This week in our podcast, we are releasing Part 4 of our Warrior Wealth series. We’re going to be talking about the not so sexy but vital topic of accounting and the game of numbers, and why knowing your numbers actually matters.
The following topics will be discussed every month:
Week 1: Power
Week 2: Production
Week 3: Profit
Week 4: Protection
In This Week’s Episode….PROTECTION
Golden Nugget #1: Ignorance is Not Bliss
- I hear so many people talk about how they don’t care about money, yet at the end of the day if you don’t care about it, who’s going to care about it for you? If you’re not all about the money inside of your business, what exactly are you all about?
- I have been on the journey of building big shit, only to watch the big shit I’ve built be destroyed because of a lack of focus and knowledge on the topic of finance, accounting, taxes and legal protection. These topics matter, but they’re not fuckin sexy. But they become sexy to an individual who actually wants to keep what they build.
How has avoiding and ignoring the topic of taxes and accounting in your business affected it?
Golden Nugget #2: Make, Spend and Hope
- Most business owners and individuals get caught up in the game of make, spend, and hope – the repetitive cycle of make money, spend money, and hoping to maintain the money the rest of their lives.
- There are a few that understand that in order for the game to continue to rise and to work, an individual must keep money so that they can grow money; that the growth phase and the keep phase is almost more important than any other process that they could experience.
What phase of the cycle are you currently in?
Golden Nugget #3: Business Worth and Cash Flow
- A balance sheet gives an individual the opportunity to look at two things: their assets and their and liabilities. The overall goal of a balance sheet is to give someone the opportunity to declare what the worth of their business is.
- The more important game and the reason why most businesses are failing is because they don’t understand their income statement. It measures income against expense and through this tool we discover our cash flow. Nine times out of ten, a business will fall apart because of what is happening on the Income statement.
This week in your business, how much money did you have coming in, and how much money did you have going out? Did you experience a profit this week?
Golden Nugget #4: Backpack Pitchmen
- Most businesses wouldn’t be able to provide up-to-date books for last month, let alone what happened in the last year, and yet inside of that, they expect to be able to build and dominate. Without clear books, you have no clear looks; without clear looks, you have no potential to actually build a business that will last. So you build a business that you end up erasing every couple of years.
- Most people run their business by checking the balance of their bank account for the day and make their move based on the available cash; they measure their entire business based on what’s in their bank account today, although 30%-40% of the money is already spoken for.
What do your books or lack of books reveal about your business?
Golden Nugget #5: Fact or Fantasy
- The worst part about living in a world of fantasy when it comes to finances is that your decisions become nothing more than fiction, and nothing inside of what you’re building has a foundation of facts. If you don’t build a business driven by the facts, then you build a business driven by fantasy, and inside of that place of fantasy, your vision becomes nothing more than fiction.
- My whole world had fallen apart from the facts that I avoided. My strategy for dealing with the facts was to drink and yell at my wife. I was so terrified at my numbers that I would ignore my numbers, ignore reality, and create my own numbers in my mind. I eventually fell in love with numbers. I can deal with facts, but what I can’t deal with is fantasy – the hope that shit’s going to work out.
What world do you live in: the world of Facts, or the world of Fantasy?
Quote of the Week:
“If I’m going to play part of the game, then I need to know the whole fucking playbook, I need to know what’s going on, I need coaches and players on my team who understand 80%-90% of the code that nobody has a clue about. If you play the game according to the rules the way the IRS has played them out, you can play into a game that actually allows you to eliminate 50-60% of your taxes.”
–Garrett J White