The start of a New Year is a beautiful time. It's full of potential; a natural inflection point; a pause. Whether it's true or not, it feels like everyone is focused on reflection and intention. We're all making space for ourselves and with that comes giving space to others. And that space allows us clarity, if we choose to seek it.

Are any of you experiencing this right now? You know where you want to go and you see a path to get there. Where you're not yet bogged down by the details.  Do you have clarity in your work and your vision? How does this make you feel?

It's been raining here in Los Angeles, so the subject of clarity is apropos. In our desert metropolis, the air is usually dense with smog, hindering visibility. But the rains comes and clears the atmosphere. And what was once hazy is now clear. The Hollywood, formerly Hollyweed, sign is crisp in the distance. And I'm forced to wonder, what would it be like to have this clarity most of the time? Would I pause more? Would it become the status quo that I slowly take for granted? I'm not sure.

Clarity in Your Business

In terms of your business and as we're here at the top of January, do you know how your business you did last year? 

For those of you who don't have clarity on your business finances, the idea might seem foreign, alien or actually impossible. There are many among us who have gone from opacity to transparency. It takes some action and some discipline, but the reward is worth the effort. 

Step 1. Understand Your Business Model

Your business model is the plan your company implements to generate income and make a profit. There are two parts to that statement. Let's break it down. The first is generating income. In other words, how does your company make money? What are the revenue streams? Do you know what drives each stream?

The second part of that is to make a profit. The profit doesn't have to be huge; but profits can help your business grow. If you're less interested in growth for the sake of growth, profits can help your business make an impact. You can donate profits to charity or use them for a buy one, give one business model. Do you understand how profitable your business is? Do you understand what revenue streams are the most profitable or what expenses are eating away at your profit?

How do we answer these questions? Through the financials. In other words, the reports that can be generated from the bookkeeping records.

Step 2. Simplicity Through Routine: Bookkeeping

Bookkeeping is the process of using an application (program) to help you categorize the transactions that happen within your business. This categorization is super sexy because it will allow you to generate reports at the touch of a button. These reports are gold. GOLD! They'll tell you how much money you made over a period of time (ANY period of time). There are tons of reports you can run. Here are some examples: a report that tells you if your business is operating at a profit or loss, how much debt you have, how many invoices are owed to you, how much sales tax you owe.

Reports give you information about your business so that when you're making decisions you can hypothesize about what you think the outcome is.

Here's one piece of great news: it's January. Which means you can get set up and start your bookkeeping in (almost) real time. You're not behind. You're ahead. Stay ahead, dude. I believe in you. When stay ahead and make it routine, it becomes manageable. 

How?

The best applications on the market right now are made by Xero and Quickbooks. 

Xero

I use Xero for The Hell Yeah Group and for my non profit, Allies in Arts. It's all in the cloud, super easy to use and I've only dealt with very minor glitches. Here's the deal: head here and you'll get 30% off of your Xero subscription for the first 6 months. Offer ends January 31, 2017.

Quickbooks

I have a lot of clients who use Quickbooks online. When Quickbooks first moved to the cloud, it was a rough transition. The reason is because the original desktop software is insanely, insanely robust. Moving it to the cloud was clunky. It's like a Cadillac trying to suddenly be a Tesla. But they're definitely making strides and I'm happy with their progress. Same deal with Quickbooks: head here and you can get a 30% off of your subscription of for the first 6 months.

BOOM. Go. Now. Sign up now and thank me later.

Who?

Bookkeeping can be done by you, the business owner or partner. You'll have to learn. You can learn online or find a specialist whose job it is to teach you how to do your books. You can also ask your accountant if they can help.

You can hire a bookkeeper or see if your accountant also does bookkeeping. Bookkeepers might charge an hourly fee between $40-$85/hour or charge a monthly flat rate.

The key to simplicity is routine. Keep it high and tight. Keep it manageable. 

Step 3. Use the Data 

Running your business is testing a hypothesis. The business began as an idea in your adorable brain and now it's actually existing in real life. How you imagined it is probably different than how it's actually running. 

Why do you make adjustments and changes in how your business operates? Maybe the marketing doesn't land or a supplier changes their pricing. Geography may play a big role in certain areas while they don't impact other areas. 

The same way other elements can impact your business decisions and operations, without a damn doubt, your finances do. But don't wait until shit hits the fan. Use the data regularly to analyze the gap between what you thought would happen and what actually happened. Or rather, the gap between what you want to happen versus what actually happened. While it's true that things don't always go according to plan, the more information you have, the better equipped you are to try to close the gap.