Can Bookkeeping Make You Rich?

About 8 years ago, we noticed a strange phenomenon occuring with our clients. Their gross income suddenly jumped after 1-2 years as a client. Since we specialize in saving taxes and protecting assets, it made sense that the bottomline would go up. But why would the top line, the gross income, go up?

So, we did some surveys and we discovered that for the small amount surveyed, the gross income had actually gone up, on average, about 2 1/2 times in the 2 years since they had become clients. The FTC makes me tell you that these results are not typical and that your results might be different. Or something like that…

Anyway, the point is that income went up. When asked why, the answers were all about having new opportunities, more joint ventures, more focus on what was working. Okay, of course, that makes sense, but why did ALL of them experience some growth. That isn’t typical. And that’s when we found the underlying reason. It’s profoundly simple, actually.

To be a client of ours, you need to have good financial statements. We can’t save you money unless we have good data. So, for some clients that meant they had to change how they did business and let go of doing the bookkeeping themselves or if they had someone else doing it already, have financial statements prepared throughout the year, not after it was done.

The reason we needed that was so that we could put tax saving strategies in place. But what happened is that some business owners had a tool they didn’t have before. They had data and through the coaching we do, they learned how to read and interpret that data. They knew what worked and what didn’t work. And that helped them become better business owners.

There was another underlying cause, too. Some of the business owners already had good financial statements, timely prepared. But they spent too much time worrying about the taxes they were paying. When they became clients they knew that tax savings strategies were mapped out in advance. They just needed to follow the action steps. Back then we didn’t have the unlimited consultation we do now, but still even with just annual reviews, there was a burden lifted from the clients. And that translated into more time, more space, to make money.

And that’s what happened.

So, how has this fared with the clients now? This past week, I’ve talked/emailed with four different private clients of mine, every single one of them is booking more business then they thought possible. One did over a half million dollars of billing last month, on a business that was just started 3 years ago. She doesn’t have time to worry about the taxes, she needs to keep the sales coming and fulfilling on the orders so that her customers all become raving fans. We’re working on some short term cash flow solutions now to keep the company working at this pace.

Another client had 3800% (yes you read that right) increase this last year. He’s looking at 5 times that number this year. He’s getting into serious tax issues now and we’re on top of it!

Across the board, their businesses are exploding with growth. And because they have bookkeeping in place, we have good financial statements that we review together every month. That helps us make planning possible for no bad tax surprises.

Can bookkeeping make you rich? Well, kindof. It’s not the bookkeeping that is making rich, per se. It’s having good bookkeeping and good systems in place with advisors you trust that let the business owners concentrate on what they do best. Without the bookkeeping, these businesses would be just where they were 2-3 years ago, scraping by.

Related posts:

• The High Cost of Delaying Bookkeeping
• The Secret Language the Rich Know
• Why ‘Work Your Passion’ Won’t Make You Rich
• No Financial Statement Could Mean a Bigger Problem
• Does Your Business Have a Cheating Culture?