I had spent several weeks working with my client getting their books in order and we were now finally able to review a pretty decent Balance Sheet. By that I mean one that was accurate, not necessarily pleasant to look at with tons of money lounging around in the asset area. I spent a few minutes reviewing with my client what each of the areas were representing, liabilities, assets, equity, etc., when I saw a confused look on the business owner's face. "What's the matter?" I asked. "Well", he said, "I don't understand why the Balance Sheet shows that I am making pretty good money, but I don't seem to be taking any of it home."

So we printed a copy of his Profit & Loss Statement for the year and began to review it as well. Again, this document was an eye opener for my client, a document that was not available prior to this time because of all of the inaccuracies in their book keeping system.

As we began to go over the details I commented to him that one of the biggest culprits causing money to disappear was not controlling expenses. "But we don't spend money on things we don't need." he said. "As you can see, we buy equipment for resale, pay our employees, buy needed office supplies, pay our accountant, attorney, and of course you, but we don't spend money on unnecessary things. So why don't I have more in the bank?"

"Are you sure that you only spend money on necessary things?" I replied. "Have you filed your taxes for the year yet?" "Not yet." he said, "We had to file an extension because we were not ready." "Oh" I said, "An unnecessary expense because your books were shabby, and how about your payroll taxes? Looks like those were paid a little late last year as well." "Yes" he said sheepishly, "Another unnecessary expense, I guess."

I went on to explain to my client that controlling expense means more than just the obvious areas of the business, because it is the hidden, extra expenses, that erode your profits. Keeping your books in order is essential to controlling these types of costs.

Running a business is not easy, if it were, everyone would be doing it successfully.

When I was going through basic training in the military (A while back!) we were made to polish our soap after each shower. I thought it was pretty stupid at the time, but in retrospect, I understand the symbolism of that task. Don't allow the things you use daily (financials, client records, invoices, etc.) to become unattractive and in disarray. Showering with a clean bar of soap will not only make you feel better but will demonstrate that you are a stickler for details, an essential ingredient for success.