The Problem with Financial Forecasts
- Financial forecasts are unreliable and practically useless when starting a business.
- Banks and investors may like them, but they don’t reflect real-world financial realities.
- You can plan for the future, but you can’t predict it—so don’t obsess over forecasting.
What to Focus on Instead
- Review your profit and loss sheet (P&L) daily instead of relying on forecasts.
- Track key metrics like:
- New clients that buy
- Returning clients that buy
- Cost of goods sold (COGS)
- Gross profits (Income – COGS)
- Net profits (Gross profits – All other expenses like staff, rent, and marketing)
Understanding the Viability Number
- The viability number is the total business expenses + 10%.
- Example: If a clinic’s total monthly expenses are $20,000, the viability number is:
- $20,000 (expenses) + $2,000 (10%) = $22,000
- Any revenue above the viability number means you’re making a profit.
- Once you consistently exceed this, you can start taking dividends and scaling.
The Best Accounting Tools for Financial Tracking
- Use QuickBooks Online for easy, real-time tracking of income, expenses, and invoices.
- Avoid QuickBooks Desktop unless you have a dedicated person managing it daily.
- Connect all credit cards and business accounts for automatic tracking.
Finding a Reliable Accounting Team
- Ship Shape Accounting has been a game-changer for managing financials.
- They handle high-level medical businesses, including one generating over $100M in annual revenue.
- They ensure on-time, accurate, and efficient accounting every month.
How This Will Help You Make More Money
- Clear financial visibility lets you identify areas of overspending or underspending.
- You can make data-driven decisions instead of guessing your budget.
- Knowing exactly where your money is going allows for smarter business growth.
Final Takeaway
- Stop wasting time on useless forecasts—track real numbers daily.
- Get a solid accounting team and the right tools to optimize profits.
