Tis the season to be giving…..which is easy if you make the time and have a plan.  However you need a plan to give to yourself before you are able to be in a position to give to others.  We are entering that time of year when everyone has the time and the necessity to look at their financial status and taxable income.  Your focus here will provide the gifts later.

Overhead.  Profit and loss.  Cashflow.  Expense categories.  Taxable income.  Yuck.  These are not terms that most people enjoy hearing.  However, running your practice, your business, intentionally…. can lead to results that can be VERY exciting.  Below are intentional actions that will lead to improved overhead and cashflow that you could direct into lowering debt, reinvest into your practice or invest in your retirement.

I periodically evaluate client income statements and cashflow to identify opportunities or areas where additional help is needed.  Within these financial statements we typically find at least 3-5 areas needing attention.  The areas in question typically:


You’ve likely heard of the Pareto Principle (80/20) before now.  Sometimes we tend to delve too deep and get so far into the weeds and we may forget what we were after.  This is one area where small but consistent efforts are crucial.  You will likely be more successful creating more revenue than squeezing every last nickel out of your overhead.  Think of it this way, your opportunity cost of time is significant when you consider the option of using 10 hours to save $5,000 or creating $50,000 of revenue. This is your 80%.  Ideally you should spend the majority of your time creating new revenue and a small, consistent, dedicated amount of time keeping the expenses lean.   The first step is to work with your team of advisors to create objectives and key results that are understandable and more importantly will be monitored weekly and monthly.


The first recommendation here is to get a bookkeeper who understands your industry and can handle all of your bookkeeping on a regular schedule.  For those of you who still do their own bookkeeping, ask yourself what is the highest and best use of your time?  Sure, you can save a few hundred dollars doing it yourself. However, what is the cost of your time?  Revenue?  New business?  Using a program such as QuickBooks Online will allow you to monitor your financial health from your computer or device from anywhere in the world.  Even while exercising!

Additionally, the two experts you will need are a Certified Public Accountant (CPA) and a Certified Financial Planner (CFP).   You also need to understand how to use both experts.   To keep it simple, your CPA prepares your tax return and they should be preparing you for a tax return with the lowest possible (and legal) tax consequence.  The CFP should be advising you on how to employ strategies that will protect and invest as much cash as possible.  These two experts could and should work in concert together to achieve your desired end result.  Don’t assume they both have the same objectives or that they both have all the information.  Be the facilitator between the CPA and CFP to ensure your objectives, as well as each expert’s strategies are communicated and maximized.


Since we are talking about a system, let’s just get to it without the fluff.

  • Hire a bookkeeper that understands your industry and can update financials on a regular schedule. The bookkeeper needs to schedule enough time monthly to complete your bookkeeping work within the month so the income statement, cash flow statement and balance sheet are current at all times.
  • The bookkeeper should use a chart of accounts that follows industry standards for general overhead and line item expense categories. This allows you to evaluate the overhead, profitability and cashflow monthly.  This is where your objectives and key results come into play.
  • Review your income statement and statement of cashflows monthly. Evaluating the detail of your income statement against the industry standards will help you identify the specific opportunities to reduce or eliminate expenses is a significant strategy.  Expenses are designed to be easy to acquire but hard to cancel.  You will find the devil in the details!   Monthly review of your results will allow your team to take corrective action when the results are outside of your objectives.
  • Employ the help of your in-office team. Your team often has great insight on daily operations, usage of products internally, services not being used, products or services that are underperforming.
  • Set up a red flag system with your experts and in-house team. They should be empowered and accountable to raise the red flag when expenses are getting outside the pre-determined guidelines.  Think about dental supplies, etc.
  • Your CPA should review your bookkeeping and financial statements at least 3-4 months prior to your tax year end. For everyone following a calendar tax year, the yearly review and tax forecast are most times completed between September and October.
  • Once the tax forecast is completed, your CFP should evaluate the financials and tax forecast to identify your opportunities to defer taxation and maximize retirement planning.


If we were to consider a situation where there is just 3% waste in a $1.5M business, you would lose $35,000 annually.  If you were to identify and save that $35,000 each year and then invest it each year over a period of 10 years at 7%, your nest egg could be $483,575 larger.  What if your waste was more like 6%?  Could it be 10%?  Do you need any other motivation?


We are all an expert at something.  Hire the experts that will leverage your time and efforts on activities where you make a real difference.  The highest and best use of your time is to generate income and provide leadership for your team.  Create your vision and communicate it to your experts, then get out of the way and allow the magic to happen.  Like the title says – cash is easy to make and hard to keep.  It is likely you’ve heard some or all of this before.  The magic happens with execution.  No one else will ever be more motivated than you to make it happen.  And if you think about it, really hard, you could apply this to your personal finances too!