He was providing courage to his men, so that they could overcome the enemy provided they remained in unity and moved together.

How many times in your business have you had to stand and HOLD when everything seemed to be against you?

Were you able to draw on your inner strength and courage to stand firm.

From today be the Braveheart in your business.

Made me think about how profit and cash flow push and pull against each other in a business.

• One month the profit seems to be great but there is no cash.
• Next month the profit falls away but there is cash in the bank.
• The struggle is getting both profit and cash flow working together and heading in the same direction.

If you relate to this challenge in your business you will understand how the ‘pushmi-pullyu’ must have felt all the time!!

I personally love GREEN days because they often set the direction for great future SKY BLUE days. If you never step back from your business and look in from the outside then you can find yourself caught in a vortex of day to day running which can overwhelm you over time.

GREEN days are the days when we do strategy and forward thinking. They’re when we work ‘on the business’ and have a day off from working ‘in the business.’ Sound great?

Having a day off?

They are great but you simply can’t have one every day because the business can’t run itself while you’re having a day off!

GREEN days need to be planned wisely and preferably in advance. Get your business ready for you to have a GREEN day. Make sure you have plenty of good solid SKY BLUE and ORANGE days before you have a GREEN day. Otherwise your great GREEN day will quickly turn into a black day.

Our GREEN day happens once a quarter when Lindsay (my business partner) and I go to the top of Mount Dandenong and spend a day working on the next quarter’s goals and objectives. There is a restaurant there and we can reserve a table looking out over the whole of Melbourne and its surrounds for the day. We only have to pay for drink and food for the day so we get great surroundings to do this at an affordable cost.

This sets the tone for a great GREEN day each quarter and one that we both look forward to. It is a day of accountability to each other, accountability to the goals and objective’s of the last quarter and the pleasure of planning what we’re going to achieve in the next quarter. A great GREEN day for One Sherpa.

They don’t really delegate it. They simply give it to someone else and hope that it goes away. More often than not this does not lead to a good result. If you are delegating administration to others then you’ll still need to check that it is done correctly and you should also review the results and reports produced to make sure you know what is actually going on in your business.

My suggestion is that you do this on a particular day of the week. Set aside a day, or half day when you say to yourself ‘I’m having an ORANGE day today.’ This will help you focus on a job many business owners don’t like doing. So what happens when we have no ORANGE days?

A black one is just around the corner because your business will get into a mess administratively and then something major will go wrong because you forgot to do something.

May be the phone or power gets cut off
or you get a letter from the tax department
or you get an eviction notice from your landlord because you forgot to pay the rent.

This is the day when you’re working on bringing income into your business. It should be one of the most exciting things that you do. Lead generation, lead conversion and then sales fulfilment.

This should also be a really positive day and the most common way I see of this turning into a black day is when you have to deal with the customer from hell. Now be honest, we all have them and when they dominate our day it will turn black fairly quickly. A SKY BLUE day is about going forward not backward. Working out how to interact with our GOOD customers.

They are the ones who love what we do, are positive about our business and always value us by honouring their commitments with us. A SKY BLUE day is not about reacting to customers and feeling pushed around.

Get on the front foot. Think about your uniqueness. Think about why you are so much better than your competition. Be courageous. It will make you feel a lot better and that’s how you’re supposed to feel on a SKY BLUE day

In developing our whole system called The Financial Fence® I have learnt the value of colour and as a result found that many people learn more by the association of colour than numbers and words.

So in this little series of blog posts I’m going to look at the three colours that make up the activity on the fence and associate them to the kind of day you might be having.

So there are three different types of day you may be having as a business owner:

1. A SKY BLUE day – this is the kind of day when you’re interacting with your customers.
2. An ORANGE day when you’re working on administration , process and efficiency.
3. A GREEN day when you’re working ON your business rather than IN your business.

Many times you may be having a day when all the colours are merged together and you feel in a bit of a mess. That is probably a black day for you.

If you’re having one of those days then the best thing to do is take a deep breath. Count to ten. Put two of the three colours away for the day and focus on only one of them.

You’ll find this will really help you and , you know, there’s always another day to bring out the other colours and get the value from them.

We talk about Capital funded by Debt and Equity.

Also, Capital is represented by the colour green because we say that this is the garden where you grow things.

So in our endurance riding example for these three posts we have been looking at finishing well.

That means making sure the horse can continue another 40 kilometres and also complete the whole season. It also means in your business that the balance sheet is in great shape to go forward to the next period.

Over my work life I have seen many profit and loss accounts being manipulated to show a great profit for the period but all this does is make the closing balance sheet a little weaker for the future.

So how would this work in practice?

I might want to show a good profit so I bring sales forward for the month but my customers are going to take longer to pay.

This means that in my Closing Balance Sheet there are some items which are not collectible in the correct period and therefore my balance sheet is weaker.

Building the right Capital into my balance sheet is fundamental to how the next period will perform from a CASH point of view.

So why is that?

The next month’s cash in a business is going to come from the Accounts Receivable not the Sales for the next period (Unless your business is completely Cash Sales).

Therefore if I haven’t finished with a correct balance sheet my business may fall over in the next period.

The overall message in finishing well is about closing out each period of your business with a sound closing Balance Sheet and not simply a successful Profit and Loss account for the period.

Remember the final visit to the vet and the fact that the horse had to be fit to do another 40 kilometres?

Many business owners in their haste to make profit forget to feed their business and it becomes run down. They take every piece of profit out and forget to leave some money in the business to sustain it.

Sustainability is about making sure you have a horse that you’ve kept hydrated throughout the ride; that you have not ‘run into the ground’ and that can take you throughout an endurance season.

To do this you must make sure that you look at two things while riding the endurance race.

1. Keep an eye on how fast you’re running because remember it is a race and you’re trying to do your best time.
2. Keep an eye on how the horse is doing so that you make sure it can go the distance.

So in your business you must keep an eye on your profit and loss account because that will help you make sure you’re progressing well and are not going backwards but also keep an eye on your balance sheet because that will tell about the sustainability of your business and whether you can go forward from this particular part of the journey.

Watch for my last entry in this series where I will look at the importance of the quality of your end Financial Fence post…….

I used to be an endurance rider which involved riding horses over long distances. The most popular distance was 80 kilometres and this would involve two sections of 40 kilometres each.

The ride would usually take place on a Sunday morning and we would travel to the location on a Saturday.


The programme would look like this:

• Step One – Take horse to the onsite vet for a pre ride check.
• Step Two – Ride first 40 Kilometres.
• Step Three – Present horse to vet for second check.
• Step Four – Ride second 40 Kilometres.
• Step Five – Present horse to vet for third check and gain a completion certificate.

You may be asking, “Why all the vet checks? Surely it would simply be a matter of making sure you followed the course and got to the finish line”?

Well, the vets checked the horse for such things as heart rate and lameness but the most important part of their work was to ensure the horse was fit for the next leg.

So the check at the finish was to ensure the horse would, in their opinion, be fit to complete another 40 kilometres.

So how does that relate to a business?
Many business owners only think about their Profit and Loss Account. That’s like being out on the ride. But they never really think about their Balance Sheet which is like going to the vet and checking whether their business is OK to carry on.

Watch for my next post on this topic where I will expand this thought further…..

1. Beating the Tax Man
There is a well known pastime by most business owners of trying to beat the tax man. This means that people try and write off items as fast as they can and therefore mis-match costs to revenue. Bringing costs forward happens subliminally and causes the Jekyell and Hyde which goes on a business owners mind.

2. Failure to keep up to date with book work
Business owners fail to keep their book work up to date and only records items when they PAY for them which can bear no resemblance to when they were purchased ( refer to part 1 of this series).

3. Failure to appreciate the affect of inventory in the business
The biggest and most common issue is that people do not use the two step process when dealing with stock in their business. There are three common reasons for this:

1. This can often be encouraged by outside accountants who are focused on reducing the profits of a business to reduce tax.
2. This can also be caused by the business owner never wanting to count stock and never really knowing how much they have on hand.
3. This can be caused by the business owner trying to simplify their book work so much that it destroys the accounting view and only produces cash book information.

Let me describe the process and see where you fit in:

When purchases are made in your business do you think of them as Purchases or Cost of Sales?

This makes quite a deal of difference because it will tell you where you code the suppliers invoice.

If you think of them as purchases you will likely code the invoice to STOCK in the balance sheet. This is exactly what happens in practice but rarely in the books of account. Most people code their supplier invoices straight to Cost of Sales.

So if items are bought BEFORE being charged to customers (which is normally the case) then there will be another miss match in the profit and loss account because the cost of sales DO NOT match to the sales.

Think about it, Cost of Sales should represent the costs associated with the Sales in the profit and loss account.

Many times the costs of sales are costs associated with sales in a completely different period so the profit and loss account is completely incorrect.

If you have been coding directly to cost of sales the following is likely to be happening in your business:

1. You are in denial about your real profit and rely more heavily on your theoretical costing or job costing which doesn’t have to rely on correct timing.
2. You are often surprised by the profits in your business and don’t believe them on a monthly basis.
3. You have said something similar to this in the past: “Let’s not worry about monthly reporting. If we look over a quarter then the ups and downs will even out over time.”

This last point is so common in business that we always look for it first when trying to help business owners discover the profitability of their business.

Making this move to accounting for purchases in a two step process will help enormously in getting the timing correct for the transactions in your business and perhaps give you a true profit figure for the first time.

Unless you are happy being in denial on the real profitability of your business, I encourage you to have a look at how you’re doing the recording in your business.

If you would like some further help in this then click on this link where you can see a short video on how this works in practice.