p&l

Rob explains how to calculate the financial freedom amount you need to live comfortably each month. This could mean in retirement or in an emergency financial event. Also, we discuss the process of reviewing how much you need for your security fund, and auditing your investments.

Calculate financial freedom amount with your personal P&L - Profit and Loss Report for financial independenceFinancial Freedom Amount – Finding it through your Profit and Loss Review

Rob starts out reviewing three levels of living standards: the basic level, vitality level, and your financial freedom amount. To determine how much you need to live on day to day, you must perform a personal P&L review with your own bookkeeping software. Whether it’s Quickbooks or another platform, it should have tools built in to generate profit and loss statements easily.

He then presents the concept of “grateful business expenses”. If he didn’t own a business, he couldn’t write off certain expenses, such as his cell phone bill and medical expenses. Make sure those write offs are part of your report!

Next, the discussion turns to your security fund. Your financial freedom amount must take into account money you’ll need in case of disaster. Rob recalls the day that the COVID-19 pandemic shut down all non-essential businesses. Many people were not prepared for this scenario, and we are still feeling the effects of it today. You must determine your own emergency fund number by months of income. Rob’s wife Claudia’s comfort lies with 18 months of income in the bank.

After that, you need to examine your investment funds. Are you stacking cash you don’t want to touch, but can afford to if need be? In an absolute emergency, you can borrow from your kids’ education fund, albeit with penalties.

Take all of these factors in when calculating your financial freedom amount.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

 

Rob Rowsell stresses the importance of working closely with your CPA before you make an offering memorandum. Review the details and summary of your P & L every month, so if the day comes that someone wants to buy your business or real estate property, you’re ready to sell.

Offering Memorandum Checklist for Selling Business or PropertyAdvantages of an In-House Bookkeeper

Rob recalls an astounding previous experience of working with an outside CPA. When they returned his records, they had drawn up a P & L, despite not having anything organized. They didn’t ask any questions in order to gain a deeper understanding of his business. He then understood the advantages of hiring an in house bookkeeper.

Let’s say you have a potential buyer interested in your business. They will need to examine your books before making an informed purchase decision. When you don’t pay close attention to your numbers, they will come back with many questions that you as the owner can’t answer. If there are too many question marks surrounding your records, they may walk away. Who needs that headache?

If you have the capacity to employ your own bookkeeper, you should. Whether you’re gearing up for a sale, or providing numbers for your business coach, you always have the answers on hand. Your bookkeeper should know all of the categories and formulas needed to run the financial side of the business, so you, the owner, can focus on other duties.

Offering Memorandum Checklist – Review Your Finances Monthly

Next, Rob suggests a monthly numbers review with your financial officer. A single one hour meeting each month should do it. Don’t let any other tasks interrupt this important meeting. You need to concentrate on both the detailed and summary versions of your P & L statement.  Require that they generate those numbers by the 12th of each month. This way, you can make any course corrections necessary. Make sure you have a paper copy, so you can highlight important lines and make notes in the margin. Hold onto your copy for future reference.

This process is so crucial if you have a potential buyer. If you don’t have up to date numbers to include in the offering memorandum, you might miss out on a huge payday. Quarterback those numbers, because nobody will care as much as you do!

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!