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Simple Numbers, Straight Talk, Big Profits!: 4 Keys to Unlock Your Business Potential
Simple Numbers can guide you to increased business profitability! Take the mystery out of small business finance with this no-frills guide to understanding the numbers that will guide your business out of any financial black hole. Author Greg Crabtree, a successful accountant, small business advisor, and popular presenter, shows you how to use your firm's key financial indicators as a basis for smart business decisions as you grow your firm from startup to $5 million (and, more!) in annual revenue. Jargon free, and presented in an easy-to-follow, step-by-step format, with plenty of real-world examples, Crabtree's down-to-earth discussion highlights the most common financial errors committed by small businesses, and how to avoid them. You'll be fascinated to learn: Why your numbers are lying to you (and why you are the cause!) How labor productivity is the key to profitability and simplifying human resource decisions Why the amount of tax you pay is
200 pages, Hardcover
First published July 26, 2011
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Displaying 1 - 30 of 81 reviews
January 2, 2016
I wish I had this book earlier in my business life as it talks directly to the biggest mistakes I made with finance in my first, now failed company. He is a straight talking writer who makes you look at yourself and stop lying about how well you think you are doing, and actually gives you the simple and proven ways to make sure you are on the right track. While the book is about finances mostly, he does talk about culture, hiring staff, and co-founders. I think it's a must read for anyone in business.
January 19, 2016
This book should be required reading for any entrepreneur attempting to start or run a small business. I wish I had read it 17 years ago when I started my company. Hopefully, it's not too late, now that I know how to look at the numbers intelligently -- and what numbers to look at. Essential for financial survival, especially post-2008, for all small business owners.
March 20, 2019
If I'd read this book 18 months ago before I started Casbeg I probably wouldn't get the brilliance of this book. But maybe, 6 months after we've started the company would be the right time.
The title says it like it is. It's simple. It's around profits and other business metrics. And it's a very down-to-earth approach for a down-to-earth businessman and women.
If you feel like you suck at finance and feel that P&L, Profit statements, and balance sheets are way too complicated and overwhelming - this is a book for you. I certainly did. And now, it became more understandable and not so overwhelming.
Highly recommended if you already run your own business.
The title says it like it is. It's simple. It's around profits and other business metrics. And it's a very down-to-earth approach for a down-to-earth businessman and women.
If you feel like you suck at finance and feel that P&L, Profit statements, and balance sheets are way too complicated and overwhelming - this is a book for you. I certainly did. And now, it became more understandable and not so overwhelming.
Highly recommended if you already run your own business.
February 16, 2019
Simple Numbers, Straight Talk, Big Profits! - This is a fantastic book for understanding your numbers as a business owner. The author does a great job of providing tactics and direction for navigating topics like valuing the business, labor productivity, taxes, forecasting, and much more. The book is 177 pages long (not a single one wasted) and each chapter ends with a summary of key concepts. There are several charts and graphs for visual representation and a few situational examples to give you a wider perspective. This book is a must read and would be a great compliment to Profit First by Mike Michalowicz (which is also a must read).
July 14, 2019
I'm super curious how people with an approach "I don't need precise data because I KNOW WHAT I'M DOING without numbers" will rate this book.
Great explanation of the practical aspects of finances for founders. Not too wordy (which is very rarely for business books from the USA) I would even say as long as it should be. Examples show what are the long term consequences of different approaches to profitability.
I had been studying finance and accounting for 5 years and I saw many times how people who teach finances tend to overcomplicate them. The author has a skill of explaining things in a clear and simple way.
Great explanation of the practical aspects of finances for founders. Not too wordy (which is very rarely for business books from the USA) I would even say as long as it should be. Examples show what are the long term consequences of different approaches to profitability.
I had been studying finance and accounting for 5 years and I saw many times how people who teach finances tend to overcomplicate them. The author has a skill of explaining things in a clear and simple way.
June 10, 2018
Crabtree has many interesting insights regarding selling a business, understanding the valuation for business, and key financial indicators that monitor the health of a company. He is an accountant and I am not, so some of the concepts and examples were over my head - but for anyone seeking to have a better financial understanding of their business, this is a great resource.
August 15, 2021
If you are starting up your own business, then you have to read this book. It is essential reading to understanding basic economics and finance of your business!
December 2, 2023
I can only dream as far as I can see . . .
And when I get there, I can always see farther.
—Anonymous
You get paid a salary for what you do, and you get a return on what you own.
Your business’s number one key performance indicator is this: How big a check did you write to the IRS this year?
Beware of people who promise to lower your tax bill to 10 percent or less. They are using the effective tax rate as a lure to have you spend all your profits to lower your tax bill.
DETERMINING A MARKET-BASED WAGE
Think of it like this: If you got run over by a bus today and your heirs decided they would keep the business going in your absence, what would they have to pay someone to do your job?
Economic Research Institute’s Salary Survey Assessor ( www.erieri.com). It is one of the main salary survey sites, and it’s the engine for most salary surveys. I’ve always been able to find a relevant salary survey to give clients some direction without much difficulty. Another website to check out is Salary.com.
There are only two positions that might get a higher salary than the CEO. One is a salesperson who’s on an eat-what-you-kill incentive program. The other is an expert technical person who gets a high salary at the early stage of the business when you have to build the whole business off of that person’s technical skill set.
When you’re in a situation where you’ve got two shareholders and there’s not enough profit for everybody to make a market-based wage, you need to account for it as debt as the unpaid salary builds up or as an accrued salary that wasn’t paid. If you don’t use either of these approaches, there has to be a shift in equity ownership.
If I’m starting a business with you and I have the ability to do something but I have no cash, I need a funder to put money in. This philosophy says that 100 percent of the profits and losses of the business should be allocated to the money partner until that partner recoups the initial investment. After that, you move to some agreed profitand-loss percentage.
I’m not a fan of sharing profits before the investors are paid back. There’s always going to be some animosity. The investor will think: Hey, I put all the money in, and you’re getting your salary and a share of the profits. Look at how long it will take for me to get my money back.
You can even set up an incentive program to motivate the new CEO. Tell the new person, “I’ll share a percentage of anything you get above my baseline profit number.
interest, depreciation, and amortization are real numbers, so it’s important to understand that you should ignore EBITDA and focus on your pretax profit.
we need to focus primarily on your gross profit before we can fix your pretax profit. Gross profit is revenue less cost of goods sold. Contrary to many other accountants, I recommend that you not include any labor costs in getting to gross profit.
By focusing on gross profit instead of revenue, most businesses from any industry can be compared side to side.
Your gross profit matters most, followed by how you get to pretax profit.
Operations: This is the person who makes sure that the trains run on time and that whatever product or service you’re sel ing gets delivered.
Finance: Somebody has to pay the bills, balance the checkbook, and do basic financial reporting.
The need to add management infrastructure seems to naturally occur when you have about twenty employees typically, when you’re between $2 million and $3.5 million in revenue.
It’s really expensive to hire the wrong people and then replace them.
at my firm we like to hire people straight out of college. They don’t know a lot about anything when they come out of college, but they also do not have any baggage to unlearn.
Most venture capitalists will tell you that there isn’t a lack of money but there’s a lack of good business ideas and good deals.
The teams that win are the teams that get the most productivity for every dollar of labor. When businesses go through tough times, everybody thinks first about cutting costs. My experience always leads me back to one key factor: labor productivity. Focus on your gross profit per labor dollar as your key indicator for labor productivity.
a significant component of cost creep is labor creep
Their success is based on knowing when to hire veteran talent and when to develop new talent. They have been effective at both.
You want the business to have at least a 10 percent pretax profit. If you��re not at 10 percent already, you have to try to get there. If you’re already above 10 percent, you don’t want to go backward.
When you get to 15 percent pretax profit, you can add employees to drive your profit back down toward 10 percent, and then you can grow it back to 15 percent again. Your pretax profit and salaries are in flux as your salaries go up and your profit goes down. You can continue this process to get a nice upward-sloping revenue curve
That’s the billing cycle in the real world: bill at the end of the month and get paid in forty-five days.
The four forces of cash flow are as follows, in this order:
1. Paying your taxes
2. Repaying debt
3. Reaching your core capital target (building working capital)
4. Taking profit distributions
This is usually referred to as working capital, but after studying it I realized that a better name is core capital target.
let’s define distributions as a draw against the equity of the business.
One of the sloppiest things you can do is try to live off distributions. I’ve seen clients write checks for groceries, new furniture, home mortgage payments, and their children’s education. How serious is this from a tax standpoint?
if you’re an S corporation, this is potentially bad because the IRS will say it really should be salary
lawyers will say you’re damaging the legal protection of your business. This is called piercing the corporate veil
In many cases businesses are fully capitalized in twelve to eighteen months, and the owners can start paying themselves a market-based wage. Knowing a tentative date will give you the courage to hang on until that day comes. When it’s some unknown date in the future, people are tempted to live off the business prematurely.
I’ve been told that you should always have your business prepared to sell.
And guess what? If you’ve worked off the books and done some of these monkey business things, then you’re not in any condition to show your financials to a potential buyer.
Your operating cash flow starts with your net income for the month; then you add back the difference in the changes in accounts receivable, accounts payable, and inventory (if applicable). You can see that there’s a significant disconnect between pretax profit and operating cash flow
There are a few rare circumstances when it’s better to be on the accrual system, such as a business that gets paid up front for something.
Even if your customers pay you up front, if your accounts receivable are usually larger than your accounts payable, then you should be on a cash basis. The only time you want to be on an accrual system is if your accounts receivable are consistently lower than your accounts payable.
An interesting thing to note about C corporations is they have a requirement to become accrual based at some point. Conversely, S corporations and LLCs can remain on a cash basis no matter how large they get. However, if you have inventory, you are generally required to be on an accrual basis, no matter what type of legal entity you are.
A true line of credit is one that goes to zero for at least thirty consecutive days in a twelve-month period. If you’re not doing this, you have what’s referred to as an evergreen loan.
if you need a vehicle for work and you want to buy a Mercedes, I’m not wild about that. But at least it’s financed with term debt (a fixed monthly payment over specific period of time) and you can depreciate the cost over the life of the asset
When you take on debt, you’re forcing yourself to be profitable in the future or else you’ll default.
maybe people are paying you through a contractual arrangement and a contract dispute arises that causes things to seize up. You need to have access to a line of credit because some things are outside of your control, but you know the situation is temporary.
You’re not using a line of credit to fund a losing business. That’s what your capital reserves are for, should you choose to use them for that purpose.
Do not confuse debt with capital. Capital is the cash you leave in the business to fund your receivables and inventory for normal business conditions, and debt is financing for special cases. Once you start financing normal receivables with debt, you are lowering the odds of your business being able to survive a downturn.
using an S corporation to avoid payroll taxes is on the IRS’s Dirty Dozen tax scams list, and it’s an audit flag.
Another big area of cheating involves offshore activity. It’s certainly a high level of focus at the IRS. There are legitimate offshore activities, of course. In the 2010 health care reform bill, Congress codified the concept of the economic substance rule. This essentially says that any transaction conducted merely for the benefit of saving taxes doesn’t have economic substance. In such cases, the transaction and the business entity aren’t considered legitimate.
Bartering is not illegal as long as you record it and it is for a legitimate business expense, but it’s illegal to trade a legitimate business expense for something that is for your personal benefit.
At my firm, we require subcontractors to fill out a W-9 form and give their taxpayer ID number before they can get paid. That way we don’t have to chase them down at the end of the year when we send 1099s.
Simply put, if you work this year and bill the client $100,000 for your services, but at the end of the year the client hasn’t paid you, then you don’t have to report the income this year. You don’t report it until you get paid. But the thing is, you haven’t made any money yet. You can’t feed your family based on $100,000 in receivables.
download a tax calculation spreadsheet for an or an S corporation from my website, www.seeingbeyondnumbers.com
the IRS rules allow them to wait until April 15 to pay taxes on that, I tell them to buy a Certificate of Deposit that matures on April 10. This prevents them from touching that money for any reason.
The second approach is to pay as you go and make estimated payments on your taxes throughout the year. The payment dates are divided into four periods:
January 1—March 31
Due April 15
April 1—May 31
Due June 15
June 1—August 31
Due September
15 September 1—December 31
Due January 15 of next year
After the tax distributions have been made, you can take profit distributions. Use them to build your emergency fund and repay your personal debt until it’s gone. After that, you can start investing and building true wealth.
Spending a dollar to save 40 cents in taxes is not a wise choice!
In chapter 3 I said the number one thing that causes you to be either profitable or unprofitable is how much productivity you get out of every dollar you spend on labor, including your own market-based wage. I’ll use my company as an example. I have to get $1.80 of gross profit (revenue less direct out-of-pocket costs for subcontractors or travel, not including any inhouse labor) for every $1.00 I spend on labor to reach my profitability target, regardless of whether that $1.00 is paid to an administrative person or a production person. You might think administrative people don’t generate gross profit, but they do! They take care of tasks that allow billable people to be more billable.
avoid the “emperor has no clothes” scenario that every entrepreneur faces. If there’s someone in the business who can be a knowledgeable sounding board and has a high comfort level with you, encourage that person to come to you and tell you the hard things.
an employee who claims to have fifteen years of experience but actually only has one year of experience fifteen times. This kind of employee is worth no more than an employee who has one year of experience, so years of experience often don’t count for much.
My local chamber of commerce publishes an excellent wage survey each year.
There are times when you need people to put in extra hours, but it should be because you need the additional productivity. You don’t need people to work extra hours if they were unproductive for a couple of hours that day.
It’s not uncommon for someone who’s doing a $35,000-a-year job to creep up to $50,000 a year. This is especially true when a job initially required technical experience, but maybe the technology is more common now and anyone can be taught those skills. If you can hire somebody for $35,000 a year to do the same thing, then you’re losing $15,000 a year.
When people have stepped up and taken their performance to another pay level, I adjust their salaries immediately. I do not wait for a review cycle to adjust someone’s pay.
I make it clear what the person will do differently as a level-three client manager, and I explain what the employee needs to improve on to get to level four. By doing this, I can give people definitive guidance and provide a focus to their career paths.
Jack Stack, president and CEO of SRC Holdings Corporation (formerly Springfield ReManufacturing Corp.), has written extensively about the concept of open-book management (OBM). His ideas are summarized in his book The Great Game of Business
Before I devise an incentive plan for an employee, I want to see a personality profile to find out if the person is motivated by money and driven by incentive plans. Very few people are motivated this way.
My fallback plan is to use discretionary judgment on what the target incentives should be for people who went above and beyond the call of duty but just didn’t get results. Obviously, I can’t give out incentives that my business can’t afford.
I have to allow the failure and decide if it’s a one-time thing or if the employee needs to be transitioned into a new role or maybe even out of the company.
Your gross profit per labor dollar is the second most important key performance indicator for your business.
Set wages based on the market, not on cost of living.
Evaluate talent based on productivity, not on years of experience.
Use performance appraisals to set honest expectations of your employees
There’s tremendous confusion about the word capital. Simply stated, it’s the difference between what you own (your assets) and what you owe (your liabilities). Another term for capital is equity.
You can invest in a company by buying its stock, and you should expect a return on your investment. You should expect to get dividends with a nice rate of return, or you expect that the business will be sold and your investment will be worth much more than it was when you purchased the stock. When other people invest in your business, they expect the same returns on their investments.
Sometimes you’ll hear the term borrowed capital, but that’s an extreme distortion because capital isn’t the same as debt. Those are two different things. It’s either debt or capital.
I strongly urge you to research the track record of angels to see how they handle the ups and downs. They have probably been part of some bad deals, and how they handled those situations is a predictor of how they’ll react when things go sour.
Document your investors’ expectations and hire a professional lawyer to draft your shareholder agreements.
Put sweat equity into your business whenever possible. It wil always give you the best possible return on investment.
Your numbers are talking . . . are you listening?
1. Daily report: Cash balance
2. Weekly reports: Cash flow forecast; sales and productivity
3. Monthly reports: Profit and loss; balance sheet and where the cash goes
If your bookkeeper tells you he or she cannot produce this because the cash balance in your accounting system is not up to date, that is a key indicator you have a big problem. Have that person fix it or get a new bookkeeper. Someone in your office can be trained to send this report in a daily e-mail to the key people in your business. If you use a program such as QuickBooks, you can e-mail the amount of the deposit from within the software.
The purpose of the cash flow forecast report is to make sure you have money in the bank when your bills are due:
• General bills
• Payrol
• Payrol taxes and benefits
• Rent
• Payments for debt (lines of credit and fixed-term notes)
The key is to make sure you don’t have a long list. In my firm, one thing we add at the bottom of our list is a running total of partner paychecks that have been missed. If we run out of cash, the owners forgo compensation so that everyone else can get paid.
look at what receivables you need to collect so you can make the payroll next week. Maybe you have to make other arrangements, such as drawing against your line of credit.
My firm pays bills on Mondays, which means that on Fridays we’re making sure that everything that needs to be paid is in the system.
Recently I’ve successfully tied labor efficiency to weekly sales. Remember, labor efficiency is gross profit per labor dollar. For example, I was able to determine a client’s gross profit before any labor was taken out by basically taking their sales minus their cost of goods sold. Let’s say that gross profit before labor came out to 50 percent of sales, so if they had a $40,000 sales week, they had $20,000 in nonlabor gross margin, which is our term for the cost of gross profit before any labor is taken out. The client’s goal was to have a labor efficiency of 2.0. So that week’s payroll needed to be $10,000.
When you look at chains with great labor management, such as Outback and Starbucks, you’ll find that they send a $9-per-hour person home early when productivity drops below a certain level. That way, they won’t have to make up the $20-plus in revenue the next day to cover the cost of keeping the $9-per-hour employee on duty.
The Outbacks of the world manage their numbers on an hourly basis, but if you manage yours on at least a weekly basity weekly bis, you’ll start to establish a gut feeling about the numbers. If you don’t have a natural gut feeling, you can develop it by watching the two numbers that matter most: gross profit and cost of labor. That’s it!
If my cost of goods sold has a labor component and a goods component, I definitely have to separate those
It includes all payroll taxes, health and disability insurance, workers’ compensation insurance, and any other fringe benefits.
You can have a profitable business and run out of cash. Sometimes you have to constrict your growth to the amount you can fund yourself.
When using multiples of EBITDA, the flaws surface when you have a lack of earnings or a distortion of earnings due to incorrect owner salaries or discretionary expenses. Going back to the first chapter where we talked about owners’ salaries, you’ll distort the earnings of your business if you pay yourself too low a wage. You can also potentially distort the earnings of your business by paying yourself too high a wage. And you can distort the earnings of your business by living off the business profits, as we know a lot of small-business owners do.
You take a profit distribution only when all of your taxes have been paid and you have money above your core capital target.
Under IRS rules, businesses can typically take a 10 to 20 percent discount for lack of marketability and a 10 to 20 percent discount for lack of control. The lack of marketability discount applies when the transaction is for a company that is not publicly traded. The lack of control discount applies when stock is sold to someone who does not own a controlling interest (typically 51 percent).
And when I get there, I can always see farther.
—Anonymous
You get paid a salary for what you do, and you get a return on what you own.
Your business’s number one key performance indicator is this: How big a check did you write to the IRS this year?
Beware of people who promise to lower your tax bill to 10 percent or less. They are using the effective tax rate as a lure to have you spend all your profits to lower your tax bill.
DETERMINING A MARKET-BASED WAGE
Think of it like this: If you got run over by a bus today and your heirs decided they would keep the business going in your absence, what would they have to pay someone to do your job?
Economic Research Institute’s Salary Survey Assessor ( www.erieri.com). It is one of the main salary survey sites, and it’s the engine for most salary surveys. I’ve always been able to find a relevant salary survey to give clients some direction without much difficulty. Another website to check out is Salary.com.
There are only two positions that might get a higher salary than the CEO. One is a salesperson who’s on an eat-what-you-kill incentive program. The other is an expert technical person who gets a high salary at the early stage of the business when you have to build the whole business off of that person’s technical skill set.
When you’re in a situation where you’ve got two shareholders and there’s not enough profit for everybody to make a market-based wage, you need to account for it as debt as the unpaid salary builds up or as an accrued salary that wasn’t paid. If you don’t use either of these approaches, there has to be a shift in equity ownership.
If I’m starting a business with you and I have the ability to do something but I have no cash, I need a funder to put money in. This philosophy says that 100 percent of the profits and losses of the business should be allocated to the money partner until that partner recoups the initial investment. After that, you move to some agreed profitand-loss percentage.
I’m not a fan of sharing profits before the investors are paid back. There’s always going to be some animosity. The investor will think: Hey, I put all the money in, and you’re getting your salary and a share of the profits. Look at how long it will take for me to get my money back.
You can even set up an incentive program to motivate the new CEO. Tell the new person, “I’ll share a percentage of anything you get above my baseline profit number.
interest, depreciation, and amortization are real numbers, so it’s important to understand that you should ignore EBITDA and focus on your pretax profit.
we need to focus primarily on your gross profit before we can fix your pretax profit. Gross profit is revenue less cost of goods sold. Contrary to many other accountants, I recommend that you not include any labor costs in getting to gross profit.
By focusing on gross profit instead of revenue, most businesses from any industry can be compared side to side.
Your gross profit matters most, followed by how you get to pretax profit.
Operations: This is the person who makes sure that the trains run on time and that whatever product or service you’re sel ing gets delivered.
Finance: Somebody has to pay the bills, balance the checkbook, and do basic financial reporting.
The need to add management infrastructure seems to naturally occur when you have about twenty employees typically, when you’re between $2 million and $3.5 million in revenue.
It’s really expensive to hire the wrong people and then replace them.
at my firm we like to hire people straight out of college. They don’t know a lot about anything when they come out of college, but they also do not have any baggage to unlearn.
Most venture capitalists will tell you that there isn’t a lack of money but there’s a lack of good business ideas and good deals.
The teams that win are the teams that get the most productivity for every dollar of labor. When businesses go through tough times, everybody thinks first about cutting costs. My experience always leads me back to one key factor: labor productivity. Focus on your gross profit per labor dollar as your key indicator for labor productivity.
a significant component of cost creep is labor creep
Their success is based on knowing when to hire veteran talent and when to develop new talent. They have been effective at both.
You want the business to have at least a 10 percent pretax profit. If you��re not at 10 percent already, you have to try to get there. If you’re already above 10 percent, you don’t want to go backward.
When you get to 15 percent pretax profit, you can add employees to drive your profit back down toward 10 percent, and then you can grow it back to 15 percent again. Your pretax profit and salaries are in flux as your salaries go up and your profit goes down. You can continue this process to get a nice upward-sloping revenue curve
That’s the billing cycle in the real world: bill at the end of the month and get paid in forty-five days.
The four forces of cash flow are as follows, in this order:
1. Paying your taxes
2. Repaying debt
3. Reaching your core capital target (building working capital)
4. Taking profit distributions
This is usually referred to as working capital, but after studying it I realized that a better name is core capital target.
let’s define distributions as a draw against the equity of the business.
One of the sloppiest things you can do is try to live off distributions. I’ve seen clients write checks for groceries, new furniture, home mortgage payments, and their children’s education. How serious is this from a tax standpoint?
if you’re an S corporation, this is potentially bad because the IRS will say it really should be salary
lawyers will say you’re damaging the legal protection of your business. This is called piercing the corporate veil
In many cases businesses are fully capitalized in twelve to eighteen months, and the owners can start paying themselves a market-based wage. Knowing a tentative date will give you the courage to hang on until that day comes. When it’s some unknown date in the future, people are tempted to live off the business prematurely.
I’ve been told that you should always have your business prepared to sell.
And guess what? If you’ve worked off the books and done some of these monkey business things, then you’re not in any condition to show your financials to a potential buyer.
Your operating cash flow starts with your net income for the month; then you add back the difference in the changes in accounts receivable, accounts payable, and inventory (if applicable). You can see that there’s a significant disconnect between pretax profit and operating cash flow
There are a few rare circumstances when it’s better to be on the accrual system, such as a business that gets paid up front for something.
Even if your customers pay you up front, if your accounts receivable are usually larger than your accounts payable, then you should be on a cash basis. The only time you want to be on an accrual system is if your accounts receivable are consistently lower than your accounts payable.
An interesting thing to note about C corporations is they have a requirement to become accrual based at some point. Conversely, S corporations and LLCs can remain on a cash basis no matter how large they get. However, if you have inventory, you are generally required to be on an accrual basis, no matter what type of legal entity you are.
A true line of credit is one that goes to zero for at least thirty consecutive days in a twelve-month period. If you’re not doing this, you have what’s referred to as an evergreen loan.
if you need a vehicle for work and you want to buy a Mercedes, I’m not wild about that. But at least it’s financed with term debt (a fixed monthly payment over specific period of time) and you can depreciate the cost over the life of the asset
When you take on debt, you’re forcing yourself to be profitable in the future or else you’ll default.
maybe people are paying you through a contractual arrangement and a contract dispute arises that causes things to seize up. You need to have access to a line of credit because some things are outside of your control, but you know the situation is temporary.
You’re not using a line of credit to fund a losing business. That’s what your capital reserves are for, should you choose to use them for that purpose.
Do not confuse debt with capital. Capital is the cash you leave in the business to fund your receivables and inventory for normal business conditions, and debt is financing for special cases. Once you start financing normal receivables with debt, you are lowering the odds of your business being able to survive a downturn.
using an S corporation to avoid payroll taxes is on the IRS’s Dirty Dozen tax scams list, and it’s an audit flag.
Another big area of cheating involves offshore activity. It’s certainly a high level of focus at the IRS. There are legitimate offshore activities, of course. In the 2010 health care reform bill, Congress codified the concept of the economic substance rule. This essentially says that any transaction conducted merely for the benefit of saving taxes doesn’t have economic substance. In such cases, the transaction and the business entity aren’t considered legitimate.
Bartering is not illegal as long as you record it and it is for a legitimate business expense, but it’s illegal to trade a legitimate business expense for something that is for your personal benefit.
At my firm, we require subcontractors to fill out a W-9 form and give their taxpayer ID number before they can get paid. That way we don’t have to chase them down at the end of the year when we send 1099s.
Simply put, if you work this year and bill the client $100,000 for your services, but at the end of the year the client hasn’t paid you, then you don’t have to report the income this year. You don’t report it until you get paid. But the thing is, you haven’t made any money yet. You can’t feed your family based on $100,000 in receivables.
download a tax calculation spreadsheet for an or an S corporation from my website, www.seeingbeyondnumbers.com
the IRS rules allow them to wait until April 15 to pay taxes on that, I tell them to buy a Certificate of Deposit that matures on April 10. This prevents them from touching that money for any reason.
The second approach is to pay as you go and make estimated payments on your taxes throughout the year. The payment dates are divided into four periods:
January 1—March 31
Due April 15
April 1—May 31
Due June 15
June 1—August 31
Due September
15 September 1—December 31
Due January 15 of next year
After the tax distributions have been made, you can take profit distributions. Use them to build your emergency fund and repay your personal debt until it’s gone. After that, you can start investing and building true wealth.
Spending a dollar to save 40 cents in taxes is not a wise choice!
In chapter 3 I said the number one thing that causes you to be either profitable or unprofitable is how much productivity you get out of every dollar you spend on labor, including your own market-based wage. I’ll use my company as an example. I have to get $1.80 of gross profit (revenue less direct out-of-pocket costs for subcontractors or travel, not including any inhouse labor) for every $1.00 I spend on labor to reach my profitability target, regardless of whether that $1.00 is paid to an administrative person or a production person. You might think administrative people don’t generate gross profit, but they do! They take care of tasks that allow billable people to be more billable.
avoid the “emperor has no clothes” scenario that every entrepreneur faces. If there’s someone in the business who can be a knowledgeable sounding board and has a high comfort level with you, encourage that person to come to you and tell you the hard things.
an employee who claims to have fifteen years of experience but actually only has one year of experience fifteen times. This kind of employee is worth no more than an employee who has one year of experience, so years of experience often don’t count for much.
My local chamber of commerce publishes an excellent wage survey each year.
There are times when you need people to put in extra hours, but it should be because you need the additional productivity. You don’t need people to work extra hours if they were unproductive for a couple of hours that day.
It’s not uncommon for someone who’s doing a $35,000-a-year job to creep up to $50,000 a year. This is especially true when a job initially required technical experience, but maybe the technology is more common now and anyone can be taught those skills. If you can hire somebody for $35,000 a year to do the same thing, then you’re losing $15,000 a year.
When people have stepped up and taken their performance to another pay level, I adjust their salaries immediately. I do not wait for a review cycle to adjust someone’s pay.
I make it clear what the person will do differently as a level-three client manager, and I explain what the employee needs to improve on to get to level four. By doing this, I can give people definitive guidance and provide a focus to their career paths.
Jack Stack, president and CEO of SRC Holdings Corporation (formerly Springfield ReManufacturing Corp.), has written extensively about the concept of open-book management (OBM). His ideas are summarized in his book The Great Game of Business
Before I devise an incentive plan for an employee, I want to see a personality profile to find out if the person is motivated by money and driven by incentive plans. Very few people are motivated this way.
My fallback plan is to use discretionary judgment on what the target incentives should be for people who went above and beyond the call of duty but just didn’t get results. Obviously, I can’t give out incentives that my business can’t afford.
I have to allow the failure and decide if it’s a one-time thing or if the employee needs to be transitioned into a new role or maybe even out of the company.
Your gross profit per labor dollar is the second most important key performance indicator for your business.
Set wages based on the market, not on cost of living.
Evaluate talent based on productivity, not on years of experience.
Use performance appraisals to set honest expectations of your employees
There’s tremendous confusion about the word capital. Simply stated, it’s the difference between what you own (your assets) and what you owe (your liabilities). Another term for capital is equity.
You can invest in a company by buying its stock, and you should expect a return on your investment. You should expect to get dividends with a nice rate of return, or you expect that the business will be sold and your investment will be worth much more than it was when you purchased the stock. When other people invest in your business, they expect the same returns on their investments.
Sometimes you’ll hear the term borrowed capital, but that’s an extreme distortion because capital isn’t the same as debt. Those are two different things. It’s either debt or capital.
I strongly urge you to research the track record of angels to see how they handle the ups and downs. They have probably been part of some bad deals, and how they handled those situations is a predictor of how they’ll react when things go sour.
Document your investors’ expectations and hire a professional lawyer to draft your shareholder agreements.
Put sweat equity into your business whenever possible. It wil always give you the best possible return on investment.
Your numbers are talking . . . are you listening?
1. Daily report: Cash balance
2. Weekly reports: Cash flow forecast; sales and productivity
3. Monthly reports: Profit and loss; balance sheet and where the cash goes
If your bookkeeper tells you he or she cannot produce this because the cash balance in your accounting system is not up to date, that is a key indicator you have a big problem. Have that person fix it or get a new bookkeeper. Someone in your office can be trained to send this report in a daily e-mail to the key people in your business. If you use a program such as QuickBooks, you can e-mail the amount of the deposit from within the software.
The purpose of the cash flow forecast report is to make sure you have money in the bank when your bills are due:
• General bills
• Payrol
• Payrol taxes and benefits
• Rent
• Payments for debt (lines of credit and fixed-term notes)
The key is to make sure you don’t have a long list. In my firm, one thing we add at the bottom of our list is a running total of partner paychecks that have been missed. If we run out of cash, the owners forgo compensation so that everyone else can get paid.
look at what receivables you need to collect so you can make the payroll next week. Maybe you have to make other arrangements, such as drawing against your line of credit.
My firm pays bills on Mondays, which means that on Fridays we’re making sure that everything that needs to be paid is in the system.
Recently I’ve successfully tied labor efficiency to weekly sales. Remember, labor efficiency is gross profit per labor dollar. For example, I was able to determine a client’s gross profit before any labor was taken out by basically taking their sales minus their cost of goods sold. Let’s say that gross profit before labor came out to 50 percent of sales, so if they had a $40,000 sales week, they had $20,000 in nonlabor gross margin, which is our term for the cost of gross profit before any labor is taken out. The client’s goal was to have a labor efficiency of 2.0. So that week’s payroll needed to be $10,000.
When you look at chains with great labor management, such as Outback and Starbucks, you’ll find that they send a $9-per-hour person home early when productivity drops below a certain level. That way, they won’t have to make up the $20-plus in revenue the next day to cover the cost of keeping the $9-per-hour employee on duty.
The Outbacks of the world manage their numbers on an hourly basis, but if you manage yours on at least a weekly basity weekly bis, you’ll start to establish a gut feeling about the numbers. If you don’t have a natural gut feeling, you can develop it by watching the two numbers that matter most: gross profit and cost of labor. That’s it!
If my cost of goods sold has a labor component and a goods component, I definitely have to separate those
It includes all payroll taxes, health and disability insurance, workers’ compensation insurance, and any other fringe benefits.
You can have a profitable business and run out of cash. Sometimes you have to constrict your growth to the amount you can fund yourself.
When using multiples of EBITDA, the flaws surface when you have a lack of earnings or a distortion of earnings due to incorrect owner salaries or discretionary expenses. Going back to the first chapter where we talked about owners’ salaries, you’ll distort the earnings of your business if you pay yourself too low a wage. You can also potentially distort the earnings of your business by paying yourself too high a wage. And you can distort the earnings of your business by living off the business profits, as we know a lot of small-business owners do.
You take a profit distribution only when all of your taxes have been paid and you have money above your core capital target.
Under IRS rules, businesses can typically take a 10 to 20 percent discount for lack of marketability and a 10 to 20 percent discount for lack of control. The lack of marketability discount applies when the transaction is for a company that is not publicly traded. The lack of control discount applies when stock is sold to someone who does not own a controlling interest (typically 51 percent).
April 29, 2022
The ideas in the book are decent, but the writing and editing left MUCH to be desired. It’s supposed to simplify business finance but in some ways I find it adds to the confusion.
Basically, if you’re not already familiar with financial terms, you may get quite confused by the way Crabtree approaches the financial terms. First, doesn't always define a term clearly before he starts rambling on a concept...or worse, to jump between concepts. Second, his choice of words + expressions can make things unnecessarily complex. e.g. “10 Percent Is The New Breakeven” or “Your breakeven point is 10 percent” That’s just confusing and technically wrong. He’s basically saying that you need at least 10% profits to be financially ok….but that’s not the same as breakeven so it can confuse the hell out of people who already don’t understand those financial terms. Or he chooses to use “core capital target” instead of “working capital” because he finds the term more intuitive (well, I find "working capital" more intuitive). Or, he uses “business physics” instead of simply cash flow. So, instead of just learning existing financial terms, you must figure out how it HE defines the terms.
Even when he talks about Jack Stack’s "The Great Game of Business", he presents the ideas in a really convoluted way...if I hadn’t already read Stack’s book (which thankfully I did), I probably wouldn’t grasp whatever Crabtree was saying.
Many of the examples and financial illustrations he gave were pretty useless in imho.
Much of the advice is from the US perspective, though you can probably adapt it for other countries, e.g. most countries have their equivalent of S Corporations and LLCs arrangements, though the specific tax requirements may vary.
My biggest takeaways?
1. The concept of sweat equity and how to ensure fairness in a multi-partner scenario
2. How to calculate and manage salary cap for labor productivity
3. The 4 components + sequence for cash flow management.
In short, this book has some nice ideas. BUT I would recommend "Profit First" for entrepreneurs trying to gain control of their business finance, and "Financial Intelligence" for people who want the nuts and bolts of reading/understanding financial statement. Those 2 books did much more for me than this one....
Book summary at: https://readingraphics.com/book-summa...
Basically, if you’re not already familiar with financial terms, you may get quite confused by the way Crabtree approaches the financial terms. First, doesn't always define a term clearly before he starts rambling on a concept...or worse, to jump between concepts. Second, his choice of words + expressions can make things unnecessarily complex. e.g. “10 Percent Is The New Breakeven” or “Your breakeven point is 10 percent” That’s just confusing and technically wrong. He’s basically saying that you need at least 10% profits to be financially ok….but that’s not the same as breakeven so it can confuse the hell out of people who already don’t understand those financial terms. Or he chooses to use “core capital target” instead of “working capital” because he finds the term more intuitive (well, I find "working capital" more intuitive). Or, he uses “business physics” instead of simply cash flow. So, instead of just learning existing financial terms, you must figure out how it HE defines the terms.
Even when he talks about Jack Stack’s "The Great Game of Business", he presents the ideas in a really convoluted way...if I hadn’t already read Stack’s book (which thankfully I did), I probably wouldn’t grasp whatever Crabtree was saying.
Many of the examples and financial illustrations he gave were pretty useless in imho.
Much of the advice is from the US perspective, though you can probably adapt it for other countries, e.g. most countries have their equivalent of S Corporations and LLCs arrangements, though the specific tax requirements may vary.
My biggest takeaways?
1. The concept of sweat equity and how to ensure fairness in a multi-partner scenario
2. How to calculate and manage salary cap for labor productivity
3. The 4 components + sequence for cash flow management.
In short, this book has some nice ideas. BUT I would recommend "Profit First" for entrepreneurs trying to gain control of their business finance, and "Financial Intelligence" for people who want the nuts and bolts of reading/understanding financial statement. Those 2 books did much more for me than this one....
Book summary at: https://readingraphics.com/book-summa...
May 3, 2012
I'm enjoying this book - it is straight talk indeed, and definitely a "solve simply" book for leaders of entrepreneurial and growing companies in the <$5Million/year revenue range.
Giving me lots to think about.
Giving me lots to think about.
October 6, 2014
Helped me understand how to make sense of the financial side of my business. I devoured this book after attending a seminar taught by a partner at the author's firm. I highly recommend this to any small business owner with 2+ employees.
Read
September 9, 2022Now that you know just how to secure profits before they’re swallowed up by expenses, how about acquainting yourself with the key metrics that will determine your company’s success? The book Simple Numbers, Straight Talk, Big Profits! takes you through which numbers matter, where they need to be, and how to keep an eye on them. From paying the right salaries, boosting productivity figures, and flagging potential problems, you’ll become an expert on how to get your business thriving.
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Working with smaller amounts of money makes managing your finances easier.
If you’ve ever tried to lose weight, you’ll be familiar with the idea of using smaller plates to consume fewer calories.
Because we’re compelled to pile as much as we can onto a plate, using smaller plates makes it easier to eat less food. When the author first heard this, he had a eureka moment. He was piling all his money into one big account and subsequently spending everything. So, to spend less, he needed smaller portions of money.
So, how do you divide your money into smaller piles? By setting up different bank accounts for different purposes. The author recommends five different accounts for your business. A main income account, one for your profits, one for the business owner’s salary, one for the taxes you’ll have to pay, and one for operating expenses.
Once you have your accounts, here’s how to manage them. Whenever the business earns revenue, it’s deposited into the income account. Then you transfer money to the other accounts, always starting with – you guessed it – the profit account. Once you’ve taken your predetermined profit, the remaining money is used to fund the rest of your accounts.
Each account should only be used for its specified purpose. For instance, any company bills must be paid from the operating expenses account, and when tax season comes around, you work with what’s in the tax account.
However, even the most disciplined people are tempted now and then. And so, just like some people try to avoid eating junk food and snacks by keeping them out of their homes, you can avoid dipping into two important accounts by keeping them out of sight.
These accounts are your profit and tax accounts.
Why? Well, profit is exactly what you’re trying to have more of, so depleting that account wouldn’t make sense. And tax? Just think of the trouble you can get into when you can’t pay your taxes.
To keep this money safe, these two accounts should be with a different bank. This is where your profit and taxes will be kept in the long term. After you’ve divided the money between the accounts at your main bank, transfer the profits and taxes to the corresponding accounts at the new bank. Not seeing this money every time you look at your bank balances means you’re less likely to spend it.
---
Paying off your debt doesn’t have to get in the way of making your business profitable.
You’ve heard the saying “it takes money to make money”, right? And as a business owner, you’re probably aware of just how true this is. Building a company requires a lot of cash, and sometimes you just don’t have it.
Whether it’s by borrowing money from friends and family, taking out a loan, or even maxing out a credit card or two, many entrepreneurs find themselves in debt. And when this happens, becoming debt-free can easily take precedence over everything else, including making a profit.
But this doesn’t have to be the case.
No matter how bad your debt is, you should continue putting a percentage of your company’s income into your profits account. Doing this while paying off what you owe will build your cash reserves and eventually ensure that you have enough to cover any expenses in the future.
If you’re wondering where the money to clear the debt will come from, just look in your bank account.
Remember the profits that you’re pocketing every quarter? You’ll have to sacrifice some of them, 99 percent to be exact. Put 99 percent of your profit share towards debt payments, and keep the remaining one percent for yourself. Losing such a big chunk of money might sting, but this will get you debt-free much faster.
Now, having the money to pay off debts is not enough, you also have to be strategic with it. Here’s how.
Start by listing your debts from the smallest amount to the largest. If you have different debts of the same amounts, put the one with the higher interest rate first. Then, make the minimum payments on all the debts except the smallest one at the top of your list. Now, put the rest of your money towards this debt. Once you’ve paid it off completely, add the money you’ve freed up to payments for the next debt on your list.
Before you know it, there'll be nothing left to pay off and you’ll have more of your profits to enjoy.
---
Applying the profit first system to your personal life can help you gain financial freedom.
How great would it be to never have to worry about money again? Picture living in your dream home, and booking holidays whenever you feel like it. Or simply having the comfort of knowing that you can cover any expenses that life throws at you.
However you imagine a life free of financial stress, you can make it happen with the same profit-boosting tactics you’ve just learned.
Just as your business has different accounts for different purposes, you should split your personal finances across a few accounts. Have an income account where your salary is deposited, and then create accounts for your day-to-day expenses, recurring payments like rent or insurance, retirement funds, and any emergencies that might come up.
Every time you get paid, immediately transfer a percentage into your retirement account. You’ll eventually have to live off this money, and so the account gets first dibs and the other accounts are filled after it.
If debt is keeping you up at night, do exactly as you would in your business. Use 99 percent of the money allocated to your retirement for debt payments and keep the remaining one percent in the retirement fund. Do this until your debt is paid off and then turn your focus back on growing that nest egg.
As you watch it grow, you might be tempted to start living a bit larger. After all, the money’s in the bank so why not? But this is exactly the opposite of what you should do.
To eventually become financially free, you need to consistently save as much money as you can. So, no matter how much money you see in your account, your lifestyle should remain the same. The author recommends maintaining it for five years. Keep your costs low by doing your research before buying anything. Find out if there are cheaper or free options, learn how to negotiate, and give yourself time to think about making big purchases.
But if you’re thinking, “Wait a minute, there’s no fun in being this frugal,” don’t worry, you can enjoy a bit of your money and still save. Whenever your income increases through a raise or a tax refund, for example, invest only half of that money in your lifestyle and put the rest where it needs to be, in your retirement fund.
After enough years of adding to this fund, it will start earning enough interest to fully support any lifestyle you choose, making you completely financially free.
---
Working with smaller amounts of money makes managing your finances easier.
If you’ve ever tried to lose weight, you’ll be familiar with the idea of using smaller plates to consume fewer calories.
Because we’re compelled to pile as much as we can onto a plate, using smaller plates makes it easier to eat less food. When the author first heard this, he had a eureka moment. He was piling all his money into one big account and subsequently spending everything. So, to spend less, he needed smaller portions of money.
So, how do you divide your money into smaller piles? By setting up different bank accounts for different purposes. The author recommends five different accounts for your business. A main income account, one for your profits, one for the business owner’s salary, one for the taxes you’ll have to pay, and one for operating expenses.
Once you have your accounts, here’s how to manage them. Whenever the business earns revenue, it’s deposited into the income account. Then you transfer money to the other accounts, always starting with – you guessed it – the profit account. Once you’ve taken your predetermined profit, the remaining money is used to fund the rest of your accounts.
Each account should only be used for its specified purpose. For instance, any company bills must be paid from the operating expenses account, and when tax season comes around, you work with what’s in the tax account.
However, even the most disciplined people are tempted now and then. And so, just like some people try to avoid eating junk food and snacks by keeping them out of their homes, you can avoid dipping into two important accounts by keeping them out of sight.
These accounts are your profit and tax accounts.
Why? Well, profit is exactly what you’re trying to have more of, so depleting that account wouldn’t make sense. And tax? Just think of the trouble you can get into when you can’t pay your taxes.
To keep this money safe, these two accounts should be with a different bank. This is where your profit and taxes will be kept in the long term. After you’ve divided the money between the accounts at your main bank, transfer the profits and taxes to the corresponding accounts at the new bank. Not seeing this money every time you look at your bank balances means you’re less likely to spend it.
---
Paying off your debt doesn’t have to get in the way of making your business profitable.
You’ve heard the saying “it takes money to make money”, right? And as a business owner, you’re probably aware of just how true this is. Building a company requires a lot of cash, and sometimes you just don’t have it.
Whether it’s by borrowing money from friends and family, taking out a loan, or even maxing out a credit card or two, many entrepreneurs find themselves in debt. And when this happens, becoming debt-free can easily take precedence over everything else, including making a profit.
But this doesn’t have to be the case.
No matter how bad your debt is, you should continue putting a percentage of your company’s income into your profits account. Doing this while paying off what you owe will build your cash reserves and eventually ensure that you have enough to cover any expenses in the future.
If you’re wondering where the money to clear the debt will come from, just look in your bank account.
Remember the profits that you’re pocketing every quarter? You’ll have to sacrifice some of them, 99 percent to be exact. Put 99 percent of your profit share towards debt payments, and keep the remaining one percent for yourself. Losing such a big chunk of money might sting, but this will get you debt-free much faster.
Now, having the money to pay off debts is not enough, you also have to be strategic with it. Here’s how.
Start by listing your debts from the smallest amount to the largest. If you have different debts of the same amounts, put the one with the higher interest rate first. Then, make the minimum payments on all the debts except the smallest one at the top of your list. Now, put the rest of your money towards this debt. Once you’ve paid it off completely, add the money you’ve freed up to payments for the next debt on your list.
Before you know it, there'll be nothing left to pay off and you’ll have more of your profits to enjoy.
---
Applying the profit first system to your personal life can help you gain financial freedom.
How great would it be to never have to worry about money again? Picture living in your dream home, and booking holidays whenever you feel like it. Or simply having the comfort of knowing that you can cover any expenses that life throws at you.
However you imagine a life free of financial stress, you can make it happen with the same profit-boosting tactics you’ve just learned.
Just as your business has different accounts for different purposes, you should split your personal finances across a few accounts. Have an income account where your salary is deposited, and then create accounts for your day-to-day expenses, recurring payments like rent or insurance, retirement funds, and any emergencies that might come up.
Every time you get paid, immediately transfer a percentage into your retirement account. You’ll eventually have to live off this money, and so the account gets first dibs and the other accounts are filled after it.
If debt is keeping you up at night, do exactly as you would in your business. Use 99 percent of the money allocated to your retirement for debt payments and keep the remaining one percent in the retirement fund. Do this until your debt is paid off and then turn your focus back on growing that nest egg.
As you watch it grow, you might be tempted to start living a bit larger. After all, the money’s in the bank so why not? But this is exactly the opposite of what you should do.
To eventually become financially free, you need to consistently save as much money as you can. So, no matter how much money you see in your account, your lifestyle should remain the same. The author recommends maintaining it for five years. Keep your costs low by doing your research before buying anything. Find out if there are cheaper or free options, learn how to negotiate, and give yourself time to think about making big purchases.
But if you’re thinking, “Wait a minute, there’s no fun in being this frugal,” don’t worry, you can enjoy a bit of your money and still save. Whenever your income increases through a raise or a tax refund, for example, invest only half of that money in your lifestyle and put the rest where it needs to be, in your retirement fund.
After enough years of adding to this fund, it will start earning enough interest to fully support any lifestyle you choose, making you completely financially free.
November 6, 2021
Setelah habit bacaku balik, aku punya kebiasaan juggling baca buku dalam waktu bersamaan, jadi satu buku kelar bisa dalam satu minggu. Jadi satu tahun bisa baca 40-48 buku minimal, balik lagi ke target minimum ketika dulu aku masih menyebut diriku “bookworm” — but from Atomic Habit I learned that 1% progress is still a progress. Apalagi setelah 4 tahunan absen baca 10 buku dalam setahun aja super struggling, iya seberat itu karena macem-macem alasan, salah satunya sibuk kerja.
Mungkin targetku tahun depan salah satunya adalah naikin qty buku bacaan jadi seminggu 2-3 buku, dan punya waktu khusus buat “readathon” dalam sebulan sekali.
Targetku bulan ini adalah naikin produktivitas kerja (rule kerja 4-hours/day) dan juga bangun habit masak untuk melatih skill masak & platting-ku. Karena habit & skill itu dibangun dari repetisi.
Anw, aku sekarang mostly baca buku untuk langsung kupraktekin. Dan ternyata sekarang lagi suka buku-buku yang bahas soal finansial karena finansial adalah salah satu yang pengen kuperbaiki dulu, karena merasa 4 tahun ini finansial-ku kacau.
Apa aja yang kuperoleh dari buku ini:
— Ketika bangun bisnis kamu wajib bayar diri sendiri sesuai harga pasar, kalau ini masih belum bisa kamu lakukan artinya bisnismu nggak sehat.
— Bayar pajak! Jangan menghindari pajak! Semakin tinggi pajak usaha yang kita bayar semakin menunjukkan kalau bisnis kita sehat.
— Fokus naikin profit
— Turnover karyawan itu mahal
— Demokrasi di perusahaan nggak diperlukan, lead your way! It’s yours!
— Kalau mau tahu bisnis kita sehat atau enggak, cek kalau kita hire employees secara ideal dengan payroll ideal seperti apa, jangan bikin laporan keuangan “palsu” yang menunjukkan profit kita besar padahal banyak yang kita cut off.
— Nggak perlu fokus di budget tapi fokus di forecast dan eksekusi untuk mencapai semua itu.
— Nggak perlu hire pegawai kalau masih bisa dikerjain sendiri, tapi bayar dirimu sesuai dengan harga pasar.
— Jangan berhutang! Bayar hutang, debt free.
— Jangan spending profit cuma buat nggak bayar pajak.
— Jangan pelihara pegawai yang nggak bisa handle customer karena mereka adalah wajah perusahaan.
— Bayar bonus ke karyawan di rapel: 10, 20, 30, 40
— Bayar gaji karyawan sesuai dengan beban & porsi pekerjaan mereka
— Cek pegawaimu itu produktif atau belum, kalau belum, evaluasi: cut off atau buat SOP yang sesuai
Mungkin targetku tahun depan salah satunya adalah naikin qty buku bacaan jadi seminggu 2-3 buku, dan punya waktu khusus buat “readathon” dalam sebulan sekali.
Targetku bulan ini adalah naikin produktivitas kerja (rule kerja 4-hours/day) dan juga bangun habit masak untuk melatih skill masak & platting-ku. Karena habit & skill itu dibangun dari repetisi.
Anw, aku sekarang mostly baca buku untuk langsung kupraktekin. Dan ternyata sekarang lagi suka buku-buku yang bahas soal finansial karena finansial adalah salah satu yang pengen kuperbaiki dulu, karena merasa 4 tahun ini finansial-ku kacau.
Apa aja yang kuperoleh dari buku ini:
— Ketika bangun bisnis kamu wajib bayar diri sendiri sesuai harga pasar, kalau ini masih belum bisa kamu lakukan artinya bisnismu nggak sehat.
— Bayar pajak! Jangan menghindari pajak! Semakin tinggi pajak usaha yang kita bayar semakin menunjukkan kalau bisnis kita sehat.
— Fokus naikin profit
— Turnover karyawan itu mahal
— Demokrasi di perusahaan nggak diperlukan, lead your way! It’s yours!
— Kalau mau tahu bisnis kita sehat atau enggak, cek kalau kita hire employees secara ideal dengan payroll ideal seperti apa, jangan bikin laporan keuangan “palsu” yang menunjukkan profit kita besar padahal banyak yang kita cut off.
— Nggak perlu fokus di budget tapi fokus di forecast dan eksekusi untuk mencapai semua itu.
— Nggak perlu hire pegawai kalau masih bisa dikerjain sendiri, tapi bayar dirimu sesuai dengan harga pasar.
— Jangan berhutang! Bayar hutang, debt free.
— Jangan spending profit cuma buat nggak bayar pajak.
— Jangan pelihara pegawai yang nggak bisa handle customer karena mereka adalah wajah perusahaan.
— Bayar bonus ke karyawan di rapel: 10, 20, 30, 40
— Bayar gaji karyawan sesuai dengan beban & porsi pekerjaan mereka
— Cek pegawaimu itu produktif atau belum, kalau belum, evaluasi: cut off atau buat SOP yang sesuai
April 8, 2020
SN, ST, BP! is one of the best business books I have read till date. Vision is the most important thing in a company, but it should also be the least time-consuming. Most business "gurus" skip that fact, but CrabTree will help you break the monotony. Concepts like Labor Productivity, Salaries (Yours and your Employees'), Distributions, Forecasts and most importantly Profits take the front seat.
This relatively small book is not a light read and for someone like me, who's sum total of accounting knowledge is sending the Accountant his bank statements, it is at times a titanic task. Yet, if you try a little you will be able to understand the concepts fairly quickly and easily. The book is a little technical but it never gets boring and every page is filled with years of experience gained through running a real business and managing the books of those who do the same.
I have learned more about how to run MY business by CrabTree than I learned in the past 3 months of bringing all operations in house. Highly recommended for anyone who has been in business for awhile and wants to learn how to better run it.
This relatively small book is not a light read and for someone like me, who's sum total of accounting knowledge is sending the Accountant his bank statements, it is at times a titanic task. Yet, if you try a little you will be able to understand the concepts fairly quickly and easily. The book is a little technical but it never gets boring and every page is filled with years of experience gained through running a real business and managing the books of those who do the same.
I have learned more about how to run MY business by CrabTree than I learned in the past 3 months of bringing all operations in house. Highly recommended for anyone who has been in business for awhile and wants to learn how to better run it.
November 11, 2019
The information in this book is very, very basic. If you understand financials then you won't see a lot here that's new. I did like the author's treatment of "But it's a deduction!" -- Making sure people realize that spending just for a deduction is ludicrous.
The author has pretty good descriptors of different stages of business growth, but is a bit handwavy when it comes to execution. Of course we all want to "hire right."
I was hoping to gain some more insight into my financials with this book, but it basically confirmed what I already know. If you're a layman, just starting out with business, and have never seen a P&L, this book would be useful.
The author has pretty good descriptors of different stages of business growth, but is a bit handwavy when it comes to execution. Of course we all want to "hire right."
I was hoping to gain some more insight into my financials with this book, but it basically confirmed what I already know. If you're a layman, just starting out with business, and have never seen a P&L, this book would be useful.
December 23, 2019
The title does the book justice, it is very straight to the point and it builds up to an overall image of what a healthy business looks like from an accounting perspective.
I had a constant sensation that if the author didn't consider something very important or building an argument he didn't include it in the book. I very much appreciate this approach, it shows consideration for the reader's time.
If one wants to start a business or has a business up to 5 million in revenue I strongly recommend this book!
I had a constant sensation that if the author didn't consider something very important or building an argument he didn't include it in the book. I very much appreciate this approach, it shows consideration for the reader's time.
If one wants to start a business or has a business up to 5 million in revenue I strongly recommend this book!
November 11, 2017
This is an UNBELIEVABLE book for business owners or executive management (1-5 million in sales companies). Author is an accountant and explains methodologies and metrics to help monitor and run a company. Very practical and brilliant. Every company has metrics they monitor to help fuel success, but he offers other metrics that are simple but very telling in regards to the health of a company. I loved this book.
February 11, 2022
The title says it all. This book really is straight talk and helps business owners better understand their numbers. It's a quick read. I appreciate that Crabtree gets into a topic that I haven't seen in any other business book: What is a reasonable owner salary? I wish he would have gone into more detail on how to determine that number.
The graphs were confusing for me, but this is a book I'll be referencing over the years as my business grows.
The graphs were confusing for me, but this is a book I'll be referencing over the years as my business grows.
August 23, 2023
Thank goodness that there are people in the world that enjoy this stuff. Absolutely no judgment on Greg but while the nuggets I heard were good I really struggled to stay interested. Often his voice became "Charlie Brown's school teacher".
I prob should have read this one as opposed to listened to it, but I'm not sure I'd get through it. I think it's probably better as a textbook with chapters that will be relevant at different times.
I prob should have read this one as opposed to listened to it, but I'm not sure I'd get through it. I think it's probably better as a textbook with chapters that will be relevant at different times.
January 26, 2024
No dosłownie jest to straight talk, jeśli ktoś nie jest w stanie samemu wpaść na połowę z tych rzeczy typu „nie wmawiaj sobie że jesteś najlepszy” albo „płać tyle podatków ile powinieneś” to może faktycznie niech lepiej przeczyta tę książkę, jest tu też sporo praktycznych wskazówek związanych z rachunkowością ale myślę że bez doczytania o co w tym chodzi większość osób i tak nie wyciągnie z tej książki tych rzeczy.
August 22, 2017
Fantastic. I really wish I would've had this book 11 years ago when I started my business. It's a fantastic overview of all the things you'll hear from your accountant (you do have a good accountant, yes?) in terms that are easy for non-finance folks to understand. Definitely a great read for any small business owner or entrepreneur.
February 25, 2018
Tore through this over the weekend to get caught up on some fundamentals while working on some forecasting and modeling work. Was worth it. It gets a little thin at the end on forecasting, but I appreciate the key idea there - "Budgets are permission to spend. Forecasts are permission to turn a profit."
July 9, 2020
Mixed feelings about this one - I am in banking, from Europe. This book is for entrepreneurs, from US. I read it to get insights for my own job, which it doesn't really deliver.
However, if I ever star a business, this is what I learned:
- think about profitability: profit per employee is a good metric
- keep 6 months of cash reserve
However, if I ever star a business, this is what I learned:
- think about profitability: profit per employee is a good metric
- keep 6 months of cash reserve
March 23, 2022
A great book for entrepreneurs who need help with their numbers
I am a CPA and this book was recommended to me by another CPA. What a great read! I have already bought a copy for a client and I’ll do it for more of them. I do a good job of explaining numbers to my clients but it never hurts to get better at it. All my clients will benefit from this awesome book!
I am a CPA and this book was recommended to me by another CPA. What a great read! I have already bought a copy for a client and I’ll do it for more of them. I do a good job of explaining numbers to my clients but it never hurts to get better at it. All my clients will benefit from this awesome book!
October 17, 2023
In Simple Numbers, Straight Talk, Big Profits! Greg Crabtree provides invaluable advice for entrepreneurs. There are nuggets for all, including novices, repeaters and even those who presume to be experts. It aligns really well with the Data Component of EOS (the Entrepreneurial Operating System) . #edcinpacomments #simplenumbers 10/10
November 27, 2017
Good book, little too simplistic. I think even smaller business should have more complex attitude when it comes to finances.
Some ideas are really brillant though, but I've seen them earlier on "Scaling up", so maybe that's why it's not a five star review.
Some ideas are really brillant though, but I've seen them earlier on "Scaling up", so maybe that's why it's not a five star review.
December 30, 2017
Great book, it helped me understanding the financial numbers that I never got right :) and fixing the mistakes. Easy to read, and the tables are easier to read on the complementary website simplenumbers.me
August 19, 2018
Very straight-forward and well thought out book. If you're currently running a business I'd encourage you to apply his thinking against your business and see where it makes sense to change. We didn't agree with all of his recommendations, but there is a ton of value in those that we did.
March 28, 2019
Great Book, Easy Read and Simple concepts which are often overlooked
Simple and easy to understand book. As a small business owner myself, I could understand and relate with the importance of the simple things which are often overlooked in business.
Simple and easy to understand book. As a small business owner myself, I could understand and relate with the importance of the simple things which are often overlooked in business.
July 3, 2019
A worthy read for any small business owner
The first half covering owner salary, distributions, Labour to gross margin ratios is really excellent. The later sections were harder to grasp.
The first half covering owner salary, distributions, Labour to gross margin ratios is really excellent. The later sections were harder to grasp.
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