How Often Should I Track Financials?

Transcript:

I almost want to do a poll of you guys to find out how many of you are actually running monthly financials. It’s a small percent, it’s minute in the real estate industry and I would say, I wish more people did it here. It is the number one, first you have to do in the financial part is run monthly financials. And the bottom line is that you’re not going to have a real business until you do this.

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It is like the only score that matters; it’s that one thing we can all come together and say hey, how’d your business do? Like, "Well, I don’t know, it’s May and I haven’t done my financials for 2015 yet." I say that because I know there are some of you on this that might be operating that way.

Chart of Accounts

You just have to make a decision on how you want your chart of accounts to look. And I’m not going to go through this in detail, but any bookkeeper will be able to take this. Someone made the comment that their chart of accounts isn’t set up in a way that’s useful. This chart of accounts is set up that way, so, Keller Williams has a Streamlined Business Solutions, which I've heard mix reviews on honestly, but any bookkeeper can take the chart of accounts there and tweak them to understand them.

So, you want revenues and cost broken down by list and buy. And all of your operating expenses. Your listing, your marketing, advertising, technology, overhead, administrative. It’s not that complicated. Get that chart of accounts. Go on Craigslist, interview three certified Quickbooks bookkeepers.

If you’re not running monthly financials, and you’re on this call right now, that is your number one multiplier project. You have to be producing monthly financials. I started doing this in 2008. I was new and it was my first full year in real estate and I was doing monthly financials. I knew I needed to know this. I was making money and spending money and I had a business background, and I’m like, what do businesses do when they make money and spend money? Well, they keep track of it. So this is just a bare minimum requirement.

You need to stop everything right after this and grab that chart of accounts, that Excel document, open up, print it out, look at it, process it as it makes sense to you. You can make it more or less detailed, the whole point is that there are categories and number ranges. When you’re working with your bookkeeper on a regular basis, they’ll say hey, I’m not sure where to put this. You have that chart of accounts printed out already and can say to put it 55-15. Like okay, cool, thanks.

All your revenues are all 4,000 series. Your cost of sales is 5,000. So 410 is listing commission for us. 420 is buyer commission. 430 is listing transaction fees, so I track my transaction fees separate from your commission income.

It is way easier than it seems even if you’re a financial idiot. You’ll have that chart of accounts, Quickbooks certified bookkeeper. Okay?

Biz Tracker

Ryan asked the question, "Why isn’t your Business Tracker not enough for monthly financials?" I don’t care what size you are, I started in 2008. It was the year I did 44 transactions. You have to have someone put your books together, put them into Quickbooks. It’s a bare requirement. The report your bookkeeper gives you, that data goes into the Biz Tracker, but you could have a 100 transactions in a month. And who’s going to organize those transactions into the the chart of accounts? That’s what the bookkeeper does.

I mean, I have a ton of transactions going through my real estate business and I only pay my bookkeeper $200 a month. For like a lot of transactions, based on how long it takes them essentially, anywhere from 25 to 50 an hour most bookkeepers will charge. It depends on how efficient they are. Mine’s pretty efficient so it doesn’t take her that long. Definitely Biz Tracker doesn’t replace monthly financials.