Practice Made Perfect 17 is the ideal opportunity to spend quality time with the best financial-advisory business consultants in the country. You get tips, tools, and worksheets to ensure that you can manage your practice to become the business success you want it to be. This book will be your new best friend—guaranteed | 138 Practice Made Perfect the availability of inexpensive accounting- software tools and capable bookkeepers. Although the process does add temporarily to your administrative costs the insight you obtain will help you become a more effective decision maker. Furthermore accounting and financial management are fundamental to running any business. You re making an investment of time money management and energy. Do you recommend investments for your clients without understanding how that money will be deployed or how the return should be realized Without a clear understanding of the unique financial dynamics of your practice there is no way to know if you re doing things right. One advisory firm we worked with had grown its top line 15-20 percent a year for four years in a row. When we met the owner his practice was generating 3 million in annual revenues his takehome pay was 75 000. He was thrilled by the top line but couldn t figure out why he was making so little. If you were he wouldn t you want to know how to evaluate your results before continuing such a growth plan This chapter reviews the fundamentals of accounting so that we can demonstrate effective financial-management techniques. We defer to the bookkeepers and accountants and accounting textbooks on the actual entries into a general ledger and how they re translated into a financial statement. But we provide some essentials regarding what should be tracked on your financial statements and which details should be kept separate so that you can dig deeper into the questions that may arise. You ll also find in the appendix a sample chart of accounts and other forms in worksheets 7 through 10. The goal is to offer a management guide not a bean counter s how-to. Having a solid understanding of the financial dynamics of your business can be one of the most useful management tools for understanding which strategic and operations decisions the data point to. Constructing a Financial Statement Every month every .
