005 - Administering the Business
In our first episode, we shared an overview of the Four Fundamentals of Business:
Guiding the business (Leadership)
Getting the business (Sales & marketing)
Doing the business (Production of your product or delivery of your service)
Administering the business (Administrative tasks like bookkeeping, HR, payroll, etc.)
Today, we’ll talk about “Administering the Business,” which is basically all of the tasks you didn’t know you were going to have to do when you started your business. The good news? You don’t have to do them alone (and you shouldn’t!). We’ll also share the story of a contractor who got help with administration and transformed his business.
Show Notes
Why you shouldn’t try to do all of the administering yourself. (4:28)
Three reasons why people don’t reach out to experts to help them. (6:52)
Story of the Show — Martin’s client didn’t know his costs, margins, or whether the business was even making money. (9:33)
Before you start a business, consider this... (12:19)
What is administration? (15:35)
Where do you start when you want to improve your administration? (16:46)
How the administrative part of bookkeeping informs all of the other three areas of business. (19:31)
What’s the ultimate vision? What things do contractors need to know? (21:11)
What is a profit and loss statement? (23:16)
The 5 fundamental questions your 3 financial statements will answer. (25:03)
Why your bank statement does not work as a profit and loss statement. (26:27)
What is a balance sheet? (29:50)
What is a cash flow statement? (35:50)
How you can “rent” advisors. (40:08)
What information do you get from good books once you have someone put them in order? (41:27)
Mount Rushmore — Admin tools (43:34)
Quote of the Day — “If there is not a good bookkeeper in your business, you will go on groping like a blind man.” - Luca Pacioli (inventor of double-entry bookkeeping) AND “If the books are a mess, so is everything else.” - Anonymous (51:02)
Closing the story — Martin’s client got his books in order and made more in Q1 of 2020 than the entire two years prior. (54:55)
Ethan’s Minute — What parts of administering the business stuck out to Ethan? Listen to find out! (57:45)
Quotable Moments
“Administration will consume more of your time and effort than doing whatever it is that you actually do.” — M
“You don’t need to become an expert at administration. You just need to understand how it works and then find people you trust to really help you in those areas.” — K
“The subjective of how you feel at any given time isn’t good enough. We need information as objective as it can possibly be to tell how we did, how we’re doing, and what we need to do in the future.” — M
“If you’re trying to grow a business on a gut feeling, you’re setting yourself up for disaster and for stress and for headache and heartache.”— K
Mount Rushmore
QuickBooks — Khalil’s George Washington
Target margins for your bids
A good CPA who can help with managerial accounting
The Profit Problem: They Say I Make Money, So Why Don’t I Have Any? by Martin Holland — Martin’s George Washington
Find a bookkeeper
Resources
Strengths Finder by Tom Rath
More from Martin
More from Khalil
More from The Cashflow Contractor