A chart of accounts.

When you set up your accounting system, you need to make a list of the categories into which you want to collect data. This list is called "The chart of accounts"

The simplest chart would look like this:

Cash and Other Assets

Owners Equity and other Liabilities
(These first two items make up the balance sheet)

Sales Revenue

Direct cost of Sales

Fixed or overhead Costs
(These three items make up the main divisions of your Profit and Loss Account or P&L account)

It is most important that you clearly define these categories, and use them consistently. The reason is simple, these definitions will provide you with the measurements that will be the indicators that you use to run your business.

So, why do you need to do accounting?

So many business owners take the view, "So long as my bank balance goes up, I can leave accounting to my CPA." The problem is that in so doing, you loose all the information you need to properly run your business. Now don't get me wrong, a good CPA is an important member of your support team, but his main interest is getting your tax return right.

To run your business you need to know things like,

1. What are my fixed costs?
2. What is my gross margin?
3. How best can I price the next bid?
4. Am I really making money?

And you need this information today, not at the end of the month, or as happens so many times, in April next year. The good thing is that with a good accounting system you can do all this with very little sweat, You just need to know how.

That's where we come in. Give us a call

(941) 855-0235 and say

"Train me to be a CEO"

Break-Even: What should I Know?

The concept of break even is one of the important numbers a CEO needs to know about his business. Understanding it's importance, and how to calculate it will also crystallize several other concepts. So what does break-even mean? Simply put it is that level of gross sales in a certain time period where achieved margin equals fixed cost. So sell less than this amount and you are losing money, sell more than this amount and you are making money. That sounds like a very important number to know!

So let us learn how we find out what the break even for our own company is. On the surface, it is one of the easiest numbers to calculate. The formula is:

Break-Even = Fixed Cost/Gross Margin %

Very simple isn't it. But do you know how and where to get your fixed cost amount, and do you really know what your gross margin is.

Need to know more, call

(941) 855-0235 and say

"Train me to be a CEO"

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