Why Write Values, Mission and Vision Statements?

There are many websites dedicated to the writing of Vision, Mission and Values Statements.  Some of them very good. (I recommend 3 Statements That Can Change the World: Mission/Vision/Values for an excellent breakdown). I do not wish to ‘re-invent the wheel’ in this regard.  However, there is much question as to WHY to do such a thing.  Although useful for serving in the writing of your business plan, these documents can, and should be so much more.

For small businesses and Entrepreneurs, these statements can be very personal.  There is even an argument to be made for writing your own personal Values, Mission and Vision statements. It’s important that you take the time necessary to think about these in some depth.  Be honest with yourself, and write them down.

Often, tutorials will teach you to begin with your Vision statement.  However, I recommend that you instead begin with your Values Statement, and hopefully, you’ll see why.

Values Statements – Why

Values statements are often overlooked.  They articulate what you wish for your business to hold true.  Every employee of your business is expected to believe and act on these values, and perhaps right now, this is just yourself.  But really, beyond professional conduct and customer service, what is it that requires articulating?

You will hear many business speakers and entrepreneurs talking about the importance of your ‘Why”.   If you haven’t already, I highly recommend watching Simon Sinek’s Ted Talk – Start with Why

Your ‘Why’ is possibly the single most effective indicator of your success.  It becomes the measuring stick by which all of your business activities may be measured, and it is the spark which will drive you forward when you question your path. Your ‘Why’ is, in other terms, the underlying purpose of your business, it is your reason for being, and it is articulated in your values.

It is your values with which your customers and clients will identify, and which will set you apart from others.  They will guide you in your growth and forward projection into the world.  When having to make decisions, your values will help you determine which choice is a better fit for your company.

Typically, the values described in the values statement are described as prescriptions for beliefs and behaviours held by the company/organization that must be reflected by its employees.  These values will provide a compass for your business decisions, but also help you to identify what it is your business aims to accomplish.

In the case of Entrepreneurs, these beliefs prescriptions are your own.  These values will be made manifest in the way you carry out your business.   For example, I have found that I value flexibility in both my work schedule and for my clients.  This means that I have to be prepared for varied work hours, communication methods and learning new software and tools for managing client tasks.  This has directly resulted in my choice to work in a virtual environment, to schedule time and budget for training, and to be open to communicating with my clients during evenings and weekends in addition to traditional business hours.  You may value a strict work schedule, and so your policies surrounding these areas will be different.

Typically, you will have five to seven values that are really core to your professional presentation.  Articulating these clearly will allow for the effective development of policies and decisions that are in alignment with your goals.  Your Values Statement will be that upon which you build the foundation of your business, and thus your Vision and Mission statements will follow from these.

 

Mission Statement – How

Your mission statement outlines what you DO. For entrepreneurs and small business owners, this is really where you identify what it is you can contribute to your community.  In a lot of cases, this is what we do well enough to consider starting our own business doing it.  We have something to offer the world, so offer it.

The decision to start a business in a particular field often feeds off of your values.  You will want to reflect this in your mission statement.

For example, I value natural wellness modalities, and making holistic medicine readily available to the public. I am quite good with numbers, categorization and writing, and I genuinely want wellness professionals to do well.  My mission statement therefore emphasises what I DO to help wellness professionals do their job.  “The Art of Balance provides quality bookkeeping and administrative support services to support wellness professionals.”  It is not complicated, but it doesn’t need to be.

Not only does articulating your Mission statement express to others what you do, but also directs your own activities.  In the above example, I can you use my mission statement to identify whether I want to engage with a new client, or whether a particular task is something I am willing to take on.   Again, there are very practical instances where having a well-articulated statement can help in the decision making process on a day to day basis.

 

Vision Statement – What

Often, business will start by outlining their vision statement, and for good reason.  The Vision statement is where you can really express your vision of a better world.  Here, we have started by identifying our particular strengths that we can contribute and so we are well-equipped to identify an ambitious but attainable goal for ourselves and our business that is in line with our values and capabilities.

Vision statements outline a state of affairs that we can aspire to. Goals are important!  They help us measure our effectiveness – the difference between what was and what can be.  They help us to differentiate between projects that are relevant and those that are not.  What difference do we want to make? Is the time we’re spending on any particular task or project worth the time we’re spending on it?  Is this a task I need to do myself, or can I delegate it to another?  Is there something I can be doing that I am not? Your Vision statement can open a space for brainstorming new approaches to your goal by removing the limitations on what you already do, to what you can do.

 

Grow Organically

These three statements are not static.  Once you’ve established your small business, you may find that your values change, your abilities expand, or your picture of a better world changes.  You can use these three statements to identify changes you wish to make moving forward, or to describe a situation that is already the case but not fully recognized.

It’s a good idea to revisit these statements regularly, perhaps yearly or even monthly to maintain awareness of the health of your business, and to continue to direct your business towards those opportunities and situations that you desire.  Use them as measures of performance, and as a context for planning future projects.

In this way, you will ensure that your business is a reflection of what you wish to manifest in the world.

 

 

 


How to Read your Profit and Loss (P&L) Statement

Profit and Loss

 

 

Any small business owner needs to understand at least the fundamentals of their finances, and although a Bookkeeper can be of great help, it is important that you understand what all of those oh so helpful reports are telling you.

 

Today, I’m going to go over the Profit and Loss (P&L) Statement, and how this can help you understand the state of your business.

 

The P&L Statement measures your income, costs and expenses over a set period of time (often a year, quarter, or month). Reviewing your P&L statement over the course of several months can give you a pretty good idea as to how your business is faring. It will also help you to identify (in real numbers) any seasonal patterns or trends.

 

Gross Earnings: The first line of the P&L is “Sales” (product sold) or “Revenue” (services rendered). This is the “top line”, and refers to the sum of all sales or revenue earned during the period. Depending on the detail of the report, you may find that this is broken down further into types of sales or revenue, depending on the variety of your sources of income.

 

From your total revenue, we need to subtract all of the costs to run your business, which will leave us with our “bottom line” or “Net Earnings”. There are several different kinds of costs that need to be accounted for to determine your net earnings.

 

Cost of Goods Sold (COGS): If you sell a product, you will have to first purchase the raw materials or prepared product for your inventory.

 

Depreciation: Investments that the company has made will lose value over time. For example, if you purchase a company car for $28,000, over the course of 5 years it may only be worth $6,000. This loss in value is calculated regularly to reflect the current estimated value of assets.

 

Operational Expenses: Operational expenses primarily reflect the cost of salaries for staff, debt, and regular bills. Essentially, the day to day cost of doing business.

 

Financial Costs: These are usually related to interest on loans, late payment fines, interest on credit cards, bank accounts, exchange costs/gains etc.

 

Extraordinary Costs/Gains: Sometimes, there are just strange, non-recurring costs or revenues that don’t really fit anywhere else. It’s a good idea to make sure that if there are any extraordinary costs or gains, you know where they came from.

 

Gross Profit: Revenue – COGS = Gross Profit   This numbers is helpful to know just how much money your company is bringing in every period. This is what you have to pay your bills.

 

Earnings before interest and tax (EBIT): Gross profit – Operational expenses = EBIT. This is a helpful performance indicator as to how your company is doing.

 

Net Earnings: Your “bottom line”. The end result of all Revenue – all Costs, including interest and tax. This is what your company really brought in during the period. Hopefully, this number is positive and meeting your goals. If not, you’re potentially in trouble, and need to find out how to either increase your revenues, or cut your costs. This value can either be retained within the company, or paid out to shareholders.

 

For small businesses, I recommend that the P&L report be reviewed regularly. As previously mentioned, it can help identify trends, seasonal patterns, as well as warn you of impending danger.   If you don’t already receive this report from your bookkeeper or accountant, I highly recommend that you ask them for it as part of your regular monthly financial reports, and of course, don’t be afraid to ask questions.


Benefits of Hiring a Bookkeeper for Small Wellness Business Owners

Benefits

 

 

Small business owners often feel the need to handle their entire business themselves. I get it, your business is your baby. But sometimes it is more beneficial to you to outsource some of those important tasks. Bookkeeping is one of those tasks. Here are some reasons you may want to consider contracting a virtual bookkeeper:

 

1. Specific Financial Knowledge

You have received training and been educated specifically for your profession: massage therapy, herbalism, psychology, yoga instruction etc. Even though you have a fair idea of your business’s finances, you likely lack the specific accounting knowledge required to classify all of your income and expenses accurately. This can have negative financial implications at tax time, and prevent you from truly having an accurate picture of how your business is doing.

 

2. Save Money

Keep track of bills and avoid overdue penalties. Identify areas where your expenses are outstripping your budget and find creative ways to minimize those expenses.  Tracking popular services and problem areas will allow you to capitalize on your strengths, and address weaknesses effectively.  Have all of your reports ready to go for your accountant at tax time.

 

3. Financial Reporting

Bookkeepers can provide you with customized reports illustrating the financial health of your business, and help to identify opportunities for improvement. These reports can also be prepared for your accountant come tax time to make filing simpler, and less expensive.

 

4. Budgeting and Benchmarking

Bookkeepers are experts at helping you develop and stick to an advantageous budget for your business. This helps keep your business practices in line with your goals. Compare your costs and services to other similar businesses to identify opportunities to maximize your income potential.

 

5. Time

Most importantly, hiring a bookkeeper frees up your time so that you can do the work you love to do. Time that you would normally spend doing the books on your own can be much more effectively spent on the real work of your business, while you have a trained expert efficiently handling the finances.

 

Hiring a professional bookkeeper can pay for itself, both in income/expense optimization and the freedom for you to focus on serving your clients.