Mark and Jesse ponder the philosophy behind Rule Three -- roll with the punches. At the end of the day, it's just flexibility! Jesse also takes issue with the concept of "overspending." Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com
Mark and Jesse continue their philosophical musings over the Four Rules by considering the essence or first principle of Rule Two -- Embrace Your True Expenses. Some people have taken YNAB's position to be "we don't forecast," but Rule Two is all about forecasting. The idea here is to forecast your expenses , while only allocating dollars you have right now to those expenses. There's a great reason for this. The dollars you have right now are real; they exist in your bank account. The known expe...
Mark and Jesse revisit YNAB's Four Rules to explore whether there's a deeper, more universal concept underlying them. It's often been said that Rule One -- give every dollar a job -- is about aligning your money with your priorities. While that is true, there's a deeper truth. Rule One is really all about tradeoffs , or opportunity cost, in that when you give a dollar a job, it then ceases to do every other job which it could have done. The tradeoff reveals the priorities, or value set, of the b...
Thinking about taking the plunge and running your business on YNAB? Mark and Jesse covered the many benefits of doing so on the podcast in first episodes of Beginning Balance. Today, Mark goes deep into his onboarding process for new clients in his bookkeeping business, which uses YNAB for every client's financials. As Mark details, if you get the onboarding process right, once you get to "maintenance" mode with your financials it's so smooth and fast to generate financials and know exactly wher...
Data from annual PWC-led surveys, as well as YNAB's own surveys, make it clear that employees carry their financial stress into the workplace with them. In some cases, it simply results in less-happy employees; in other cases, more requests for paycheck advances and payday loans. Either way, it's a drag on workplace morale and relationships between employees, their employer, and their family at home (family relationship stress is often tied to money stress). YNAB has developed a solution to work...
Mark and Jesse ponder the question, "when should you retire?" While many sources float out the 4% Rule, or some variation of it, that states you can pull out four percent of the value of your retirement portfolio each year without running out of money. The debates about the validity of the rule in current market conditions, and the withdrawal rate, are endless, but as Mark and Jesse observe, the decision to retire is an emotional one. At the end of the day, life is uncertain, and a person has to...
Mark and Jesse field a question from listener Jose, who asked what he could do to improve the communication between his team during meetings. Revising Prose by Robert Lanham https://www.amazon.com/Revising-Prose-5th-Richard-Lanham/dp/0321441699/ref=sr_1_1?qid=1656859182&refinements=p_27%3ARichard+Lanham&s=books&sr=1-1&text=Richard+Lanham The Five Dysfunctions of a Team: https://www.amazon.com/Five-Dysfunctions-Team-Leadership-Lencioni-ebook/dp/B006960LQW/ref=sr_1_1?keywords=5+dys...
Let's say you needed some money, and you wanted to start a business with minimal lead time and startup cost. What would you pick? Mark and Jesse discuss the scenario, and lay out a strong case for starting a service business. Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com...
Businesses are concerned with profitability, and rightly so. If the business can't turn a profit, it can't stay in business very long! Calculating bottom line profitability is a fairly straightforward operation, but what about calculating the relative profitability of individual product lines or services? This is where things get complicated, and interesting! Every product or service costs something to make or provide. There are fixed costs, such as machinery, tooling, and computers, as well as ...
Mark and Jesse discuss the "curse of the superstar employee," that one person in your business that you can't imagine living without. The employee that does every task better than everyone else (probably faster too), with enthusiasm. While these are great people to have on your team, they can become bottlenecks for growth -- especially when they take on too many tasks, and too much minutiae in the business. Of course, there's a major operational risk to allowing superstar employees to "own" too ...
Employee theft and fraud happens in the business world all the time, from theft of office supplies to slipping cash out of the register to massive multi-million dollar embezzlement schemes. Most of it happens, unfortunately, to small businesses, which often lack the sophsitication and manpower to prevent and detect fraud. Jesse has a few easy to implement strategies for preventing most common fraud that could occur in your business. Controls, authorization, and review custody of assets and accou...
Can you imagine it? Mark and Jesse discuss Cal Newport's book A World Without Email , which urges workers, especially knowledge workers, to rethink their work in terms of process and systems. Good processes make us more efficient, but more importantly they allow us to engage in deeper work and be more creative as a result. Good processes and systems don't just happen, however. Typically they are emergent, and it is so easy to fall into a mindset of "it's working, and I always do it this way, so ...
Mark and Jesse answer a question submitted by a listener wanting to know if he could run his coffee shop books in YNAB? Jesse has recommended in the past that businesses with inventory run YNAB in parallel with their normal bookkeeping software, but he and Mark agree that a coffee shop, although it has inventory, is a great candidate for YNAB. Question for Mark or Jesse? Email the show at askjesse@ynab.com Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budg...
Mark shares his practice of taking quiet days, quiet weeks, and (eventually) quiet months to find clarity and focus on bigger questions and problems. Jesse explains why YNAB recently decided to implement a four day workweek, and how scarcity of time can actually drive productivity. Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com...
Mark recounts a recent conversation with a client in which she wanted to create a profit sharing arrangement with an employee who had previously only worked for a standard hourly rate. The idea was that the profit sharing would incentivize this employee to do a good job, since the better the product sold the more money she would make, thereby "aligning" her compensation more closely with the company's goals. While in principle this is a good idea, Mark and Jesse both point out the dangerous prec...
Mark explores his anxiety around staying in the same business for several years, and why he has finally come to peace with staying in one lane and executing his book keeping business. Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com
Thinking about a business partnership? Well, think long and hard about it, because entering into a business partnership is a lot like entering into a marriage. Good partnerships require effort, resources, and a high level of emotional intelligence. Put simply, they add a lot of complexity to the task of running a business. This doesn't mean they aren't worth it, but Mark and Jesse urge extreme caution before getting married to your partner! Mark Butler, Virtual CFO https://markbutler.com https:/...
Mark and Jesse explain how you can incorporate YNAB and the Four Rules into your business without changing your accounting software and without making your accountant grumpy! Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com
At some point in their growth, most businesses will need to hire additional help. Often businesses begin by hiring contractors to offload some of the operations from the owner, which are paid as contractors and issued a 1099. As the business continues to grow and the need arises for full-time team members, those contractors sometimes become defacto employees, and therein lies the trap! It's vitally important to understand the difference between a W-2 employee and a 1099 contractor. The tax conse...
Mark points out that liabilities on the balance sheet don't necessarily reflect all the liabilties a business (or an indivudal) has. Following Rule Two (Embrace Your True Expenses), there are known long-term, non-recurring expenses that will come up in a business. Operating with no debt on the balance sheet is a wonderful thing, but without sufficient reserves for those non-recurring expenses... Mark argues you are still carrying debt. It's just unrealized debt. It's not on the balance sheet yet...
Mark and Jesse share their personal investment asset allocations, and discuss the role of risk, risk tolerance, and emotions in the investing life of a business owner. Jesse explains how his personal risk tolerance has changed alongside the growth of YNAB, as his net worth became more and more tied to the value of the company, and how that has influenced his ultra low risk investment portfolio. Books mentioned in this episode: The Little Book of Common Sense Investing by John Bogle The Four Pill...
Mark and Jesse tackle the common business saying: "if you're not growing, you're dying!" Is that really true? And what exactly does growing and dying mean exactly? Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com
Do you cringe when it's time to close the books? Are you frequently frustrated by an accounting problem, or certain tasks your bookkeeper is asking you to do? You've got messy books, and as Mark and Jesse argue, it likely means you've got a messy business as well. Accounting should be boring and repetitive, Mark says. When onboarding new clients for his bookkeeping business, he spends a lot of time upfront gathering information and creating systems so that, a few months in, the accounting proces...
Gather round folks, let's have a meeting... about meetings. Many people hate them, but they are a necessary part of business communication... and unfortunately meetings often become disorganized and bloated, leaving employees frustrated and less willing to invest their time in preparing for and participating in meetings in the future. Jesse thinks meetings get a bad rap, however, and offers some suggestions on how to run more effective, efficient meetings in your business. Mark Butler, Virtual C...
Mark and Jesse discuss the hiring process at YNAB, where the stacks of cover letters are deep and competition is fierce. How do they differentiate candidates in the first round? How do they weight employee referrals? What's the most important factor in finding the right "fit" in the final round of applicants? Jesse answers these questions and explains why hiring managers should be excited about every hire they make. Mark Butler, Virtual CFO https://markbutler.com https://letsdothebooks.com You N...
There are some common sayings in the business world -- "if you're not growing, you're dying" or "innovate or die" -- that suggest business owners must always be looking for the next big thing that will propel growth. The truth is, it's HARD to find things that will move the growth needle. Whether it's new menu options at a restaurant, new services or products, or ancillary things like customer educational resources or new marketing initiatives, there are any number of "new shiny" things that bus...
Mark and Jesse discuss the best indicators for determining why your business is growing, and how to grow it in the future. These are very different from trailing indicators, things like the P&L which summarize what happened in the past. Understanding what actually drives growth in your business is difficult work, but it's crucial work. Too often, business owners end up spending lots of time and energy on projects which are easy to measure and easy to implement, but don't actually drive busin...
A lot of companies are fond of saying this about their employees and their work culture -- "we're like a family here." Usually it's coming from a good place, wanting to emphasize the bond that employees have in a collaborative, productive work environment, but Jesse argues it's misleading and potentially harmful language that business leaders should avoid. Mark Butler CFO https://markbutler.com https://letsdothebooks.com You Need a Budget https://www.youneedabudget.com...
If the title sounds like a philosophy paper... well, maybe it is. A philosophical discussion at least! Jesse has been reading Four Thousand Weeks: Time Management for Mortals by Oliver Burkeman, a book which poses some deep questions about human mortality and weighing what we choose to do against the seemingly infinite choice of things we could do. Four Thousand Weeks: Time Management for Mortals by Oliver Burkeman https://www.amazon.com/Four-Thousand-Weeks-Management-Mortals/dp/0374159122 Mark ...
Mark and Jesse discuss the value of forecasts, operational and financial models, and annual planning in general, as well as the pitfalls of putting too much faith into the numbers and not enough scrutiny into the assumptions. Mark Butler CFO https://markbutler.com You Need a Budget https://www.youneedabudget.com
