Bookkeeping Basics for Bar Owners Part 2: P&Ls, Cashflow Statements & Maximizing Profitability

This week we're going to get into the profit and loss statement , or P&L or income statement , depending upon which one you want to call it and we'll discuss the statement of cash flows and kind of get into how those statements are formed and what we need to think about in order to have actionable data on those statements for our establishments .

Now two notes before we get started and I made these two notes last week , but in case you didn't listen to last week's episode , the first thing that we have to mention before we have a conversation about bookkeeping is that everyone's financial situation is defined . Everything I'm presenting here is very generic .

Do not think that , because it seems to apply to you that it absolutely does . Obviously , you need to seek out a qualified advisor who understands you complete financial picture in order to help you make the best choices . The second note I will make is I know that about 40% of our audience is not in the United States and I am in the United States .

I know the United States . Unfortunately or fortunately , depending upon how you want to look at it I have never had the joy of filing taxes or paying taxes in any other country , except for VAT or whatever . So what I'm going to talk about is all going to be based on the United States .

But I think , from a managerial bookkeeping standpoint , from an understanding , the numbers standpoint , it's really global , right ? Because if you know the amount of beer that you sold and you know the amount of beer that you bought , your beer cost percentage is going to be the same in every single country .

Currency may be different , but it's going to be the same . But keep in mind , with bookkeeping , a lot of what we're doing is based on taxes or for taxes , and so what is applicable in America is probably not applicable well anywhere else in the world , because the American tax system is a little screwed up .

Let's go ahead and dive into the profit and loss statement , and we're talking about a profit and loss and income statement . The purpose is really to say , hey , here's my revenue , here are my expenses and here's the amount of money I need Now . It gets significantly more complex than that .

So we're going to go basically top to bottom of a statement and go through what is important , what is going to give you the data , give you the information to make good decisions from the data you have , from your P&L , and also we'll get into a bit of some different ways that you can look at Recording things , some different numbers you may want to track ,

because we talked about this some last week . All managerial bookkeeping statements are just that they're managerial , and not every company , not every owner , wants to know the same things . So it's perfectly understandable that one owner may break down paper used inside the bar from paper used for to-go items , while another owner may not care .

There are good arguments either way on whether or not that's actually something that's necessary to do . Keep in mind that everything we're talking about is , to an extent , optional .

Now , obviously , as we just mentioned , you should have an advisor that's helping you through this And obviously , if the guy doing your taxes has specific things he wants to see , you should probably do those things . But there are different ways to do this and in a lot of ways , bookkeeping is like driving from , say , san Francisco to New York City .

There's a ton of roads you can take , are some straight or faster and probably better Absolutely , but you can always go on a more meandering , a more scenic route and end up in the same destination With bookkeeping .

What we're worried about is that the bottom line number is the same Your net profit should always be your actual net profit And how you break up the numbers now you treat the numbers above that you have some flexibility with And we'll get in some ways that flexibility can work for you .

As we introduce the P&L statement here quickly , i'm going to go kind of through our major sections of your P&L And then , once we've kind of done that overview , we'll go ahead and dive into each and every part of the P&L and go into some detail on some different things you may or may not want to do in those areas .

And , by speaking , every P&L is going to have four , maybe five major sections . It somewhat depends on the software you're using or how you're preparing it . Different software is going to use slightly different names and prepare things slightly differently . Again , it's all about that bottom line number being right .

There are different roads we can take to get there And something to keep in mind is that the verbiage on one software , the verbiage in one textbook , is not necessarily as important as it is to understand the actual number and what it means . So , for instance , you might hear total income , you might hear net revenue . They mean the same thing .

And so just be aware that if there's a word you don't understand or a term you don't understand , look it up , because probably you know it by something else . The same way that some people talk about a P&L or a profit loss , other people talk about an income statement . They are literally the same thing With our four sections .

Our first section on our P&L is going to be our income or our revenue , depending upon how you want to talk about it , and what that section will contain is our revenue . If we have any counter income , we'll go into that in a second , that would be there , and then that is going to give us a total , that is , our gross revenue or total income .

Then our second section is going to be our cost of goods sold or the expenses incurred in the production of that revenue , directly related to that revenue , and we'll put all those expenses there . We'll take our total income , our gross revenue , we'll subtract out that cost of goods sold And what we're left with is our gross profit .

That gross profit could be synonymous with prime cost or not , depending on how you organize things .

But once we have the gross profit , we're going to take out our operating expenses So those things that are not necessarily expenses directly related to the creation of revenue numbers and maintenance , postage , internet , things like that And that's going to leave us with our net ordinary income .

Then you might see some different terms there , but net ordinary income is pretty common And net ordinary income is essentially what you made , what you lost in the normal course of business . And then you may have under that additionally other income and expense .

And that other income and expense would be things not necessarily related to your business activity or change generally related to your business , something that not a lot of bars are going to have necessarily .

But I'll just point out say you loan someone money and you charge them interest , that interest income not really related to your bar , so that would go another income .

Likewise , say that you are using your personal vehicle as an owner in the United States And then you can use your personal vehicle mileage that's for business and apply that to your business at an IRS mileage rate . That would be another expense , because your personal vehicle is not really part of your primary business .

Now , some folks would put that in the normal expenses rather than other expenses . It can go either way . Again , this is where we're multiple past to the same answer . But be aware that ordinary income and then you're adding or subtracting from that other income and expense And then our very bottom line that we're going to have is net income .

And net income is that bottom line that you hear a lot of people talk about .

Well , it's 2% or 5% or 10% , and we'll talk about why that percentage that a lot of people throw around can be deceptive , because one problem that we have , when we start getting into P&Ls and we start talking about general restaurant bar statistics , you'll hear a lot of things like well , restaurants only make 5% , net Restaurants only make you know , bars make

more , but good luck making over 8% . Some of that is actually money that the owner is making . Some of that are expenses that are not related to cash . So it's very plausible that you can have a net income of 5% and actually be pocketing 15% as the owner .

And as we talk through this P&L , we'll get into that and kind of try to explain why , but always keep in mind , when you hear a lot of these statistics , a lot of them are deceptive .

One wonderful thing about accounting or a terrible thing about accounting , depending upon how you wanna look at it is how you organize the numbers can greatly change the way they look and how you interpret the numbers can greatly change how they look .

And oftentimes the people that are writing statistics , the people that are doing studies , they have an agenda , so they're not really making funny numbers , but they're just viewing the numbers through a certain lens that gives them a certain result to talk about .

With that said , let's go ahead and go back up to the top of the P&L and we'll work our way down here . So the first main section , as we mentioned a moment ago , is your income , or your revenue , and your ordinary income , if you will , because we have our other income that we just talked about .

So this is the ordinary course of business income , and that top section is going to put all your revenue together . It's all everything coming into your business in the normal course of business .

Now the thing is that what you will see a lot of bookkeeping software do , what you will see a lot of accountants do is they'll say okay , well , you use square to process credit cards , so here's the money from square . And oh , you use cash , so here's the revenue from cash .

And if you organize your revenue in by the source where that revenue was generated even if it is dining room revenue and bar revenue , which you see a lot less , but a lot of times bookkeepers will tend to go towards the credit card processor or cash app or whatever that is the source of that and call that revenue For our purposes in the bar business .

That does not do a darn thing for us . It is actually the most useless way to organize that information possible . What you really need when it comes to your revenue in your books is you need to understand what generated that revenue . When I say what , i mean was it food , was it beer , was it wine ? was it liquor ?

At a minimum you should have those categories . If you sell merchandise , you need merchandise . If you have pull tabs or Kino or slot machines , if you're in a state that allows gaming , a country that allows gaming , you need gaming revenue separated .

Because when we talk about things like beer cost percentage , beer cost percentage is the revenue from your beer divided by the cost of your beer . Well , you better know your beer revenue and your beer cost . At a minimum , you need the revenue section of your P&L broken down into beer , wine and liquor revenue . If you sell food , you should have food revenue .

Any different type of revenue should be listed there and should have the proper value associated with it . Otherwise we cannot determine actual costs And rather , having a document that is a huge tool for us and then allows us to optimize our business , what we have are meaningless numbers on the page .

So always keep in mind with your revenue section you want that broken down . You can break that down even further . You can go to Graph Beer , canned Beer . You can go to wines . You could do red wine , white wine . You could do it by vibrariate . You could look at your liquor cost and lights and darks , or whiskey and gin and vodka all separated .

Just be aware that the more complex you get , the harder it is to manage . The more time you're going to spend doing it , the more detailed POS reports you need to get that data . So it's not always a great idea to go super detailed .

If I'm going to break out anything beyond beer , wine , liquor , the thing I am most tempted to break out is bottle and can beer versus draft beer , because we are worried about that draft beer yield , as we talked about a few weeks ago , and with draft beer we need to make sure we're making money .

So if I'm breaking out anything beyond just kind of that beer , wine , liquor generally , i'm going to break out keg beer . The next thing that I might be tempted to break out is wines by the glass versus wines by the bottle . Now , granted , that's only really going to be valuable If the wines that you sell by the glass you don't sell by the bottle .

So a lot of times that's not going to really provide a huge amount of value , but it is something to consider .

And the other thing that you want in the revenue section of your P&L is your contra income , and when I say contra income , it's essentially negative revenue . You're saying well , why would I have negative revenue ? Well , did you comp something ? Did you give someone a discount ? Did you , as the owner , have a meal that you comped or that you didn't ring in ?

You want to record all that and you want to record it at the market value . And here's the reason for that A we want to track all our discounts , our comps , our owner meals , all of that on the P&L separately , because our true beer cost , let's say , is based upon the total value of beer .

We went through the total value of beer we sold If we comped it and we don't record that comp as contra income and we don't call out that comp , if you will , when we go to calculate our beer cost . How will we know our delta , our difference between our theoretical and actual cost ?

So let's just say you sold a hundred grand worth of beer and you comp $10,000 , and that beer cost you $25,000 . So a hundred grand divided by 25 , 25% beer cost . Now , 25% beer cost . Let's say our theoretical beer cost was 24% , our actual is 1% from our theoretical . Damn , we're doing a great job .

But now let's say that we're trying to calculate the same thing , but there were comps and there were $5,000 worth of comps . Actually , let's say $10,000 worth of comps . Keep my math a little bit simpler . So now I'm taking 90K my revenue and 25k as my expense . So it's no longer 25% cost now , it's 27% cost , actually 27.77 , so it's almost 28% cost .

So if our again , if our theoretical beer cost should be 24% and we're looking at 27 , almost 28% , oh god , we now have almost a 3.8% variance between our theoretical and our actual and we want that under 2% . Well , the difference is the comps and the difference is how we account for the comp .

So that's why comps , discounts , those sorts of things should be on your P&L as negative income rather than just reduced from the net value of your sales . And some people say well , i can keep those numbers of my POS machine , i can look them up whenever I want . That's true , that's absolutely true .

And you could put your net beer sales on there as opposed to your total sales . But it should have been minus your comps , minus your discounts , minus your waste even right .

So if you are bartending and it's a busy Saturday night and a bottle slips out of somebody's hands and it shatters on the ground and you lose a half a bottle of Jameson whiskey , well , you should ring in a half bottle of Jameson whiskey and then comp it off as spillage .

And , frankly , when I do contra income , i have separate categories for waste discounts , what I normally call QC comps , quality control comps . Those are the comps going to customers . I also sometimes have a category like VIP comps . I like that one . So I am differentiating when we sucked quality wise , versus when I'm just doing something nice for somebody .

And then owner comps . And in doing that you can watch the fluctuation of those three values . If your quality control comps are a quarter of your a quarter of a percent , i should say , of your revenue , and then the next month they're half of a percent of your revenue , the question is , why did they double ?

and if you were monitoring your VIP comps , which are giving away , you can go oh my god , i normally , you know , comp a thousand bucks a week , wait to stuff , but for whatever reason , last month I come twenty five hundred a week and that's really cutting into my money in my pocket . So it is important to track these .

And it's important for multiple reasons again , the two big ones being so that you know the actual and theoretical costs and you can monitor those properly .

And the secondary reason being so that you can monitor the increases and decreases and the overall percentages and trends of certain types of comps and discounts that you are giving your customers , or yourself , for that matter .

Right , it's really important as an owner that you're ringing in what you're eating , you're bringing in what you're drinking and you're copying that off so that you even know what your impact on the businesses , because it's really hard to say .

If we go back to what we're talking about a little bit ago , when I mentioned that , just because a P&L says that you made 3% , that doesn't mean that you only made 3% . Well , if you're eating 10 grand worth of food a month , that's a lot .

But let's just say you're taking home for your family , you got extended family coming in what up you're giving everybody in your family ?

if you're burning 10 grand of food a month , that needs to be running in , that needs to be accounted for , because that's a hundred and twenty thousand dollars worth of value that you have pulled out of your business and that's , in theory , part of your compensation as an owner are those meals . So you need to take all of that into account .

And again , with our revenue categories and with our contra income category , detail is our friend . You can obviously go too far , but detail is our friend . So once we get all those revenue numbers in there that beer revenue , wine , liquor , food , gaming , merch , what have you ? those all sum up and that gives us our total income .

After total income , you'll have a section that is called , as we mentioned earlier , cost of goods sold and cost of goods sold as the expenses that directly relate to the production and sale of the item that you make of what your manufacturer .

And an easy way to think about this is , if you're a car company , cost of goods sold is the materials that go into the car , so the steel , the rubber on the tires , all of that can be considered cost of goods sold .

And the restaurant business we do do some manufacturing think about our kitchen really is a manufacturing zone and , as we discussed last week , your cost of goods sold is largely based on your inventory and , if you remember properly , that's because our cost of goods sold equation is beginning inventory plus purchases minus ending inventory equals cost of goods sold .

You take your inventory every month . You get that cost of goods sold proper . And again , it's very important that that cost of goods sold value is precise , that it is exact , that you have actually taken a physical inventory , because that will determine your actual usage or your actual cost percentage , i should say for your beer , for your wine , for your liquor .

And , as we just gave an example of if that's off a couple points , it can make these totally different than if it's 100% accurate . So you have to do that inventory . You have to have that accurate cost of goods sold number .

Now where we can take a little bit of leeway and where I like to take a little bit of leeway , is to add in production related labor to our cost of goods sold section . And when we're talking labor we're talking payroll . The accounting for that on a P&L side can get somewhat complex .

Last week we talked about the complexities on the balance sheet with liability accounts . On the P&L generally you'll have salaries and wages depending upon the type of company you are . If you're an S corp in the US , you're going to have officer compensation listed there and you're going to have taxes paid and then any benefits expense paid there as well .

And so if we're breaking out our labor into labor that's focused on production and labor that's not . When I say focused on production , that means most of your employees would be there .

If you for some reason had a bookkeeper on payroll , if you had an admin person , if you had a reservation office , if you as the owner had an owner's salary but were not an active manager , that could all go more on our general expenses .

But nine times out of ten almost all your payroll would be in this top cost of goods sold section because it relates to the actual production and delivery of your product . And when you add that with the food and beverage , what essentially we've done is we've taken cost of goods sold and we have turned it into prime cost .

So in that way we have this really nice section , really easy to refer to . We know our prime cost , we can look at our prime cost percentage . This all makes our life easier and analysis of our P&L easier . So absolutely in cost of goods sold we have our purchased items from our inventory , the items that we have used food , beer , liquor , what have you .

We can include the production labor and make that kind of a prime cost . Then there are a few things that you may or may not include in your cost of goods sold , and this is again going to bookkeeping being away , where there's multiple ways to get to the same number .

Because at the bottom line , if you think about it , if you put something in cost of goods sold or you put it in your normal expenses , your bottom line stays the same . You're still subtracting the same amount from the same values .

But how it presents and what that gross profit number is , what that gross margin number is is where you're going to see the difference . And again , that number is your total revenue , everything in the first section that we talked about , minus everything in your cost of goods sold section that we're talking about now .

With that being said , there are , as I mentioned , a few things that may or may not be in your cost of goods sold .

The first one is paper goods , and with paper goods , obviously they're disposable And if they're going out with every order , if you were a burger place and every burger went in the same clamshell , okay , let's put all the clamshells in our cost of goods sold . That's a cost that's associated with every single order that goes out the door Almost always .

That would be considered as part of its cost of goods sold . If you're not always selling to go , whether or not your to-go materials are in your cost of goods sold or not is kind of an option that you have . The same could be said for linen . Let's say that you were using linen napkins . Every person that eats is going to get one of those .

You can make an argument that that should be a general expense . You can make an argument that that should be above that line and in your cost of goods sold . The other thing that you will see back and forth and see where different people are going to do it differently is merchant services .

So the cost of the credit cards that you take and that could be in your cost goods sold section or in your general expense . Again , that's kind of up to you Personally

. If it were me , i would put all my paper , linen and merchant services down in my general expenses .

Probably The only difference there is if I was a concept that had a lot of carry out , i was doing a good , really good carry out business , i would move my carry out related paper items up into my cost of goods sold because those are more accurately reflected in what I'm selling .

And if I sell , you know , a hundred burgers a day but fifty of those are to go , i'd put all that paper for those paper clam shells that I'm serving the burgers in up top .

But if you take anything away from this , the one thing I absolutely recommend doing , especially because it just makes your life so much easier , is you've got to have your cost of goods sold there , right ? You don't have an option on that part . Your inventory and usage has to go on that cost of goods sold section .

But then I would include that production labor and I would probably exclude the rest of it , except again , maybe paper or some paper , i should say . And that way that section really represents prime cost .

And I look at that gross profit number , that is revenue minus comps and discounts , minus my cost of goods sold , minus my labor , minus that prime cost , so that my gross profit on my P&L represents the value after that . To me that just makes a lot of sense . It looks good , it feels good , it makes those numbers easier to track .

But regardless of what you include in that cost , goods sold after that we're going to talk normal expenses And those expenses are going to get subtracted out right . So our expense section we have our gross profit , that we're starting with all our expenses . There we'll get a total of expenses and then we'll end up with our net ordinary income .

And so what kind of expenses could be there ? Military and non-production labor , as we mentioned . If you have an admin person , a bookkeeper , reservations , people , things like that , maybe that's going to be included there . Your chemicals , your janitorial equipment , all that can go there . Your utilities are there .

Your rent or occupancy expenses are there , whether that's rent , whether you own the building . However that looks , those expenses are going to be in that area . And also , if you have a loan , generally speaking your interest expense will be there . Your interest expense could be below that in other income .

If we're talking about more of an EBITDA type situation , where we want our net ordinary income to be more of an EBITDA than a net ordinary income , again you have some flexibility here , but that is what that section will contain .

So that net ordinary income now , which again we can make to be EBITDA , which is earnings before interest , taxes , depreciation and amortization , where we can include those items in our general expense . It's really kind of up to you .

As I mentioned earlier on a lot of software that gives us our net ordinary income and then after that we'll have our other income and expense . And other income and expense are things that in my mind are kind of owner optional And it sounds weird . It's not exactly that , but that's the trick in my head to try to remember what goes where .

So think of things like meals . You go out and you dine somewhere That's not related to your business necessarily , as you want to have a meal and charging it on the business .

That's another expense If you're using your personal car for business and now you're charging the business back for some of that money for your personal car and writing yourself a chat for your mileage . That's probably other expense , not primary to the business .

Now , some things that are personal expense are not actually an expense at all and should be considered an owner's drop . Some things like a meal in the United States , depending upon what type of meal , what year it is , blah , blah , blah may be able to expense 100% of it . You may be able to expense 50% of it .

You may not be able to expense it at all , frankly . So this is a place where you really can use a tax advisor to help you out . The only things that are almost always going to be in that other income section are , say , random money you make . If you find 20 bucks in your drawer that shouldn't be there , you're overshort . That's normally another income .

And if you for some reason loan someone money and you're collecting interest , that's going to be in your other income . But there's some fungibility here . There's some flexibility there that can allow you to change what's in that versus the expense category above that and move things back .

But regardless of if you have an expense in COGS or another income or just the general expense . We had our total income . We took out our cost of its soul , we got our gross profit . Or again , if we manipulated it this way , we got our total money left after prime cost . Take out our expense . All that bottom line , all the math down , is our net income .

And so when you hear a bar makes 3% , that's what we're talking about . Is that net income line ? And , as I'm sure you noticed as we talked , there's a lot of places in there that , as an owner , you might actually be making or receiving more money .

The other thing that we have to say about a income statement or a P&L is that net income does not equal cash in or out of your business , for instance , amortization and depreciation . That money was spent when you purchased that asset that you're amortizing and depreciating .

So if you have income of , say , 30 grand and you have 30 grand of depreciation , your net income on your P&L will say zero , but you actually have that 30 grand in cash because it wasn't an expense that you made . It's a paper expense on your taxes . Amortization can work the same way .

You also have things where you don't expense them but they impact your cash . So think of a loan . If you make a loan payment , right , we talked about last week how that loan gets put in as a liability and then you reduce the liability as you pay it .

Anytime you make a loan payment , you have two essential transactions in your book You have an expense for the interest and you have a payment against the loan . Both come out of your bank . So part of your loan payment is your bank booked against the liability that is that loan . Part of your payment is the bank booked against that expense that is the interest .

So if you have a huge number of loans to pay back , if you have big loans , your actual cash flow will be way less , potentially , than what it says on your P&L . So this can go both ways and because of that , a P&L is not a great indicator of how much cash do I actually have . What has my cash , positive and negative , been for this month ?

That is the purpose of the statement of cash flows or cash flow statement . So in many ways , when you own a small business , your statement of cash flows is actually somewhat more important than your P&L .

Your P&L is great for understanding your expenses , your income , all of that , but your statement of cash flows is hey , do I have more money at the end of the month than I had at the beginning of the month ? Do I have more money at the end of the year than I had at the beginning of the year ?

And that's really the win-loss record here in a lot of ways . Right , if we have expenses , that are paper expenses . If we have income , that is paper income . As the owner of a small business , that really doesn't do anything for us . It's real , it's there , it's involved in your taxes . All that's true .

But for 90% of us as small business owners , what matters is do I have more cash in my pocket now than when I started ? And that is what statement of cash flows shows . So statement of cash flows is going to be broken up into essentially , or sections , kind of like our P&L . Top section of that is going to be cash flows from operating activities .

Now that is . it starts from , i should say , your net income , because your net income is the plus or minus of what you made . But , as we've talked about , not everything that exists on your P&L , not everything used to calculate that net income is actually real cash in and out of your business .

So it's net income plus your amortization and depreciation , because that wasn't cash that flowed out of your business , plus any losses on the sale of equipment . We didn't really get into this when we talked about P&L , but you can have a P&L category in other expense or income called gain , loss on assets . That would get added back in to do your cash flow .

And then if you have those liabilities , those accounts receivable , accounts payable , payrolls payable , those things we talked about last week on your P&L I'm sorry on your balance sheet , those all get added back in And you end up with a number called net cash from operating activity , which is the total cash coming in and out of your business from operating .

Now , after that we have a section that will normally be cash flows from investing activity . So these are your capital expenditures . You went and bought a bunch of equipment that is going to be in that section And that equipment may or may not be expensive . It depends on the equipment , the tax codes , how big it is .

There are a lot of factors there in the United States , i'm sure . There are different factors all over the world . Those capital expenditures you make may show up there . You're going to have proceeds on sale of equipment . Potentially . You may also have .

If you're lucky enough to have a brokerage account , let's say you may have a gain or loss on that brokerage account And if you get into that sort of accounting you really need to talk to an accountant because there's all sorts of things about realized and unrealized and it can get very complex .

We're talking about accounting on brokerage accounts , so I'm not even going to begin to get into that . But if you do have an asset whether that's a brokerage account , stock , gold , i don't know you bought a bunch of cattle because you wanted to . Whatever your business zone is that that asset is , there is specific accounting for that .

That will come in this investing activity section . Because not everything that you spend , not everything that you do with reference to investments , to assets , is going to affect your P&L .

Because fundamentally , if I say I'm buying gold because I'm rich and I have a bar that just makes money hand over fist that I don't need which okay , hypothetical scenario not going to happen But I have a hundred grand , i buy a hundred grand worth of gold , that hundred grand went from cash to assets on my P&L .

That's cash I no longer have access to I'm sorry , cash assets on my balance sheet . That's cash I no longer have access to , but it hasn't hit my P&L at all , so it's not like I spent that cash . That's not an expense , it's just an asset transfer from one item to another , but that's negatively impacted my cash .

The amount of money I can put in my pocket if I liquidate all our bank accounts . That's actually fell into that . But that's a really good way to explain what the cash flow statement shows you . At the end of the day , that's what you would have if you liquidated all your bank accounts . So , as I mentioned , we have that operating activities .

Then we have our investing activities . After that we're going to have financing activities . So financing activities are debts And that can be debt that we have coming in . That can be debt that we issue to other people , that we're going to have proceeds from debt expenses on debt . The principal that we paid what have you ? All that gets to our bottom line .

So we take our operating cash flow plus or minus our investing activities , depending . If we wrap it down , plus or minus our financing activities , depending on are we loaning people money or are people loaning us money where dividends going , all that sort of thing , and that ends up with this wonderful number , that is , our net cash increase .

If we're looking at a cash flow statement , say for the entire year , we have cash at the beginning of the year increase , decreasing cash cash at the end of the year . And that's why the cash flow statement is really important And the great part about it is it really . The rest of the stuff we talked about is interesting .

On the cash flow statement , you should know it . But that , how much cash did I start with ? How much did it go up and down ? How much am I left with ? In my opinion , it's something a lot of people ignore . It's something you don't hear a lot of people talk about . They talk about the P&L , they talk about the balance sheet .

They talk about all that One of the most important numbers to me in a small business , especially something like a bar do I have more cash now or less cash now than I started the year with ? Do I have more cash now or less cash now than I started the month with ? So that is a very important number to know .

So hopefully , between last week and this week , you feel like you understand a little bit more about bookkeeping . This is obviously a hugely complex part of a business . And just the P&L or the cash flow statement or the balance sheet .

You can spend hours and hours studying those and learning about how those work , but again , our job here was just to kind of go over it in a quick overview . If you have any questions on any of this because I'm sure I have some of you thinking why the hell did he say this ? What the heck was this ? What is going on here ?

I don't get any of it Please reach out And I am more than happy to discuss this with you . I freaking enjoy bookkeeping . I'm weird . I've worked in bookkeeping from time to time , as I mentioned before . So if you have any questions about it , reach out to me . Best way to do that head over to Facebook , join Bar Business Nation . That is our Facebook group .

We're trying to build a community there of people to help each other out , so feel free to join there , ask questions or shoot me an email .

Chris at barbusinesscoachcom More than happy to talk to you and to explain anything in more detail that we discussed this week or last week , because this really was a quick and dirty overview of what is accounting And we did it all without a slide deck or anything , so there's no visuals . So if you feel confused , reach out .

Final thing I will say this week before I let you all go if you have not had a chance , check out the show notes , check out the book . How to Make Top Shelf Profits in the Bar Business Just came out last month and we now have the audible or audio version of the book as well .

So if you follow the links there to Amazon , you can buy the book in hardcover , paperback or Kindle , unlimited or for audible , and it is a really good book . I think I'm biased . I wrote it , but it's a really good book that really lays out a lot of the stuff that we talk about on the podcast in a little bit more detail .

But I will also say it's quick , it's chunky . It's 75 short chapters that just dive into an issue and get out . So check that out if you haven't had a chance yet . One other housekeeping piece before I let you guys go . Next week we will not have an episode of the podcast .

For those of you outside the United States It is the 4th of July next Tuesday , and as much as I would like to expect that I can put out a podcast episode next week , i have a feeling I'm either going to be drunk when I would normally record these or hung over . So next week we're taking a break , but we'll have another episode in two weeks .

I'll talk to you guys then . Have a great day .