Beginning Balance

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 Pillars of Investing by William Bernstein
• A Random Walk Down Wall Street by Burton Malkiel
• How I Invest My Money edited by Joshua Brown and Brian Portnoy

Mark Butler, Virtual CFO

https://markbutler.com

https://letsdothebooks.com

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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

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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 process is fast, accurate, and as painless as possible. There's two lessons in this: 1.) accurate books indicate that the upstream process of the business -- marketing, sales, pricing -- are tight and well defined, and that the business is not taking on too many custom or one-off orders, and 2.) for the service provider, in Mark's case his bookkeeping service, a streamlined system leads to more profit, less frustration, and less burnout. Even service providers are in the business of manufacturing, Jesse says, they are manufacturing a service or experience. Edge cases and messes clog up the manufacturing process and create frustrations.

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 CFO

https://markbutler.com

https://letsdothebooks.com

You Need a Budget

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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 Need a Budget

https://www.youneedabudget.com

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 businesses can do to try to grow.

All of these things take resources, however, and Mark and Jesse discuss how to determine which things are worth doing and which things are resource-wasters.

Mark Butler, Virtual CFO

https://markbutler.com

https://letsdothebooks.com

You Need a Budget

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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 business growth.

Mark Butler, Virtual CFO

https://markbutler.com

https://letsdothebooks.com

You Need a Budget

https://www.youneedabudget.com

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

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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 Butler CFO

https://markbutler.com

You Need a Budget

https://www.youneedabudget.com

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