Written by Peri Pakroo

Stop avoiding your numbers–there’s nothing to be afraid of and everything to gain.

Like many things we know are good for us–exercise, getting a good night’s sleep, laying off the French fries–keeping careful track of your business’s finances is one of those must-do tasks to keep your business healthy. Nevertheless, a huge number of business owners neglect their numbers, and their businesses pay the price.

I tend to see two main types of financial blow-off:

1. Fully neglecting to track income and expenses by letting receipts pile up (or get lost) and failing to enter data into a bookkeeping system.
2. Doing a decent job of keeping income and expense records up to date, but failing to use the numbers to answer questions about the business’s financial situation.

While I’ve definitely known more than a few business owners guilty of the abject neglect described in item 1 (you know who you are), the second type of financial ignorance is practically an epidemic among owners of small to medium-size businesses. Over and over I hear owners admit sheepishly, “I don’t do enough with the numbers.” If you merely keep up with the basics, you might avoid true financial disaster. But you’ll definitely miss opportunities to thrive if you don’t use your data to make strategic decisions.

Getting Over the Hump

If you’ve had your head in the sand about your business’s finances, take heart: You are not alone (by a long shot). Tons–tons–of successful business owners loathe dealing with numbers. They regard financial management with fear, anxiety, insecurity or some combination of the above. Typically, they say they are simply too busy running the business to deal with tracking income and expenses or analyzing the numbers.

The good news is that affordable bookkeeping software automates most of the work, from tracking account balances to generating sophisticated financial reports, putting essential financial information at your fingertips. If you really hate working with numbers or truly don’t have the time to do so, have a competent employee or outside bookkeeper do the job.

However, as the owner of the business and the person responsible for guiding it, you do need to be in the know about your business’s finances. So if you hire someone to do most of the financial management tasks, make sure you’re in the loop and that you understand what the numbers mean. Don’t be shy about asking for guidance or mentoring from an accountant or bookkeeper. If you feel insecure about your level of financial knowledge, you’re in good company. Just make a sustained effort to learn as you go.

Financial Management in a Nutshell

The trick with bookkeeping is to establish a system early to help you stay organized. By “system” I mean a simple process for organizing your receipts and files, as well as having bookkeeping software set up and configured. With a system in place, you’ll definitely be able to handle most or all of your bookkeeping tasks, even if you’ve never done them before. I typically break financial management down into three broad steps.

1. Keeping and organizing records of expenses and income: Financial management starts with keeping records of all the money the business spends (expenses) and all the money it earns (income). This means carefully keeping and organizing your receipts and expense records (such as bills from the office supply store, invoices from your web-hosting company, and receipts of payments to your employees and freelancers) and your income receipts (such as a cash register tape of your café’s income, check stubs from your client’s payment checks, or your invoices to clients marked “Paid”).

2. Entering this information into bookkeeping software: On some periodic basis–maybe monthly for a small consulting business and daily for a busy café or retail store–you’ll enter the information from your income and expense receipts into a bookkeeping system. More often than not, this will be some sort of financial management software such as QuickBooks or MYOB.

3. Generating financial reports: Finally, with up-to-date information entered into your bookkeeping system, you’ll generate reports such as a profit/loss report or cash-flow projection (described below) to reveal how your business is doing.

Doesn’t sound too bad, does it? Again, setting up a system will make a huge difference when it comes to entering and categorizing data in your bookkeeping software. With your data entered, you’ll be all set to do the important (and actually quite fun) part of financial management: generating reports showing you the financial health (or illness) of your business.

Often, business owners have such poor systems in place they barely manage to get their data entered accurately. It becomes a grueling task–hours spent searching for receipts and trying to decipher poorly documented expense reports–that they stop after the data entry stage and never get around to generating reports. Don’t let this happen to you. Generating reports is key to managing your business’s finances and making strategic decisions.

Financial reports summarize the data in your bookkeeping system to show you different aspects of your business’s financial situation. For example, a profit and loss report compares monthly income to monthly expenses to show whether your business is selling enough products or services to cover costs each month. A cash-flow projection shows similar information, but includes other sources of income such as capital contributions from owners or loans (that is, not just revenue from sales). It also organizes the information slightly differently to show you whether the timing of your income is adequate to pay your bills on time.

The Payoff

By generating reports, you’ll be able to see trends and patterns in your business’s finances and identify profitable opportunities to pursue. You’ll also avoid letting your business simply drift along–or worse, run it into the ground. Here are a just few ways that analyzing your financial reports will help your business:

• You’ll be able to price goods and services more competitively, pace growth more effectively and trim costs strategically–for example, you might cut back on travel expenses or outsourced services that aren’t helping to generate sufficient income.
• You may be able to reduce taxes by timing your purchases strategically and claiming all your deductible expenses–things that often escape businesses with disorganized records.
• You’ll be able to manage your business’s cash flow, ensuring you can pay important bills on time. Cash-flow management is a critical element in every business. When it’s done poorly or not at all, you may find yourself short of cash when it’s time to pay taxes, payroll or other crucial expenses. This is exactly the type of scenario that forces businesses to close up shop for good.

Finally, if you’re itching to launch your venture and still worried that you have too much to learn in a short time, stop fretting. You don’t need to turn into a financial whiz overnight. In practice, I advise every small-business owner to consult at least once or twice during their startup days with an experienced bookkeeper or accountant (or possibly both) to help the business get started on the right foot. For those of you who feel like total novices when it comes to the money stuff, consulting a professional will help you get over the hump of your financial learning curve. There are also lots of useful organizations such as The Association of Women’s Business Centers and SCORE that can help get you up to speed.

Peri Pakroo is a business and communications consultant, specializing in legal and startup issues for businesses and nonprofits. She is the author of The Women’s Small Business Start-Up Kit .

Bonus:What a Timing!

Written by Christian Rudder

What is it that makes a culture unique? How are whites, blacks, Asians, or whoever different from everybody else? What tastes, interests, and concepts define an ethnic group? And is there any way to make fun of other races in public and get away with it?

These are big questions, and here’s how we answered them.

We selected 526,000 OkCupid users at random and divided them into groups by their (self-stated) race. We then took all these people’s profile essays (280 million words in total!) and isolated the words and phrases that made each racial group’s essays statistically distinct from the others’.

For instance, it turns out that all kinds of people list sushi as one of their favorite foods. But Asians are the only group who also list sashimi; it’s a racial outlier. Similarly, as we shall see, black people are 20 times more likely than everyone else to mention soul food, whereas no foods are distinct for white people, unless you count diet coke.

Using this kind of analysis, we were able find the interests, hobbies, tastes, and self-descriptions that are specially important to each racial group, as determined by the words of the group itself. The information in this article is not our opinion. It’s data, aggregated from the essays of half a million real people.

So here’s the real stuff white people like.

Click on the icons to toggle between men/women.

In general, I won’t comment too much on these lists, because the whole point of this piece is to let the groups speak for themselves, but I have to say that the mind of the white man is the world’s greatest sausagefest. Unless you’re counting Queens of the Stone Age, there is not even one vaguely feminine thing on his list, and as far as broad categories go we have: sweaty guitar rock, bro-on-bro comedies, things with engines, and dystopias.

As for the interests of white women, you have romance novels, some country music, and a broad selection of Good Housekeeping type stuff. It’s also amazing the extent to which their list shows a pastoral or rural self-mythology: bonfires, boating, horseback riding, thunderstorms. I remind you that OkCupid’s user base is almost all in large cities, where to one degree or another, if you find yourself doing much of any of these things, civilization has come to an end.

If I had to choose over-arching themes for white people’s lists, for men, I’d go with “frat house” and for women, “escapism.” Whether one begot the other is a question I’ll leave to the reader.

Stuff black people like.

Hopefully it’s been obvious that the font-size of a phrase indicates the relative frequency with which it appears. So, toggling between black men and black women above, you can see that while soul food is important to both, but it’s really, really important to the women. In fact, soul food and black women is the single strongest phrase/group pair we found.

The above lists also make it clear that, regardless of whether Jesus himself was black, his most vocal followers definitely are. Religious expressions weren’t among the top phrases for any of the other races, but they’re all over the place for black men and (especially) black women, for whom 13 of the top 50 phrases are religious. Black people are more than twice as likely than average to mention their faith in their profiles.

Finally, it’s worth noting that of the four lists we’ve seen so far, black women’s is the only one to explicitly include someone of another race: Justin Timberlake.

Double finally, how bold is it that I am cool is the second most typical phrase for black men?

OkTrends Racial Stereotype #1

In the course of researching this article and, in particular, comparing white guys to black guys, a handy shortcut occurred to me:

If you’re trying to figure out if white dudes like something, put fucking in the middle, and say it out loud. If it sounds totally badass, white dudes probably love it. Let’s see this principle in practice:

Stuff Latinos like.

Music and dancing—merengue, bachata, reggaeton, salsa—are obviously very important to Latinos of both genders. The men have two other fascinating things going on: an interest in telling you about their sense of humor (i’m a funny guy, very funny, outgoing and funny, etc.) and an interest in industrial strength ass-kicking (mma, ufc, boxing, marines, etc.) Basically, if a Latin dude tells you a joke, you should laugh.

OkTrends Racial Stereotype #2

El chiste de knock-knock:

Latinas’ interests are fairly typical for a dating site: you got friends, career, education, movies, music, a few physical details, and, oh yeah…morbid fear. We dug further into I’m terrified of (on their list at #42) and found which words typically came next. It’s mostly insects and “the dark”, though one expert tautologist is “terrified of being scared” and another woman is “terrified of Martians.”

I feel obligated to state, on behalf of white men everywhere: That woman should get a grip. Martians are nothing compared to the Sardaukar.

Stuff Asians like.

As you can see, both Asian men and women choose I’m simple as their go-to self-description. Contrast this to black men’s I am cool and Latinos’ I’m a funny guy. It’s also interesting that Asian men very often mention their specific heritage (taiwan, korea, singapore, vietnam, china) while Asian women don’t.

OkTrends Racial Stereotype #3

Combing through these lists, you can see the different ways women use cosmetics:

• White women show off their eyes (mascara is #5 on their list).
• Black women show off their lips (lip gloss, #7).
• Latinas show off both (mascara, #18 / lip gloss, #22).
• Asian women, however, show off their practicality (lip balm, #48).

. . .

So far, I’ve gone through racial groups in order of their prominence on OkCupid. For brevity (I know this is the internet), I’ll present the remaining lists without foolish commentary. You can click any of the links to reveal them inline.

Stuff Indians like.

Stuff Middle Easterners like.

Stuff Pacific Islanders like.

Sidenote: reading level

Since we were parsing all this text anyway, we thought it would be cool to do some basic reading-level analysis on what people had written about themselves. We used the Coleman-Liau Index, and when we partitioned the essays by the race of the writers, we found this:

Before anyone gets too charged-up about this, we also ran reading level by religion and found this:

Is there a Comic Sans version of the Bible? There really should be. We subdivided this chart further, by how serious each person was about their beliefs:

Note that for each of the faith-based belief systems I’ve listed, the people who are the least serious about them write at the highest level. On the other hand, the people who are most serious about not having faith (i.e. the “very serious” agnostics and atheists) score higher than any religious groups.

. . .

We’ll be revisiting race later this month, with a statistical investigation of interracial dating, and we’re almost finished with the article on (bi-)sexuality we promised last time. Thanks for reading, everyone.

Till next time,

Christian

Max Shron and Aditya Mukerjee contributed additional research to this post.

Bonus: I miss you.

Bonus: What I do in School