounds more like scratching your fingernails across a chalk board. There is Financial Chaos at work rather than a natural financial rhythm.

Implementing the Financial Rhythm

There are three parts to implementing an effective financial rhythm in your business.

1. The 3-Part Plan for creating financial health, wealth, and freedom. I created a Free Report that shows you this 3-Part Plan and how it can breathe financial life back into your business. You can grab the report with your free membership at Financial Rhythm.
2. The profits, cash flow, net worth cycle. Understanding and managing this cycle wisely is critical to your financial success. Each component plays a different role in creating wealth. And each component requires specific tactics and strategies in order to create what I like to call Happy Owners (business owners who are creating and enjoying financial success). 🙂 I will be writing a lot more about how to effectively manage and improve this cycle for the free members here at Financial Rhythm.
3. The Monthly Financial Rhythm is a defined process that ties it all together. It is a systematic and methodical process that operates every month to create order and insight. Here is a blog post that talks about the essence of the Monthly Financial Rhythm.

Would Financial Rhythm Be a Good Fit for Your Business?

Financial Rhythm is a membership website for people who are serious about creating financial health, wealth, and freedom in their business.

If you’re an entrepreneur or business owner, Financial Rhythm is a place to get simple, actionable strategies for creating a financial future that is bigger and brighter than your past.

And I deliver it all in the language of the business owner.

I have been a CPA for 30 years now. Most of those years in CFO roles. As a CFO, it was my job to work closely with the CEO to help guide the company toward financial success. Because it’s impossible to win in business overall without winning financially.

Profits and cash flow are the fuel that powers the engine. You can’t be weak financially and expect to create a successful company. You have to be strong. And that requires a very strategic approach to managing the financial side of your business.

That’s what Financial Rhythm is all about.

• Thinking strategically about what you are trying to create (from a financial perspective).
• Putting a system in place that is smart, effective, and easy to follow.
• Strategically managing the financial side of your business to create financial health, wealth, and freedom.

That’s how you tap into the natural rhythm of business and money.

Your Free Membership is Step 1

I invite you to accept a free membership to the Financial Rhythm website.

It only takes a few seconds to enter your sign up information. Then you’ll get instant access to tips and strategies to help make your business strong financially. All at no cost and no obligation.

I believe that making money is good… and having money is even better.

Making your business strong financially is not only good, it’s smart. That’s not greed. That’s just recognizing the reality of business. Your business has to be healthy in order for you, your employees and your customers to survive and thrive.

Here’s to your financial health, wealth and freedom in your business.

Click here to join the free membership area.

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Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

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This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

Buy the hardcover at Amazon.

Buy the Kindle version at Amazon.

Buy the book at Barnes & Noble.

Buy the book at Bookmasters.

Buy the book at Google Play.

If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.

---

Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business

I have created a free report that dives deeper into the 3-Part Plan and each of the 10 steps in the system for making your business stronger financially. And I am making it available at no cost as part of becoming a member of the Financial Rhythm Membership Group.

Financial success in business can transform your life and the life of everyone who is counting on you financially. Winning financially is an important prize in business.

But there’s no magic wand you can wave that will instantly create financial success. Winning financially in business is a journey. It’s about deciding what you are trying to create financially. Then creating a plan to get you there safely and on time.

This free report provides you an achievable, 3-Part Plan you can begin implementing today. You will be surprised and delighted at the speed with which you see financial results and feel the benefits.

You can sign up for the Free Membership and get instant access to my Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business.

And for a limited time, in the Free Membership Area you can download a free copy of my book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore.

Grab Them Both Right Here – Its Free

When you were a kid, did you have a dream of what you wanted to be when you “grew up”?

I did. In fact, three of them.

Here is a quick peek into my evolution as a guy who loves business (especially the financial side of business). I had three dreams or visions for my future as I grew up.

Here is the short version of each one.

Dream #1

First, I wanted to be a rock n roll lead guitar player. I’d have long hair and a van and play huge crowds. I’d be the best guitar player around. I had imagined it vividly in my head. I was a bona fide Rockstar (in my own mind).

My Mom never would let me grow my hair long (we had some arguments over that often) but she did buy me a black Les Paul copy one year for Christmas. The problem is I realized in short order that I had no talent with the guitar and I was not coachable.

So much for that goal!

Now I live out this dream by enjoying “old school” rock and roll hairbands. Going to their concerts is one of my favorite non-business forms of entertainment. I enjoy LA Guns, Faster Pussycat, Cinderella, Motley Crue, AC/DC, Def Leppard, Tesla, and a lot more! 🙂

Dream #2

My second dream was to be a corporate jet pilot. I got my pilot’s license when I was 17. I worked (pretty much lived) at the Beaumont Municipal airport (in Beaumont, Texas). I fell in love with corporate jets in the process.

On some weekend nights we would rent a Cessna 172 and fly to Houston Hobby airport or to the airport in Jennings, LA. In Jennings, we could taxi over to a parking spot right next to what was then a Holiday Inn and have dinner. It was super cool.

We would have dinner then fly back. Great memories.

I realized I was not prepared to put in the time to get the hours necessary to start making money as a pilot. And I wasn’t going to the military because it seemed a bit too rigid for me at the time. (My little brother did go the military route and he flies F-16’s in the Air Force and National Guard). I ended up with about 220 flight hours.

I got to enjoy being in the sky later in my 40s through skydiving. I have about 150 jumps under my belt.

Dream #3

My third dream was to become a business kind of guy and focus on the financial side of business. I’d team up with smart entrepreneurs and provide a unique approach to adding value, creating financial insight (especially around cash flow), and helping them grow a company and make it worth a lot of money (and provide an outstanding product or service to customers at the same time).

I’d be a CPA who understood the business owner’s perspective. I’d be a CFO that could help a business owner create a great company that was a success financially. I wouldn’t be a typical accountant.

Now that’s fun. I found my niche!!!

Focusing intently on adding value, and owning a piece of the companies I work with, has worked out very well for me. I can’t tell you how much I enjoy working with smart entrepreneurs and business owners.

Let me know if you are one of those smart entrepreneurs I love to team up with.

Maybe it’s time to build a strong financial foundation and really crank the growth engine up. Times a wastin! 🙂

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Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

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This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

Buy the hardcover at Amazon.

Buy the Kindle version at Amazon.

Buy the book at Barnes & Noble.

Buy the book at Bookmasters.

Buy the book at Google Play.

If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.

---

Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business

I have created a free report that dives deeper into the 3-Part Plan and each of the 10 steps in the system for making your business stronger financially. And I am making it available at no cost as part of becoming a member of the Financial Rhythm Membership Group.

Financial success in business can transform your life and the life of everyone who is counting on you financially. Winning financially is an important prize in business.

But there’s no magic wand you can wave that will instantly create financial success. Winning financially in business is a journey. It’s about deciding what you are trying to create financially. Then creating a plan to get you there safely and on time.

This free report provides you an achievable, 3-Part Plan you can begin implementing today. You will be surprised and delighted at the speed with which you see financial results and feel the benefits.

You can sign up for the Free Membership and get instant access to my Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business.

And for a limited time, in the Free Membership Area you can download a free copy of my book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore.

Grab Them Both Right Here – Its Free

Business moves in a rhythm. Money moves in a rhythm. It’s that same rhythm that provides the answer to how to properly manage and improve your financial results.

Let’s say you’ve decided to take control of the financial side of your business. You want to put a mature process in place to help you grow your business and drive your profitability and cash flow higher.

Right now your numbers bounce around each month. You are not reliably hitting your financial goals or budget. Your profits are weak. And you don’t feel like the financial side of your business is under control the way it really should be.

So you write down the following goals:

1. Focus on the key drivers/metrics of financial performance.
2. Create a reliable forecasting/projections process so we can evaluate the financial and cash flow implications of various scenarios, decisions, and strategies we are considering.
3. Turn our monthly financial statements into an effective decision-making tool.

These are three areas that are either weak in your company or they’re in dire need of what I lovingly refer to as “Adult Financial Supervision”. (That’s a fun way I like to describe what a seasoned, strategically focused CFO can bring to a business.) 🙂

The Benefits of the Monthly Financial Rhythm

The way you achieve these goals is to implement what I call the Monthly Financial Rhythm. Here’s how the process works.

The Monthly Financial Rhythm is about setting operational and financial TARGETS, MONITORING projected and actual financial results, and making ADJUSTMENTS in strategy and execution inside the business when results differ from the target or expectation.

It’s a monthly process meant to speed up and improve your decision-making ability. A fast feedback loop makes it possible to quickly identify strategies that need to change because results are not in line with expectations.

Target – The targets are usually the key financial and non-financial metrics that drive from the vision and strategy of the company. A company in restructuring mode would have different targets than a company trying to scale and grow. The targets can change as well depending on short-term financial goals. For example, one quarter you might have specific goals related to collecting receivables faster. Another quarter might include a focus on reducing a certain expense category. There will generally be about 3 to 5 targets at any time. But the mix of targets/metrics will vary during the year.

Monitor – Monitoring is about creating a reliable financial forecast (expected financial results) and creating actual results. A reliable financial forecast is a fully modeled set of financial statements over at least the next six months. Actual results are financial statements and the related drivers of results that are fast and accurate. The combination of the forecast and actual results must be converted into insight (not just numbers or financials) for the management team. This is accomplished with the Monthly Confidence Package that is tailored to the business.

Adjust – Insightful financial information is then used to determine whether the specific action plans and strategies being executed throughout the company are working as expected. The management team is on board because they understand the financial goals and the related metrics being tracked. We have helped them learn how to use the monthly financial information to compare the actions they are taking in the field to the financial implications in the financial statements. Now they have a tight link between plans and the actual results. Adjustments to strategies and tactics in the field can be made quickly when the information suggests something is not working the way we intended it to.

The cycle continues every month by making any necessary changes to the financial targets and the resulting forecast/expectations.

It’s a monthly rhythm designed to focus you and your team on what matters most and help you turn your financial information into insight.

Looking at Your Financial Information in a New Way

The Monthly Financial Rhythm will help you set financial targets and goals then work on monitoring and achieving them. It provides fast feedback about whether you are actually achieving your financial goals or not. That way you can make changes within the business as necessary to achieve your goals.

The most exciting part of the Monthly Financial Rhythm is that it forces you to think about your financial information in a new and exciting way.

To be useful, your financial statements must be fast, accurate, AND insightful.

You can’t rely on an outside CPA to create your financial statements and send them to you 30 days after the month has ended. That’s way too slow.

To be insightful, the financial statements and related information must include projections (a financial forecast) so you have a clear expectation of what the numbers should look like before the month has even started.

And there has to be a focus on the key drivers of performance so you can easily link the financial information to what you are doing day-to-day to drive financial results.

It’s fun. It’s rewarding.

And maybe, just maybe, it’s time to put the Monthly Financial Rhythm to work in your business!

I sincerely believe that the Monthly Financial Rhythm is the most important thing you can implement in your company if you are serious about creating financial success.

Try it! Email me if you need help getting started.

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Philip Campbell is a CPA, financial consultant, and author of the book A Quick Start Guide to Financial Forecasting: Discover the Secret to Driving Growth, Profitability, and Cash Flow and the book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore. He is also the author of a number of online courses including Understanding Your Cash Flow – In Less Than 10 Minutes. His books, articles, blog and online courses provide an easy-to-understand, step-by-step guide for entrepreneurs and business owners who want to create financial health, wealth, and freedom in business.

Philip’s 30 year career includes the acquisition or sale of 33 companies (and counting) and an IPO on the New York Stock Exchange.

---

This book provides a straightforward, easy-to-understand guide to one of the most powerful financial tools in business: a reliable financial forecast. It will transform the financial future of your company and help you make better, faster, smarter financial decisions.

Too many entrepreneurs and CEOs today are feeling more like passengers than drivers in their business. They’re staring at their rearview mirror as they bounce along in the passenger seat. Their company is careening along on the highway of business as they wonder and worry about where their business might end up financially.

A reliable financial forecast solves this problem by providing a clear view through the financial windshield of your business. It creates the visibility and clarity you need to drive your company toward a bigger and brighter financial future.

What if you had answers to questions like:

What’s about to happen to my profitability and cash flow?

How much cash can we distribute to the owners of the business?

How long will it take to pay off our debt?

What will our taxable income be this year?

A reliable financial forecast puts the answers to these questions at your fingertips. It helps you take control of your profitability and cash flow because it gives you answers to the most important financial questions you have to deal with every day.

Put yourself in the driver’s seat of your business by tapping into the unique and exciting benefits that financial forecasting can unlock for you.

Buy the hardcover at Amazon.

Buy the Kindle version at Amazon.

Buy the book at Barnes & Noble.

Buy the book at Bookmasters.

Buy the book at Google Play.

If you already own the book, the free tools and downloads are waiting for you. Click here to access the financial spreadsheets, examples, rapid learning guides, and more.

---

Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business

I have created a free report that dives deeper into the 3-Part Plan and each of the 10 steps in the system for making your business stronger financially. And I am making it available at no cost as part of becoming a member of the Financial Rhythm Membership Group.

Financial success in business can transform your life and the life of everyone who is counting on you financially. Winning financially is an important prize in business.

But there’s no magic wand you can wave that will instantly create financial success. Winning financially in business is a journey. It’s about deciding what you are trying to create financially. Then creating a plan to get you there safely and on time.

This free report provides you an achievable, 3-Part Plan you can begin implementing today. You will be surprised and delighted at the speed with which you see financial results and feel the benefits.

You can sign up for the Free Membership and get instant access to my Free Report: A 3-Part Plan to Breathe Financial Life Back Into Your Business.

And for a limited time, you can download a free copy of my book Never Run Out of Cash: The 10 Cash Flow Rules You Can’t Afford to Ignore.

Grab Them Both Right Here – Its Free