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ACCOUNTING FOR THE NUMBERPHOBIC

A Survival Guide for Small Business Owners

Professor Dawn FotopulosFounder, Best Small Biz Help.com

ACCOUNTING FOR THE NUMBERPHOBICA Survival Guide for Small Business Owners

H o w t o r e a d y o u r Fi n a n c i a l S t a t e m e n t s ( a n d fi n d i n n e r p e a c e )

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The 3 big questions…– Are you making a profit? – Is there enough cash to run the

business? – Is the business building wealth

or destroying it?


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Did You Know…• Learn how to read your financial dashboard and you’re ahead

of 99% of small business owners. • 50% of small businesses fail in the first five years; but those

who know how to read their financials have a much better chance for survival.

• You don’t have to be an accountant to learn the basics and improve your chances for profitability and long term success.


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What If…• You could work half as hard and make twice the money? • What if you could run your small business free of debt or

meddling outside investors? • What if you could finally get a return for all your sacrifices

and sleepless nights?

You can.


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Your financial dashboardThree Key Gauges: Chapter 1

– Net Income Statement – Cash Flow Statement – Balance Sheet


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Are you making money? • Showing a profit

– Net Income is positive• Showing a loss

– Net Income is negative• Breaking even

– Net Income is zero


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Who Has Benefitted?– Jewelry Designer who avoided bankruptcy

• Reduced expenses, cut products, increased gross profit – Photographer who showed her largest profit ever

• Changed target audience, prices, marketing strategy– Interior Designer who tripled earnings

• Changed prices, focused services, improved collections

Dreamers who launch small businesses


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Do you d r i ve you r ca r w i th you r eyes c l o sed?

No!Then don't run your Small Business without

knowing how to read your financial dashboard.

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Net Income Statement:Chapters 2 & 3Making a profit or showing a loss

– Money in; Money Out– Money In; Net Revenues from sales– Money Out; Expenses to run the business– Ratios help keep the business in balance

• Net Income Ratio • Grocery store example

What’s your industry norm?


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Gross MarginRatio must be 30% or higher to stay in business


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ACCOUNTING FOR THE NUMBERPHOPICA Survival Guide for Small Business Owners

Your Business CouldBe Showing A Profit…

While Going Bankrupt

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Cash F low Statement: Chapter 5• Checkbook- starting cash, cash in, cash out, ending cash• Gas in your tank-

– how far you can travel – how long you can run the business w/o needing more cash

• Gas gauge doesn't tell you to buy gas

You must interpret where the needle is


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Why RevenuesAnd Cash Aren’ t the Same• Delays in payment • Discounts to payment• Bankruptcies• Book Net Revenues when they happen for

accurate sales cycle reporting• Book cash in when it arrives- accurate cash

cycle reporting


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I t ’ s Easy to Improve Cash Flow: Chapter 6• Invoicing policies • Collections policies • Relationship building with clients • All affect cash flow- keep it healthy


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What’s the Value of the Business?• Just the salvage value of the

desks, computers? • Do businesses have terminal

value? • Can they be sold for more than

annual revenues?

Yes!


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How to Win Friends and Influence Bankers! Chapter 8• Balance Sheet- Net worth statement of

the business• Personal net worth- business net worth• Relationship between what you own;

what you owe• Same for the business; relationship

between assets (own) and liabilities (owe)


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Net Worth=Owner’s Equi ty Chapter 9• Positive Net Worth or Net Worth

that increases over time• Negative Net Worth or Net Worth

that degrades over time • Something must change to avoid bankruptcy• How?


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Our Miss ion to Save Struggl ing Smal l Bus inesses

– Not just read, interpret, make course corrections– Anticipate what will happen – You're running the business

The business isn't running you!


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Interview withNorm Brodsky Chapter 10“A business is all about the numbers. Most businesses could make it if theowners knew even the very basics of reading their financial dashboard.”


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Comments on NUMBERPHOBIC:– So much fun to read! – Fascinating. – I'm tired of being a starving artist..– It should be required reading before anyone goes into

business. It's so empowering. – Women entrepreneurs especially need to read this book.

They're afraid of debt but if they knew how to manage it, their businesses would be much more successful.


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

Understand your dashboard; reduce risk

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Available: Amazon.comBarnesandnoble.comIndiebooks.com

Twitter: @dfotopuloswww.hiddenprofitprophet.com


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http://www.bestsmallbizhelp.com/

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Free live event Thursday, August 13th noon• [email protected]• www.hiddenprofitprophet.com

Thank you!

mailto:[email protected]