Insite into the financial world with Ellen Rohr
After another amazing interview with Ellen, we have learned even more about her company, about financial sheets, and how to make balance sheets not quite as painful. She has franchised Zoom Drain & Sewer Service into Philadelphia. This brings the total locations to a whopping 11! Not many companies can say this. She claims the next milestone is $100 million in sales. Ellen has really grown this company and made it into something great.
A quick blast from the past
Once upon a time, Ellen quit her job to work with her husband the plumber. She talks all about this experience in her video: Business Un-Complicated
Having a lot of business experience, work experience, and a business administration degree, she was feeling on top of the world.
“Accounting is not that hard. It’s just a course of study. It’s truly easier than golf and marketing.” –Ellen
So she thought…
This transition was a humbling experience for her. The books were a mess! In school, you always start with a clean, ordered, set of numbers. She had to crawl her way through every page and figure it out.
They did not have a salary. There were no benefits. Making money in this new business was like trying to draw blood from a stone.
“If you pay attention, if you learn the basics, you’re going to be a better financial manager.”—Ellen
So broke they couldn’t afford help, Ellen met an amazing mentor. Frank Blau taught her “assets from her elbows”. He took her line by line through her financials, as well as his own, and showed her what was what. Watch a dedication video on her site to Frank.
She knew no one else was going to do this for her, no one else was going to fix the books.
She had to do this herself.
Once she stopped fussing about the books and took the time to sit and understand them, everything started to fall together. With the help of some amazing people, her sister Gail included, their books and business financials, became what they needed to be.
“You need to know where your money is coming from, where it’s going, and what it’s doing. This is your money; it is your responsibility.”—Ellen
Partnering with a warehouse to keep inventory under control
While understanding your finances, keeping on top of them and ensuring they are accurate, are requirements when owning a business, they are not always your best friend or even favorite pastime. I personally love being out on the golf course, so sitting with a calculator and pencil for hours is like torture.
If you partner with people who are in the warehouse industry, as your suppliers and manufacturers, they can do the housekeeping of where the materials are. All you must worry about then is where they need to go and have them delivered. This process will simplify your accounting in many ways.
Oversee your finances
Asking the right questions, making it a weekly habit to check your balance sheet for errors, asking why, these will all keep your books on track. You don’t have to let accounting control your life. It really isn’t this daunting task. Make time, once a week, to sit with your statements and mark them off.
Your known financial position, or accurately knowing the financial standing of your company, needs to be up to date. This will help you know the current score of your business, and if it is healthy or failing. Ellen uses smiley and frowny faces, along with a ruler, to go over the books on a weekly basis.
There is a path to follow of credits and debits. Follow that path the first time to get your books in order, and then make it a weekly habit to keep on top of things.
“When you sell stuff for more than it costs, you create profit and manufacture money that wasn’t there. It’s your asset now, and without strings.”—Ellen
Whether you borrow money, as an owner put more money into your company, or simply grow your business through creating profit, growing your assets is essential to growing your business.
If you have a problematic balance sheet with a lot of debt, the way to fix it is to create a large influx of asset or money. Another, less likable option is declaring bankruptcy.
You will learn from either option but creating a large profit from raising your prices can fix most debt problems. If you raise your prices, control your expenses, and create a larger amount of profit, you can overcome almost any problem.
“Frank Blau’s selling price method is to add up all your cost of doing business, divide that number by billable hours, and charge more than that for profit.”—Ellen
Charge a flat rate instead of an hourly one. Set that flat rate higher than the cost of doing the project to ensure profit. Choosing a flat rate is going to help your business be more secure as well as the customer. They will not be left wondering how much the project is going to cost, they will have the cost up front.
Focus on the big loaves of bread
Instead of spending days or even weeks looking over tons of small numbers, create larger ones. Find the big numbers that are to be at a certain point. Watch those numbers, and when those are off, talk to the team members that are in charge of those smaller breadcrumbs. Every department has their financial connection to the books. If the larger number in marketing is off, you know you can go talk to the head of that department rather than sifting through an enormous amount of data.
“Having those conversations is essential so that your teams know what is real.”—Ellen
Ellen ended her interview with this awesome quote:
“Progress is made from fixing the mistakes that are made in the name of progress.”
Ellen has also created this amazing Financial Quick Check. Also available is her ebook Where Did The Money Go? You can watch a video on this book as well as read some great advice on her website here.