hi it's Patti scharf CPA and co-founder of catching clouds the leader in
e-commerce accounting and today I'm going to talk about my four biggest
takeaways from reading simple numbers straight talk big profits from Greg
Crabtree and stick around till the end to find out three things you need if
you're an Amazon seller okay so let's get started with takeaway number one and
that is 10% profit is the new break-even this is really great advice
this is probably my favorite takeaway from the whole book and that is if
you're making profit along the way and you're setting that money aside for a
rainy day then your business will be able to weather any storms that come
your way so running a business with with no profit in it is like living paycheck
to paycheck and you're just one hiccup away from going under so to protect the
health of your business to protect your employees and everything else it's a
really good idea to target getting a ten percent profit every month
in a minimum and then keeping that in the business until you've got a nice
healthy cushion and you can comfortably take out profits ok that brings us to
takeaway number two pay yourself a market-based salary you need to be
looking after the health of the business and looking at it financially after
you've taken out any money that you need to live on otherwise it's just kind of
misleading if it says that you're making 10% but you actually need 7 percent of
that profit to live off of then you're really only making 3 percent profit and
or worse maybe you're you're taking out too much and you're actually at a loss
so for the financials to be useful to you for you to be looking at the numbers
in the right way you need to look at them after you've taken out any money
that you need to live on and I would argue and he would argue that that
should be a market-based rate because if something happens and you need to hire
somebody to fill in for you you need to be able to afford it so so that's the
most accurate way to reflect that takeaway number 3
keep it simple now I'm a CPA so I like numbers and I like graphs and charts and
pretty spreadsheets and things like that but even I don't like things to be super
complicated when I'm trying to make decisions in my business so he's saying
just do simple things make it easy on yourself look and see how much your
income is see how much your expenses are excluding people and then have a salary
cap you know just like football teams and things like that where you have one
set lump of money that has to pay for all of the labor for your business I
think that's a great advice and thumbs up on that one takeaway number four is
not as much of a takeaway as a couple of items that I didn't necessarily disagree
with him but I think for an e-commerce seller you really need to take a second
look or look at it from a different angle one of those is cash basis versus
accrual basis financials he's a big proponent of cash basis I think part of
that is because he's a tax guy and so he likes thinking about things from a tax
perspective and I totally get that but when you're managing your business I
would argue it's more useful to have your financial statements on an accrual
basis and if you're an e-commerce seller who's selling inventory I believe that
the rules and check with your CPA but I believe the rules are that if you're
selling an average million dollars a year you're required to be on accrual
basis so it's best to set that up the right way from the beginning so I would
argue just start as an accrual based business and keep your books that way
it's going to be easier for management purposes the other thing that I'm not
sure I totally agree with is getting the books closed by the fifth day of the
month now I am a huge fan of getting real-time data all that I try and get my
books closed by the fifth day of the month but for some people like Amazon
sellers it's just not realistic because Amazon doesn't give you the information
that you need until the middle of the month so I just want to say take it easy
on your bookkeepers and don't don't have expectations of them that aren't
realistic so in conclusion I think that this book I give this book two thumbs
way up I think it's easy to understand I think I would say make sure that you
have at least a basic knowledge of income statement and balance sheet and
things like that if you don't have that at the moment subscribe to our channel
because I'm going to be doing lots of videos on that but once you have a
good basic understanding of accounting then it's really straightforward easy to
understand actionable information in there
big fan thumbs up alright so now you know you need to check out the simple
numbers book but what if you need a little bit more guidance as an Amazon
seller have no fear there's an article down below in the description I've got a
link down there for three things you need if you're an Amazon seller if you
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