Practice Made Perfect 18 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 | 148 Practice Made Perfect assets such as leasehold improvements computers and office furniture and in some cases work in process and accounts receivable. These activities consume cash. They also tend to cause the owners of advisory firms to borrow money from a bank or to infuse their own cash into the business hence the term financing cash flow. Tying the Financials Together As you ll see from the discussion on financial analysis in the next chapter the three financial statements are linked. Adding assets or liabilities directly affects cash flow profits or losses directly affect the balance sheet. it s possible to have cash and no profits and it s possible to have profits and no cash. The relationship between the two depends on whether your business is growing or shrinking and whether you re paying attention to the fundamentals of financial management when you evaluate your success. There are times when it s acceptable to have the relationship between profits and cash out of whack as long as the condition is not chronic. But in the long term the goal should be to achieve harmony in your financial statements. That harmony is measured by A healthy balance sheet Strong cash flow Increasing profits Fair return to the owner As you begin to apply discipline to the financial management of your practice you will also begin to see how such discipline affects your ability to provide the ultimate client- service experience. A growing profitable enterprise has the financial resources to reinvest in the knowledge technology and tools that will make it easier for clients to do business with it. Furthermore having a financially successful enterprise will help ensure that your focus as an adviser is on your work and not on your own financial needs. and Other DirtyjWords The financial-advisory business has entered a phase of rapid growth. For the typical firm that growth imposes multiple demands on the professional staff s time puts more pressure on fees and strains owner-advisers
