Break Down: Profit & Loss Statement
All right, So now we get Teoh. I think when the most difficult parts of running the business was really what is in a what is a profit and loss statement and what goes on a profit loss statement. Now, if you don't know the answer that or you don't know what they are used. Sometimes it's called income statements, sometimes called profit and loss. But 50% of small businesses that I travel around to they don't know what is on a profit and loss statement. So first of all, who knows what does? What's the purpose of a profit and loss statement? What does it measure money has been and where it went and where it came in and just the whole flow of all of it. Okay, well, not exactly what does what is the profit and loss statement show? What's what. What does it really show? What areas you're making profit in what areas you're losing. Okay, money. So So Shana's rights over a period of time, right? How much? How much did I bring in? How much do I spend to bring that in and what was left over? Right...
. So let's talk about what is on a profit and loss statement that key items. All right, so let's talk about that. What is This is very difficult stuff, and I know that a lot of folks than chat room are talking about what the hell is a profit and loss statement. What's an income statement? Right? So it's very important to understand this because remember, financial statements show where you've been. It gives you information to run your business. You know what's probable, what's not proper, where you spend your money. Unless you know that information, you have no idea where you're going. So let's discuss the first item on the profit and loss statement is really revenue. So for your business, what's revenue? What's considered revenue? Anyone? Sales sales. So if I sell an instrument right, if I sell a coaching session, if I sell a subscription, if I get commission from a transaction, those are that's revenue, that sales right. The next item is really what is it cost to produce that sale Now? It's either either cost of sales or cost sorry, cost of service or cost of goods, right? So, for example, a cost of good would mean all right I'm gonna sell an instrument for $500. I had abide for $250 or I'm going to do a coaching session. It cost me or my time, $25 I'm selling it for $50. You know it's time using fairly high margins, because we gotta have that. If we're really going to make a profit below the cost of goods or sales is really net profit. Let's talk about some things that really are not cost of sales or cost of goods. Cost of sales, costs of service costs of good is what is it directly cost directly cost to deliver that product or service. It does not mean rent. It does not mean utilities. It does not mean advertising. It is. What's the cost? That person was the cost of that product. That's really what is below that. You then subtract revenue minus costs of goods or cost the sales t get net profit. Yes. So, for instance, um, like what Arena does when she does a coaching session? Technically, she doesn't charge yourself for that cost of service. So technically right, there's no official cost of service because she's not gonna charge for her own time. So essentially, it's all profit. Then what she makes off of, say, an hour coaching session can think about that. That's also a trap that you can run into because you also have an opportunity cost. What else could she be doing right? And what I would suggest do is make sure that you a sign a cost for that and then pay that cost out to yourself, right? If your employees of the company or your owner put that aside to make sure you make a profit. Now, you know, I've been working with fairly large numbers because this net profit I'm sorry this is called gross profit. This gross profit is a very important number. Let's talk about gross profit for a second. Would I rather have my gross profit be 80% or to be 50% which is a better number, 80% It? Why is that? Because it's more money left over is more money. So, for example, if I sell something for $800 my cost of sales is $20 my gross properties $80 right? If let's say I sell something for instead, ah $100 and it costs me $4.6 dollars left over. Once I have all the other costs, my business, I have less of a chance to actually make money. Now, in any kind of services business, this number needs to be somewhere between 50 and 60%. In order for you to make money at the end of the day in any kind of service business, right, Some in service business field, 80%. Now, in product oriented businesses, sometimes at number is somewhere between 25 50%. But you have to just make sure yes, that was using to me. I'm sorry. Could you go back a little bit? I understand the 50 to 60%. Sure, sure. So So let's let's do this again. So if this costs me $20 I have $80 left over right? Because I'm using these numbers. My gross margin is 80% right, and then I have to deduct all the other costs. Over here, I have more of a chance. If I have $8 left over and over here, I have 100 say My Costello's 40 and have $60 left over my gross margin. 60%. I have more of an opportunity make money here than make money here because these are there's a higher number than that. Oh, I see you're just saying, Does the cost of goods sold in the percentage of that? The percentage of the gross margin is the percent. Basically, that you have left over. Okay, so that's just at your gross profit, Right? So this is a very important number, because if this is the higher the number, this is, the more money you gonna have loved over for yourself, right them or net profit? You're gonna have what goes below. This is called the line, right? They always call this the line. The gross profit line. What goes here? What are some of the other costs of running a business? Just shout those out. The what kind? Things were overhead utilities. So you have rent, You have utilities, insurance. You have software insurance. I have insurance. Right. You have taxes. Will taxes usually go down a little bit farther down because we usually do our net profit before taxes or depreciation? We have insurance, right? We have electricity. We have travel. We have advertising anything that isn't directly associated with any single time I sell additional unit of that. And then down at the bottom, you have your net profit, all right? And I'm not gonna get into net profit. Cause out of your net profit using to pay taxes need to appreciate whatever the items you sold or things like that. But this is very important because this tells you over a period of time, how much money did you really make? And it's a couple important things that we really need to t look at, right? We need to look at obviously what the revenue is with the gross margin is. But then, what is the fixed expenses and what are the variable expenses? So, for example, in your business, Karen, what would be a fixed expense and what would be a variable expense? The fixed expenses? The studio that we film out of the rent for the studio That's a fixed expense every month, every month, right? You have to pay that whether you film one thing or your film 20 things, right? Okay, that's a fixed expense. It does not vary with the with your production or what you sell. That's the definition of fixed expense, right? Any kind of rent? Many time employees or fixed expenses. Many times utilities, air, fixed expenses. Although utilities do change. But you don't really have much control. Over. Remember a fixed expenses? Something that is not tied to how many items or services you sell? All right. And what's the variable expense? Variable it, Spence would be advertising variable sort of the advertising, right? Exactly. Right. You can advertise a little or a lot, right? Right. What about in your business, Shana? Credit card transaction fees. Credit card transaction fees are what kind of expense? It's a Well, it's a fix. Expense. I know it's gonna be there every month, but it can vary dependent variable sales, right? Is it directly related to its two or 3% of whatever the transaction is right. But if you don't have any sales, you're not gonna have any any expense, right? Any expense, right? All right. What about in your business? Well, for me is the fixed expenses would be software keeping up to date with software with, um uh, you know, all the different elements of that variable expenses would be equipment, right? Equipment. Somebody dropped something or something like that. Exactly. Well, equipment is also an investment, right? Yeah. And Miyoko. So your fixed expenses are You've got people that work for you, and you gotta pay them no matter what. It doesn't matter if if it's a large percentage or not. Exactly. So now what is better? A fixed expense or a variable expense? What should when we working and structuring spends is for our business? Would you rather have more fixed expenses or your mother have more variable expenses, Which is better? More fixed? I wouldn't initially. Okay, so why would you want more fixed expenses? You know, because I know I know for it. Okay. All right. Who wants more variable expenses? Milko? Because fixed expenses like it doesn't matter. You have sales. Or now it's there where variable expenses should go up us as you sell more. I would I would tell you that it's much better. Have variable, expensive. I could have every expense in my business tied to my sales. That's really the perfect business because I only have to spend money when I actually make a sale. But of course, that's not really the way that it works. B try structures. Many things possible now, what's happened with the way work is changing now more and more people are no longer employees where their overhead, but they only get paid for the work that they actually do. So In that way, it's variable. Where small businesses really get caught is that they get a lot of fixed expenses, and when sales change, they have a problem. So let's say that this is their fixed expenses, right? We know those of the expenses all the time, but and they've got no problem. I really need a green marker for money. That's what we need here they have. No, this is This is great. When mice my sales are up here. That's really great. I can cover my fixed expenses, right? Here's all my Here's all my profit, right? But what happens when this is my fixed expenses and my sales start going like this? Right, That really gets to be a problem now if all of your expenses were variable, if your expenses went, If your if your expenses were variable like this and your sales were this, you could make the same amount of money no matter what they were. So that's really a tip that we have to do. We have to make sure, because what we see is especially during difficult times. Ah, lot of companies go out of business because good times there fixed expenses grow too quickly, and then sales drop and they can't get out of it with the biggest expense that really hurts small businesses. During this last recession was really rent. Ah, lot of people signed up for rent at a certain sales level, and then they couldn't meet the commitment because sales really went really went down. Another good thing to do with profit and loss statements is really look at percentages and trends. What I always discusses. How is this month where this quarter compared to the last quarter, right? How is it compared to other quarters and number in itself is not good or bad. It's how it compares to over a period of time. You also have to look at over what period time should you look, I would tell you, for most businesses, analyze your company over a one month period. Time is probably not enough, right? You probably do it over three months, period time or six months or something like that. Some of things you should do is look at accrual versus cash now and now we're getting into advanced financial concepts, right? So does anyone know what the difference is between a curl and cash accounting? Because again, this comes into your taxes. I'm sorry, this is going to sound. So what does that mean on your tax? I mean, there's a couple of people in the file taxes, right? And when shake their hand, it's being recorded, right? Yes, of course. So what does that mean? A cruel versus cash cash is like the actual amount between. It's not necessarily your accounting period, but your cash that you actually have on hand during the period that you're talking close. So most businesses that are service oriented do their accounting on a cash basis. Many businesses that have some kind of inventory do it on her cruel basis. Most people's taxes are filed on a cash basis, so let's talk about the difference. Let's look about revenue, talk about revenue and let's talk about expense. So on a cash basis, and it's not a cruel basis running out in here. Let's get a black pants. Everybody at home can really see we're talking about here. So on a cash basis, I recognize revenue when I receive the cash I before E except after C. Okay, when I received the cash here on accrual basis, I recognize revenue. Why deliver the product or service? So I'll give an example. So if I'm selling on instrument in Shane a store, if I give him 30 day terms, if I'm on a cruel basis, I take the revenue for that month when I ship the product. But if I'm on a cash basis, I don't recognize the Revenant will actually get paid for right. There's a difference. And even in a service oriented business, I may do a coaching job and I may do it on a given day. May bill them for it. If I was a cruel basis, that's what I'd recognize. Revenue from cash basis. I would do that. Most small businesses again. They do it on a cash basis. Now for your expenses. You actually on a cash basis when you actually pay right. That's when you on a cash basis. You actually recognize the expense when you actually write the check on a cruel basis. You do it when you actually incur the expense. All right, so you know, that would make sense, right? So this is one actually pay for this would actually incur the expense. The idea is you have to be consistent because down here you're gonna have some kind of net profit and you can't really mix methods again. It doesn't really matter which one you do, just as long as you stay really consistent. The other idea is that we should have a budget. Who here is a budget in their business was a budget in their home. I know Miyoko does, because she's in the financial industry, right? The value of a budget is it just sets a goal that you're going to measure yourself against, right, to see how you're gonna do compared to what you expect to do. The biggest mistake people make about budgets is they change them every month to match what they're actually doing. That doesn't really make a lot of sense. But if you can match yourself the budge against actual, you can see where you are against what you expect that it should be, or what's most important is if you have a budget for sales and you have budget for expenses. Are those two items interacting with each other the way you thought they would? One things that I'd like to look at is actual versus last year. I looked at like looking. We talk about fixed versus variable expense and again, which is better fixed expenses or variable expenses. Variable one more time altogether very ill expenses, because if your business goes up or down, the burial expenses were really match that. All right, so that is the profit and loss statements. Sometimes it's called the income statement. It tells us how much money we made or lost over a certain period of time. Typically, we say it's for this month or this quarter. This year, yes, so on the budget vs your actual spending. Like for our business. It's kind of hard because we can say we want a budget X amount for products in a month that we want to spend. But the reality is, if we get a lot of people who walk in and want something really expensive and they pay for it and we have to order it, then the sales there's going to go up, The number will be higher than we want, which some ways is a good thing. But, you know, hitting your budget per se. Well, what you might want to do is again, this is all about what you're going toe learn. So you might want to have a separate category for inventory sales versus special order sales. And so you can't really measure special order sales because you order what people need. But for inventory sales, how good are you at really gauging what people are gonna buy from your inventory and how quickly you're going to sell those? But it's a really it's a it's a good question. So now we're gonna go on to the balance sheet as we get more sophisticated, less and less people really understand is what is a balance sheet really do? What is a balance sheet really mean? What's the purpose of a balance sheet? And again, I know this is I know many people are going into the chat room and they're saying, Oh, this is way over my head. But I have to tell you, if you're going to run a successful business, you need to know what the numbers are for your business. If you're ever gonna get rich, it all goes through understanding what the financial statements are. So what's the balance sheet? What does it tell us? Anybody knows? Tell us is again. Assets lie very. Teas and equity. OK, so it's a snapshot in a sense of the value of your business. So whereas a profit and loss statement was, how do we do from January 1st to March 31st? This is saying on March 31st. What is the value of our business? Right. We all have a balance sheet. From a personal standpoint, we all have our own right. So think about what's on your own balance sheet. So, Karen, let's take take you right. So we have things that we own or assets. So what kind of things you own or assets in your world? Real estate. Real estate. Okay, what else do you have your own? Uh, stocks and bonds would feel bonds. You might have cash. You might have also think those of the ass that you have, right? You can also think about on a personal level what kind of assets you have, right? Like I may have, you know, nice hair. Or I may have glasses or may have a briefcase. Those air assets as well, right? And just like in a business, the assets are what the business has, right? It's cash. That's an asset, right? It's accounts receivable. That's an asset. Its inventory, right. That's an asset. Write these air. Really? The major assets. Really In a in a business. Sometimes there's loans owed to you, but actually the major thing. All right, so let's talk about liabilities. All right? What's what liabilities do you have in your life? I've got a lot of my got college loans for my kids. I've got more just on my homes. Right. What's the liability in your life? Loans? Mortgages? All right. For some companies payroll, right. All right. So so again. Well, payroll is not really payrolls. More of an expense, right? It could be a liability if I owe it Biting paid out in this month, but now we're getting we want to go to the creative life financial courses. If we're really gonna get, we're really gonna get that deep. So, in a company, what might the liabilities be? What might be alive. Billy. I'm sorry. Accounts, accounts payable. So and Shannon give us the definition of what accounts payable really is. What's the definition Accounts payable? Um, for instance, when we've ordered product and we Oh, we oh, that balance to the company to the vendor. So it's money you owe and a counter Cebull is money that's owed to you, right? So alright, accounts payable. What else would be a liability the company might have. They might have loans right to the bank, some kind of line of credit or something like that. All right, all right. And then we have the equity portion and I won't get into really what the equity portion is. But it's really, you know, it's really the difference between the two, right? It's really that's like what's left over. So if this number is negative, which a lot of small businesses are, technically you're really, really insolvent business. But this tells you I have these assets. I have leaves, liabilities. Am I really going to be able to pay my bills? And one very important part. I'm looking to see if I can pay my bills and every bank looks at This is something that's called the quick ratio. And the quick ratio is basically your current assets divided by your current liabilities abilities, right? And so that tells you, Do you have enough money on hand to pay your bill? So think about that. My quick ratio is using my current assets. We just my cash, my accounts receivable, divided by the money that I owe. If that number is less than one, you're basically again insolvent. You have enough money. I would encourage all of you if you have a balance sheet is printed out by, ah, financial tool. Your using Quicken QuickBooks Age 50 Or you ever account. Give your statements. Go back into your balance sheet and see if this number is greater less than one that's less than one. I think you're in a little bit of trouble. If it's greater than one, you're in better shape now. Depending on your industry, it should be a certain number. You know, different. Different industries could be two or three or 45 whatever that is. The most important thing when I look at the balance sheet is do I understand what every number means? That's where I lost the $1,000,000 because I had a number in here that was supposed to be negative and it was really a positive right or a positive was really a negative and a guest to be messy. And then what are the trends? So, for example, if I look back from quarter quarter, is that quick ratio going up? Is it going down? Are my assets increasing our monastics shrinking and my barring more money over time or my paying it back? Now we get to finally my favorite statement, which is the cash flow statement. Now the cash flow statement is the Onley statement out there that absolutely, positively tells the truth. Ah, lot of corporations get in trouble. We won't mention names out here, right? They get in trouble because you can make your balance sheet in your profit and loss statement pretty much say anything you want to say. It's the cash flow statement that really tells the story. What does a cash flow statement tell you? Anybody know time? It's really simply how much cash I have at the beginning of the month and how much cash they have at the end of month. Now, if you want to do the poor man's cash flow statement. There is something that's very, very easy to do with its called your company Bank statement. Now, I know some of you out there don't even open up the statement from the bank every single month. Let me tell you, that's where this stops right now. In order to gain this knowledge, Ito, open up. And really, what you do is if you open up your bank statement and if any of you have your bank statement who are listening out there very close by to give you a minute to do this, open up your bank statement. Look at your opening balance now. If we were looking, for example, at Sally's opening balance, I looked at it briefly. It had $5.7 million as the opening balance. Or is that pretty close? Is that right? If at the end of the month you're closing balance was, let's say $5.2 million right? Did my cash go up during that month or the go down on my positive cash? Lauren. Negative cash flow negative, right? So that's where the poor man's way to do it at the end of the month that I have more or less. And remember banks only run on cash deposit. It did the check clear what really happened. This is the least that any small business are should do is to open up their banks they every month to say, Did I gain cash during that month or did I lose it? But remember, if you use any of the financial software that's out there, Quicken QuickBooks Stage 50 it will. It will automatically do that for you. If you do understand, you really have to ask questions. So let's talk about again very briefly, since it is difficult what our sources and uses of cash, right? What makes cash flow go up? What makes cash will go down, and I'm doing this twice because of very difficulty. Whether it's going up or down, it's very difficult idea, right? So for accounts receivable, when accounts receivable goes up which way this cash go down? Okay, I like that. When cash flow goes up, it goes down right When accounts payable goes up, which one is cash will go. It goes up right when When inventory. Usually if you pay for your inventory. If inventory goes up which ways your cash flow. It goes down right. If I receive a loan from up from the bank and it goes up, which way is cash flow go? So keep those things in mind because those air really your sources and your use of cash. So what does that really mean? What kind of actions we want to try to have as little inventory is possible. But we may have to make sure that we we also have the right Phil rates because we want to have the stuff, whatever customers ordering and buying. But we don't have too much, and we want to reorder at the right time. We want to reorder the right quantity, so that's really the talent of inventory management. The other thing is, we want to be able to pay our bills with in terms or negotiate longer terms. But stay with in terms. Keep our credit at the same time. We want to collect the money that's owed to us as soon as possible, preferably before we actually deliver the service right. There are some times where you actually pay a deposit for something. If you've ever ordered custom furniture right they say, Well, I want 50% upfront, right? And then before I delivered to you, I want the other 50%. That's a great you know, cash business, right? With many colleges out there when colleges starts in September 1 of these university want their money. Not in September. Someone want him in July, Right? So they want the money up front, so that would really be perfect. So those are the sources, those of the sources of cash. Now, we talked about what we do actually to improve cash. So I wanna talk about that for a few minutes. What could you do in your business to improve your cash flow? So since you have a retail store, it's probably the easiest examples. Shanna, what could you do in your business over a period of time? And I use the words over a period of time because this stuff doesn't happen overnight. People are used to doing business. What kinds of things could you dio decrease our cost of goods, decrease our expenses? Okay. So what? So what you're talking about here is really what could make your business more profitable, right? We're really talking about what could affect cash flow. Right? So what things could affect cash flow can increase cash in your book sales. You know, those that that's profit and loss. So think about things like, um, you could do a credit. Do do, offer anybody terms, do, after any accounts, receivables Yemeni in the short term. No interest financing. Okay, so that is a use of cash. Right? So you could try decrease that. You could make sure that any Sometimes someone purchases from you, they pay. What about when people purchase a series of lessons they pay in front of a Paris in a week? They pay up front. Okay, so that is a good source of cash, right? Some paying it all up front. Right. What about when you rent instruments is that is just the paid every single month. Or they have to pay three months or a year in advance. Um, well, to clarify, we don't run instruments, we rent sound systems, and it's usually a one day spaying. So usually it's 50% upfront to reserve it and then the other, The balance would be due on the day that they pick it out. Excellent. So then you're not exposing yourself to cash. So it seems like the other thing you do is try to keep his much little inventory as possible in order to fulfill the request. And if you have instrument vendors that you pay to try to stretch out those terms as much you can with in terms, whatever permissions you really have, So anybody else, I mean, in me, Yoko's field, she's kind of limited and really what she can really do. But this is a really this ah, is an excellent example of what you really can dio anybody else have something they would like to do. I mean, Yogi Stream can increase subscriptions. So let's talk about the Yogi Stream. What you could do is you could say, OK, you could pay every month for one price. I'm gonna give you a slight discount. If you pay 1/4 at a time, I'm gonna give you a slight difficulty. If you pay a year something like that, when you're doing e commerce, you're getting the money up front. You know, that's not really gonna be a problem. When you do coaching, you might sell a package of coaching where you're gonna have to spend get seven or 10 of them upfront to really do that. OK, all right, that me other ways to do it. So these are really the financial statements and these this is hard stuff. So now we're gonna go over to the workbook, so we'll review some terms, because again, this is very difficult. This is a different kind of thinking, and I really I know it's hard for many small business owners because we didn't sign up for this, right? We want to run our business. We didn't sign up for the financial statements, but really gotta do it. All right, so we have a little bit of quiz and just raise your hand if you think you know what the answer is. All right? So in review, what is What's the purpose of a profit and loss or income statement? What's the purpose? We're gonna be repeating this section at 12. 45. Again. Brianna, what's the purpose now? What's on it? What's the purpose? How can I use it for my small business? So profit and loss statement is showing how your business is gaining profit, where you're profiting and where you're losing money. So so how much money you're made. How much more evidence coming in and we're just going out. How much is going out? Right? What would it cost you to actually produce that revenue? What? Your profits at the end. Okay, Shane. And that was a great answer. What is a balance sheet? What is a balance sheet? Tell me who has answer for that. He'll go off. Why you are OK. It's basically the book value of your company. But more importantly, remember what I talked about, which is the quick ratio? That's the things you look at. Look at your current assets, which is basically your cash and your receivables and less so your inventory inventory is not really liquid. And divide that by what your liabilities are, what you have in which. Oh, and you have to make sure that number is over one. All right, what about the cash flow statement? What does that tell you, Marina? So how much cash you have over a course of a specific amount of time? So let's say a month, right? So example wouldn't be a bank statement saying, you know, this is how much you had the beginning. This is how much you had the end and the variables within that amount of time. What was happening during that time? How much money was coming in? How much money was going out? Okay, you know, this part is for extra credit, right? Okay, so when accounts receivable goes up, right? Is that a use or source of cash? When accounts receivable, book goes up, he goes down. That's right. A decrease in cash. Right when accounts payable goes up. Is that a source or use of cash? It is. It goes up. That's a source. Ryan. Inventory inventory goes up. Cash was down. That's good. See, we're making progress here. It's very, very difficult to understand. So we had a really great discussion. This is in part six, where it talks about the metrics that matter. We an excellent discussion of how you actually make money won the question that have, for all of you is who actually does your bookkeeping for your business. And are they effective? So let's talk with you first. I do the bookkeeping. Actually, you do the bookkeeping. Okay. And how does that work out? Um, seeing as how much I needed to learn about profit and loss statements and all that I do. I've done the best that I can keeping it together. But I definitely have room to improve. We'll talk about the next segment. It probably makes sense if you do the bookkeeping to make sure that you have another bookkeeper and accountant review it on a quarterly basis and you can ask questions and learn. What about in your business? I use men Use meant okay on how does that work out for you? It it's not the best. It s the most ideal situation. But it's It's just where I'm at. At the moment, I would like to be able to hire a good bookkeeper out there for anyone. Now, it's very, very important that you have your own business. Remember, you have to separate out the finance of your business from your personal Do not combine them together because the tax time, that's really gonna be a problem. All right. Karen Quickbooks, primarily myself and then my accountant. Okay. All right. And who does yours? Merrill Lynch takes care of that. Okay, So the important thing is that you have someone to rely on that help you interpret. Really? what's going on because the biggest question is, what are the numbers really mean? So make sure that we take we take a look at that. So this area, I would tell you, is very, very difficult to understand. And if you had difficulty getting through this part, I encourage you. Like Chris has been saying all along. Go back and review this again because it's not something that comes naturally, really, to any of us. Again. Think back on where I lost a $1,000, an MBA from Northwestern and I had courses in finance, and I just didn't get it. Now, on a regular basis, this has really become my mission. So let's talk about what's going on in the chat room here. Questions, please. You mentioned Quicken. We had a question here from Cullen photos saying There's so many options online to keep track of these finances. Is Barry have a few options that he recommends for small business accounting tracking. You know, again, probably the two most popular ones are really Quicken Quickbooks and sage 50. But the most important thing is that you use one. You get familiar with it and and you put good information into it and review the information that it spits out. What I find that most companies don't do is they don't use it consistently, and then they don't go back. I know this is kind of treason for a lot of people. They don't actually balance their checkbook. In other words, they look to see what is in the system doesn't match with the bank had and do they balance it together? The good thing about a lot of these electronic systems, it makes it a lot easier. Yes, so when we are setting up quick books because I have been looking at QuickBooks as that as a possibility for myself. But when I would go the idea of opening up a software like that and trying to figure out what's a fixed, uh, expense. What's a variable expense? How to even do that and figure it out? Not really knowing, I mean, just from all this, it's like a little overwhelming for me. So how what do I hire a bookie produce to help me set it up and teach me how to do it? And then, you know, two ways one is most. These guys, either QuickBooks or sage 50. They have a lot of quick starts. What will say, what kind of business do you really have? And I'll guide you through a process that doesn't work on their website. They have a lot of advisers that will help you set that up. You bring up a very good point arena, because if you don't set up your financial statements correctly to start, then they're going to be all messed up. So make sure you set up what's called the chart of accounts. Set up correctly was an excellent point. So do we have anything else in the chat room? I'm still waiting for my money's go. I'm gonna tell you he's going to go already. So they have the Yeah, We've had a lot of people champion. We've got people who want to send kids to camp. We want people who want to save. There's we have a lot of charities were trying to comb through all of these over the break. What kind of a You save the period because I'm big on that. Has anyone has anyone? But you know who's been a Cayugas? It's tiny little seaside thinking Big Sur. It's an awesome Pierre. Are you gonna split this money upright? You Whenever you're on the Oh, yeah, We've got cited the animals in Pennsylvania named night like that. They might like that as well. So I don't have any other financial questions that we have in the chat room. I think that people are pretty good. A lot of people are at different stages in their business. And some people were saying, Well, I'm so small, I'm not ready to jump into balance sheets. And I know we've had a lot of conversations. People saying Well, it doesn't really matter how big you are, Absolutely right. So by saying that you're too small, that you don't need a look at the financial statements that is a cop out. Because in fact, everybody personal in their own lives has a profit and loss statement. Right? How much money did you earn this year? What were your expenses right? And how much were you left with? That you have to pay taxes on So everyone has that no matter how big or small you are, it is a total copout saying you're too small. Get started now, with some good habits. Yes, so as, um, a public figure, type of person business where I'm blending my personal life with my business life in a lot of different ways. I mean, especially when I'm traveling and featuring different places and people and whatever. So to where? How do you How does one figure out what is personal and what is business and really, how to break those things apart, especially when we're talking about messaging and involving our personal lives into our business. But as you know, you have your your circles that, you know, kind of collide in some places. That's an excellent point. Remember, you want to put everything in your business, which is either revenue you get for your business or a qualify a ble business expense. According to if you in the United States and I rest or whatever you're taxing, authority is over the world so way that I've run my using pay yourself out of that. I remember that I have actually I actually have a business account, and I actually have a personal account and one more suggestion. If you have been married for 23 years, it's best to have your spouse and you to have separate accounts. It works out really, really well. But when I have revenue coming in, I get paid for a Pickler job. I put that into my business account, right? And then I have business expenses that get paid out of my business account. And then what I also do is actually have money from here when I pay myself and it goes to my personal account, So I'm paying myself now. Over here, there's also expenses that are personal, like my mortgage or paying for kids for college. You don't qualify as a business account. The good news is what happens at the end of year when I go to pay my taxes, I feel at my tax form, but I just give my accountant basically my profit and loss statement on a cash basis. So it's very important you set up to at least two separate checking accounts out of he goes in here. All your business income, all your business expenses come out of here. You pay yourself out of this account and all your personal expenses come out of there. You must really divide it up because at the end of the year, if you're trying to figure out what business and personal it really gets to be. It gets to be a mess. And Onley your local accountant, whatever country you're in will be able to help you decide what qualifies, What doesn't.