To my friends, it's probably monumental to them that I haven't mentioned Bruce Springsteen in one of my posts yet. It would be modest to say that I'm a big fan...and it's only a recently developed fanaticism (a few years), at least for Bruce fans. I've traveled all over the southeast in recent years attending as many concerts as I could (4 on the last tour), meeting people who were attending their 45th show, and sharing the front row with three generations of fans.
My adoration for The Boss prompts many questions: mostly, why so much attention? What is it about him, the E Street Band, and the music that is so special?
Like Chiropractic, the music speaks to my heart, it's about struggle and hope, it's about overcoming fears and rising to greatness, it's about tapping into the genius in all and empowering others to become extraordinary. It's about removing the interference and becoming 100% of who you are.
It's "that special something."
As a performer (if you've had the privilege to see The Boss you completely understand), there is no better concert experience. I can see the eyes rolling and hear the guffaws now...and I get it, you have your favorites as well, but I've never seen energy like this coming off the stage...and it's always a marathon show.,.we're talking 3+ hours every show.
John Stewart summed it best when he introduced Bruce for his induction at The Kennedy Center Honors last year..."whenever I see Bruce Springsteen do anything, he empties the tank...every time..." That's the power he creates on stage, in his music, for me.
So I gotta ask, when was the last time you emptied your tank?
When was the last time you gave everything out of love and ambition and pride and service and humility?
Can you do it today? Please? The power you will create for yourself and those around you will be magnificent. The attraction into your life of the things you want will be effortless.
Go out and empty the tank today, and tomorrow and every day you have after that and watch your life be magical.
Thursday, February 25, 2010
Wednesday, February 24, 2010
The Curse of Competence...
"Good is the enemy of great," reads the first line of Jim Collins' book Good to Great (a classic in the business community).
Great is understanding what you can be the very best in the world at while also understanding what you cannot be the best in the world at.
Good shows up in a variety of ways: lacking conviction, turning to outside-in approaches, doing the minimal necessary to skate by, being comfortable, etc...
Here's how it can unfold in an office? In an effort to create additional revenue sources and be "good", you think "maybe I'll start selling some vitamins, and pillows, and begin some therapies, and join this program and do this and that...even to the point of some incorporating laser hair removal and cellulite therapy in their practice," during which the essence of your practice gets diluted, causing you to lose focus and intent on why you're there and what services you provide.
Don't you see external damage this does? That the mindset of the public is already so outside-in?? Their paradigm of achieving health is that something must come from outside of them to "cure" them...and when you bring all that outside stuff into your practice, the message gets garbled...and it's no wonder the public is so confused about what we do...it's no wonder billboards and buses in Connecticut can have ads on them "warning" the public of how dangerous we are...
And I can hear some now say, "well they need this stuff, it makes them feel better and I'm achieving success in my business by doing it, and the patients are happy...and and and...
Collins sums it up perfectly "to go from good to great requires transcending the curse of competence. It requires the discipline to say, 'just because we are good at it - just because we are making money and generating growth - doesn't necessarily mean we can become the best at it.' The good to great companies understood that doing what you are good at will only make you good; focusing solely on what you can potentially do better than any other organization is the only path to greatness."
I'll throw it out to you...and I expect answers back!!
No more distractions for you, okay? Keep it simple, pure and unadulterated, then watch your practice explode!
Great is understanding what you can be the very best in the world at while also understanding what you cannot be the best in the world at.
Good shows up in a variety of ways: lacking conviction, turning to outside-in approaches, doing the minimal necessary to skate by, being comfortable, etc...
Here's how it can unfold in an office? In an effort to create additional revenue sources and be "good", you think "maybe I'll start selling some vitamins, and pillows, and begin some therapies, and join this program and do this and that...even to the point of some incorporating laser hair removal and cellulite therapy in their practice," during which the essence of your practice gets diluted, causing you to lose focus and intent on why you're there and what services you provide.
Don't you see external damage this does? That the mindset of the public is already so outside-in?? Their paradigm of achieving health is that something must come from outside of them to "cure" them...and when you bring all that outside stuff into your practice, the message gets garbled...and it's no wonder the public is so confused about what we do...it's no wonder billboards and buses in Connecticut can have ads on them "warning" the public of how dangerous we are...
And I can hear some now say, "well they need this stuff, it makes them feel better and I'm achieving success in my business by doing it, and the patients are happy...and and and...
Collins sums it up perfectly "to go from good to great requires transcending the curse of competence. It requires the discipline to say, 'just because we are good at it - just because we are making money and generating growth - doesn't necessarily mean we can become the best at it.' The good to great companies understood that doing what you are good at will only make you good; focusing solely on what you can potentially do better than any other organization is the only path to greatness."
I'll throw it out to you...and I expect answers back!!
- What are Chiropractors the best in the world at??
- And of equal import, what can we never be the best in the world at?
No more distractions for you, okay? Keep it simple, pure and unadulterated, then watch your practice explode!
Tuesday, February 23, 2010
Seeing and Believing...
The old statement goes, "I'll believe it when I see it!" And in this life of ours we too often take this jaded, outside-in point of view.
Don't you see how wrong that is?
Our belief systems and how we view the world is what manifests as our lives. It's becoming more and more accepted that researchers have a profound tangible impact on the studies they're performing because they simply desire that specific outcome.
Here's a real life example. The patient that has been inactive for months flashes through your mind and you spend a few moments thinking about their health and life...what happens??
They "magically" end up on your books that afternoon...how many times has that happened to you??
I suggest taking your appointment book and filling in all the blank spaces with the names of the family members who aren't under your care, all the inactive files you have and the people you've met at events and visual them coming to see you. Don't you believe that they need to be checked for vertebral subluxation?
If you do, watch those people begin calling. Watch your books start to fill up. Watch your practice explode. See your town get to new levels of health. See yourself creating a life of success and significance.
But to see it...first, you gotta believe.
Don't you see how wrong that is?
Our belief systems and how we view the world is what manifests as our lives. It's becoming more and more accepted that researchers have a profound tangible impact on the studies they're performing because they simply desire that specific outcome.
Here's a real life example. The patient that has been inactive for months flashes through your mind and you spend a few moments thinking about their health and life...what happens??
They "magically" end up on your books that afternoon...how many times has that happened to you??
I suggest taking your appointment book and filling in all the blank spaces with the names of the family members who aren't under your care, all the inactive files you have and the people you've met at events and visual them coming to see you. Don't you believe that they need to be checked for vertebral subluxation?
If you do, watch those people begin calling. Watch your books start to fill up. Watch your practice explode. See your town get to new levels of health. See yourself creating a life of success and significance.
But to see it...first, you gotta believe.
Monday, February 22, 2010
Holding Crucial Conversations...
I recently sat through a program about holding crucial conversations and how to have them effectively. There is a five-step process that we must take into consideration when holding them, and the awareness of the process is important to create the outcome you desire.
There's no better example of holding crucial conversations in your office than the report of findings. It is simply the most critical conversation you will ever have with a patient and effective communication and awareness will make the desired outcomes for all parties that much better.
Step One
Sense Data -- Great communication occurs when there is a meeting of meaning. What I say and attempt to communicate with you hinges on what your paradigm is and what meaning you give to what I'm saying. And it's not just the words, in fact the words only account for 7% of sense data we receive. 58% of communication is non-verbal body language and 35% is the tone, inflection and volume in which we use those words. Are you using techniques essential to effective communication? Altering your body language, changing your voice and physiology, etc...?? Do so and watch your effectiveness catapult to new levels.
Step Two
Thoughts -- what do you think about the message you're communicating? Do you think what you're attempting to communicate is beneficial to your patient. Are you withholding from them because you think they won't accept your recommendations? We often get so intimidated because we don't think a patient will pay or come in as frequently as we think they should. Stop it! You are doing such a disservice to you, your profession and most importantly to that patient. If you think they need to be checked three times a week, why would you recommend anything else? Why would you pre-judge a person and their ability to pay your fee? Your fee is your fee is your fee!! When you negotiate your fee with someone, you diminish the value of what you do. Don't you know there could NEVER be a fair exchange for what you do?
Step Three
Feelings -- what are the emotions attached to your message? To you? Your patient? Once we have complete conviction about Chiropractic, it feeds our passion for it...most think you have to get passionate about something and then you can commit to it. It's just the opposite, once you make a commitment to something, it drives your passion even higher. Check in with yourself, you may need something to feed your commitment and passion. If so, take action now!
Step Four
Wants -- what do you want for yourself out of the conversation? What do you think your patient desires? And then what do you want for your business? Most patients want their pain to go away. We want to create a lifetime patient, and our business benefits from it. You see the disconnect and how we have different wants from the beginning of the relationship? Maybe you need to approach the ROF differently to move your patient from what they want to where you want.
Step Five
Actions -- based on what you communicate, what actions can be taken? Will it be blatantly obvious to your patient that Chiropractic should be an important piece of their health for their family? Or was there confusion?
Make a point to be aware of each piece in this cycle...perhaps you want to record your ROF to observe your communication style as objectively as possible.
How you communicate is the difference between someone accepting your recommendations and making Chiropractic a part of their life, or walking away...
That's crucial.
There's no better example of holding crucial conversations in your office than the report of findings. It is simply the most critical conversation you will ever have with a patient and effective communication and awareness will make the desired outcomes for all parties that much better.
Step One
Sense Data -- Great communication occurs when there is a meeting of meaning. What I say and attempt to communicate with you hinges on what your paradigm is and what meaning you give to what I'm saying. And it's not just the words, in fact the words only account for 7% of sense data we receive. 58% of communication is non-verbal body language and 35% is the tone, inflection and volume in which we use those words. Are you using techniques essential to effective communication? Altering your body language, changing your voice and physiology, etc...?? Do so and watch your effectiveness catapult to new levels.
Step Two
Thoughts -- what do you think about the message you're communicating? Do you think what you're attempting to communicate is beneficial to your patient. Are you withholding from them because you think they won't accept your recommendations? We often get so intimidated because we don't think a patient will pay or come in as frequently as we think they should. Stop it! You are doing such a disservice to you, your profession and most importantly to that patient. If you think they need to be checked three times a week, why would you recommend anything else? Why would you pre-judge a person and their ability to pay your fee? Your fee is your fee is your fee!! When you negotiate your fee with someone, you diminish the value of what you do. Don't you know there could NEVER be a fair exchange for what you do?
Step Three
Feelings -- what are the emotions attached to your message? To you? Your patient? Once we have complete conviction about Chiropractic, it feeds our passion for it...most think you have to get passionate about something and then you can commit to it. It's just the opposite, once you make a commitment to something, it drives your passion even higher. Check in with yourself, you may need something to feed your commitment and passion. If so, take action now!
Step Four
Wants -- what do you want for yourself out of the conversation? What do you think your patient desires? And then what do you want for your business? Most patients want their pain to go away. We want to create a lifetime patient, and our business benefits from it. You see the disconnect and how we have different wants from the beginning of the relationship? Maybe you need to approach the ROF differently to move your patient from what they want to where you want.
Step Five
Actions -- based on what you communicate, what actions can be taken? Will it be blatantly obvious to your patient that Chiropractic should be an important piece of their health for their family? Or was there confusion?
Make a point to be aware of each piece in this cycle...perhaps you want to record your ROF to observe your communication style as objectively as possible.
How you communicate is the difference between someone accepting your recommendations and making Chiropractic a part of their life, or walking away...
That's crucial.
Friday, February 19, 2010
Are You Getting an Abundant Harvest?
The concept of "planting seeds" has been with us forever. We ask on the initial phone call (or should!) if this appointment is for you or your entire family, expecting the caller to catch on that they should be bringing their family in to be checked for subluxation as well. And there are several variations and other examples of the manner in which we plant seeds.
But the thing that most of us forget is that just because we plant a seed, doesn't necessarily translate into that seed sprouting and growing. Saying something like the example above may just be noise for that person on the other end of the line.
In order for the seed to germinate and grow it needs other things, yes?
Sunlight, nutrition, water, etc...
These occur in our practices through relationship building, being convicted and authentic about Lasting Purpose, and providing information that the individual may need to grow in health and Chiropractic.
And maybe most of all, Principle 6 always creeps in...there is no process that does not require time.
Putting all these things together will ensure long term success for you and your practice. Providing all the resources your patients need to grow may take extra effort and may take longer to build, but the long-term effects will certainly be rewarding.
Higher retention and entire families of committed patients who tell other families about you. I'd be willing to wait for those seeds to grow into an abundant harvest. How about you?
But the thing that most of us forget is that just because we plant a seed, doesn't necessarily translate into that seed sprouting and growing. Saying something like the example above may just be noise for that person on the other end of the line.
In order for the seed to germinate and grow it needs other things, yes?
Sunlight, nutrition, water, etc...
These occur in our practices through relationship building, being convicted and authentic about Lasting Purpose, and providing information that the individual may need to grow in health and Chiropractic.
And maybe most of all, Principle 6 always creeps in...there is no process that does not require time.
Putting all these things together will ensure long term success for you and your practice. Providing all the resources your patients need to grow may take extra effort and may take longer to build, but the long-term effects will certainly be rewarding.
Higher retention and entire families of committed patients who tell other families about you. I'd be willing to wait for those seeds to grow into an abundant harvest. How about you?
Thursday, February 18, 2010
Know That Nothing Stays the Same...
It never has and never will.
So yeah, I've been on a Peaceful Warrior kick the past couple of days, but the book and accompanying movie have so much insight and wisdom in them. In one particular scene Dan and Socrates are hiking up the mountain and Dan is excited to find IT. The big reveal that Soc has been promising, the answer to it all...only to come to realize that it's not about finding IT.
This is IT.
The journey you're on is IT. Oversleeping for class and missing your midterm? That's IT for you. The patient that dropped out of care when you thought they understood? That's IT for you. The joy of a child whispering in your ear "Daddy, I love you sooo much" and the feeling of overwhelming emotion you receive from that unconditional love. That's IT. The goosebumps you get from listening to music that inspires you, the expression of exhilaration when you watch an athlete who competes at high degrees of excellence. That's IT.
You see, it's all IT. Everything that happens to you in your life is IT.
And so while positive dreams and goals and vision are absolutely necessary for your success, do not forget to enjoy and be grateful for the ride that you're on. No matter how bumpy or out of control it may seem at times, it's still your LIFE.
Hopefully you won't have to wait 'til the end to finally realize that it's the journey that brings us happiness.
Enjoy!
So yeah, I've been on a Peaceful Warrior kick the past couple of days, but the book and accompanying movie have so much insight and wisdom in them. In one particular scene Dan and Socrates are hiking up the mountain and Dan is excited to find IT. The big reveal that Soc has been promising, the answer to it all...only to come to realize that it's not about finding IT.
This is IT.
The journey you're on is IT. Oversleeping for class and missing your midterm? That's IT for you. The patient that dropped out of care when you thought they understood? That's IT for you. The joy of a child whispering in your ear "Daddy, I love you sooo much" and the feeling of overwhelming emotion you receive from that unconditional love. That's IT. The goosebumps you get from listening to music that inspires you, the expression of exhilaration when you watch an athlete who competes at high degrees of excellence. That's IT.
You see, it's all IT. Everything that happens to you in your life is IT.
And so while positive dreams and goals and vision are absolutely necessary for your success, do not forget to enjoy and be grateful for the ride that you're on. No matter how bumpy or out of control it may seem at times, it's still your LIFE.
Hopefully you won't have to wait 'til the end to finally realize that it's the journey that brings us happiness.
Enjoy!
Wednesday, February 17, 2010
Time to Take Out the Trash...
I was sitting in Panera this morning enjoying a cup of coffee and a bagel, pondering the world around me. The meetings, the deadlines, the projects...all the stuff we just have to get done.
After awhile I found myself staring at the backrest of the booth across from me for what seemed like several minutes, and after I came to, I realized it was the first time in several weeks that I had just been "in the moment."
It's such a rare occurrence these days to just be present, at least for me...how about you? When you're not thinking about what you should have done or what you could do, but just being silent, just being present and embracing the now.
When was the last time you had total focus on the patient lying in front of you? Not thinking about the next one coming in, or what's going on at the front desk, or the event you're gong to later that night...
Just that one.
Distractions can be so powerful and when we let ourselves get consumed by these distractions, they indeed become a reality.
Get clear today, this week and this month. Be totally present with your patients, your family and loved ones.
I think you'll enjoy this clip from Peaceful Warrior, it brings a nice perspective on our discussion:
By the way, if you like what we've been doing here, let us hear your feedback...
After awhile I found myself staring at the backrest of the booth across from me for what seemed like several minutes, and after I came to, I realized it was the first time in several weeks that I had just been "in the moment."
It's such a rare occurrence these days to just be present, at least for me...how about you? When you're not thinking about what you should have done or what you could do, but just being silent, just being present and embracing the now.
When was the last time you had total focus on the patient lying in front of you? Not thinking about the next one coming in, or what's going on at the front desk, or the event you're gong to later that night...
Just that one.
Distractions can be so powerful and when we let ourselves get consumed by these distractions, they indeed become a reality.
Get clear today, this week and this month. Be totally present with your patients, your family and loved ones.
I think you'll enjoy this clip from Peaceful Warrior, it brings a nice perspective on our discussion:
By the way, if you like what we've been doing here, let us hear your feedback...
Tuesday, February 16, 2010
Spring Lyceum 2010 -- April 8-10
Today's blog is all about shameless plugs...
It's about Life University's Power Up weekend to be held April 8-10 and I've gotta tell you, it will be fantastic. Below are descriptions of the events going on that weekend. Join us to be inspired and informed by Chestnut, Burnier, Donka, Riekeman, Will Bowen, Doornick, and Peterson. For more information click here. This is a can't miss event and I look forward to seeing you there!
It's about Life University's Power Up weekend to be held April 8-10 and I've gotta tell you, it will be fantastic. Below are descriptions of the events going on that weekend. Join us to be inspired and informed by Chestnut, Burnier, Donka, Riekeman, Will Bowen, Doornick, and Peterson. For more information click here. This is a can't miss event and I look forward to seeing you there!
Lyceum 2010
The world is waiting for you to become extraordinary! Lyceum 2010 will empower you to lead your life with vision, commitment and Lasting Purpose that will transform you and your practice. Come join us for inspiring lectures, an interactive Thursday night opening ceremony, fireworks, fellowship and more that will enhance your personal and professional life. Take back the energy and passion you gain from this weekend to your practice and get ready for explosive growth!
LifeSource Octagon
The first major think tank created by the chiropractic profession which brings together the world’s greatest thinkers to address problems from health care to education to human interaction based on a philosophy of Vitalism. This year’s conference will bring together health care educators, practitioners, economists, philosophers, ethicists, and politicians to write a policy paper on the inclusion of Vitalism as a basis for addressing the health care problems of the nation. They will report on their work at the Power Up weekend.
LIFEforce
This dynamic team of 1000 doctors is committed to building enrollment at Life University. Quarterly, they gather at the University for a weekend to learn from world renowned speakers and participate in practice growth forums. The result is a deep sense of purpose and passion, an exchange of practice growth resources and a chance to affect the lives of prospective students and the profession. You are invited to attend this life changing experience.
Life Leadership Weekend
Doctors…do you have practice members who you believe could be great Chiropractors? If so, send them to Life Leadership Weekend, an experience that will change their lives! Life Leadership Weekend focuses on prospective students and engages them in the vision of themselves in the chiropractic profession and their education at Life University. Do your part to replace yourself in this great profession and create a bigger vision for a healthier world by referring a student to this amazing program.
"Red Hat Day"
Join us to celebrate Dr. William Harris' legacy of giving out of a sense of abundance. This memorial event raises awareness on the importance of philanthropy and will leave you with a stronger belief in the greater good. "Those who believe, achieve!"
Talk The TIC
This is an exciting international competition among Chiropractic students, the primary focus of which is delivering the Chiropractic message. The true reward for entering the competition is the discovery of one’s voice. Come see the next generation of Chiropractors find their voice, hone their message, and emerge as champions who are ready to enter the world.
Monday, February 15, 2010
Who is Your Most Important Customer?
Break down the patients in your practice by age group. Who would you say is the most important? Some would argue that it’s the 68 year old in phase 93 of subluxation degeneration who is on 17 different medications and is suffering on a daily basis. Some would say it’s the next one lying on the table that you give 100% focus and attention too.
And while I’m certain your love, focus and intention is to give the above examples the best care possible, let me argue a minute for children. If there’s an answer to the healthcare dilemma that is plaguing our nation, it’s our children.
The statistics are overwhelming aren’t they? Childhood obesity and diabetes are skyrocketing out of control. Prescription drug use levels that are astonishing. Unhealthy diets, lack of regular exercise, poor sleep, and most notably, vertebral subluxation from horrible birth procedures are leading our youth to disaster.
It’s a simple solution really…make it your mission to check every child in your community. Plan marketing events with schools, give lectures to parent groups, participate in programs that are kid-centered, make sure that your parents are bringing in their children.
Not only will your practice grow, you will have contributed positively to the future health of your community and the world. Who knows, there may be some children inspired to become Chiropractors!
In simplest terms….it’s a legacy plan. It’s a gift that you can be proud to have created for your community and the world.
Saturday, February 13, 2010
You Can't Do It Anymore...
One of my favorite marketers and authors Seth Godin wrote in his daily blog today about "phoning it in." You know, just doing the minimum necessary to skate through your life not wanting to really make the effort to be remarkable.
I guess it prompted me to ponder whether you Chiropractors and students out there are "phoning it in" to the people you serve.
Here's the thing...I know you are.
All the time? Of course not. But you are some of the time, and you know what? You can't do it anymore. And you know why? Well...you know why. Lost customers, lost revenue, and above all else, the lives of the countless suffering that need you.
Make a commitment right now to be laser focused with every single patient, every single action, every single time, no matter what. It is a difference maker and the magic it creates for you and your practice will be extraordinary.
I guess it prompted me to ponder whether you Chiropractors and students out there are "phoning it in" to the people you serve.
Here's the thing...I know you are.
All the time? Of course not. But you are some of the time, and you know what? You can't do it anymore. And you know why? Well...you know why. Lost customers, lost revenue, and above all else, the lives of the countless suffering that need you.
Make a commitment right now to be laser focused with every single patient, every single action, every single time, no matter what. It is a difference maker and the magic it creates for you and your practice will be extraordinary.
Friday, February 12, 2010
Understanding Financial Statements
Today's blog gives some more pragmatic information on your business. They can't nor should all cover the soft skills right?
Financial statements are an important management tool. When correctly prepared and properly interpreted, they contribute to an understanding of the current financial condition, problems, and possibilities of a company.
What does the bank look for when processing a credit application?
- Immediate liquidity (cash) and how cash is being used in the business’ operations
- Assets you have available to use as collateral
- Long-term earnings potential (ex. how much profit will this business likely make in the future?)
- The cash available to pay interest on a loan
- Cash you have available to repay the principal of a loan
There are three basic financial statements:
- Balance Sheet
- Income Statement
- Statement of Cash Flows
The Balance Sheet
This is sometimes called the Statement of Financial Condition or the Statement of Financial Position. It represents the financial position of the business entity at a moment of time – a snapshot. Most often the balance sheet from one or more preceding years is presented to provide meaningful information on how the company is performing.
The Balance Sheet is so named because it represents the following equation:
Assets (Resources of the business) = Liabilities (Amounts owed) + Equity (Deficit) (net worth (positive or negative)
Assets increase or decreases as resources are bought, disposed of, become more or less valuable, or are used in the course of operations.
- Current Assets are those assets of a company that are expected to be realized in cash, sold or used during the next 12 months. These assets generally include cash, accounts receivable (ex. from patients or insurance companies), inventories (ex. healthcare products and other items you’re selling) and certain costs such as insurance, security deposits, or rent paid in advance.
- Property and Equipment are assets with a life greater than one year like computers, adjusting tables, x-ray equipment, etc. that are used in the regular operations of the business. A good rule of thumb is to expense items less than $1,000 to the income statement instead of recording as an asset.
- Accumulated Depreciation is the aggregate of charges to expense or to write-off the cost of property and equipment over its estimated useful life. It is the result of a bookkeeping entry and does not represent any current cash outlay. Under generally accepted accounting principles (GAAP), we have to expense property and equipment as it is being used. For example, if you expect a computer to last 3 years, you write 1/3 off each year to depreciation expense. Land is never depreciated.
Liabilities increase or decrease as obligations to creditors are incurred or repaid.
- Current liabilities are those obligations that are reasonably expected to be paid within one year using current assets. These liabilities generally include bank debt, accounts payable, income taxes payable and accrued expenses such as salaries, retirement plan contributions, and interest. The balance in a liability account at any given time is the amount of money the company owes. For example, the company owes Bank of North Georgia $20,000 for equipment on February 1st and makes a payment of $1,500 on February 28th. Of that $1,500 payment, $500 is interest and $1,000 is a reduction to the loan balance. So, the liability on the balance sheet as of 3/1 would be $19,000. If the bank wants to see a balance sheet with the current part shown separately, your accountant could figure out the next 12 months’ principal reductions and show them in a separate liability account. So, you would have two liability accounts that, if you add them up, equal the $19,000. One liability account would show up in “current liabilities” and the other would be in “long term liabilities” (below).
- Long-term liabilities are total debt less current liabilities (above) and include those obligations that are not expected to be paid within one year. Mortgages and capital leases are common long-term liabilities.
Equity increases or decreases as a result of income or loss from operations of the business (the results of the current year income statement). It also increases when owners contribute capital to the business and decreases when the capital is withdrawn from the business.
- Common Stock and Preferred Stock represent the ownership interests in a corporation. Limited liability companies (LLCs) have members’ equity, which is shown instead of stock on the balance sheet.
- Retained Earnings are the portions of all the company’s past earnings that were not distributed to the owners. If the retained earnings are negative, they’re called “accumulated deficit”.
- Total Liabilities and Stockholders’ Equity (Deficit) is always equal to total assets.
The other primary financial statements present a summary or activities over a period of time, usually a fiscal year.
The Income Statement
This is sometimes referred to as the Statement of Operations or the Profit and Loss Statement and presents a summary of activities over a period of time, usually a fiscal year. This example below represents revenues less associated expenses and the resulting net income.
| Revenue (or sales) (ex. fees earned from services provided to patients or sales of products to patients) |
| - Cost of revenue (cost of producing goods for sale) (ex. staff salaries and cost of products actually sold to patients) |
| = Gross profit (measure of the profit from sales of products or services) |
| - Administrative expenses (general costs associated with the operation of a business) (ex. rent, office staff salaries, utilities) |
| |
| = Income from operations |
| +/- Other income and expense (not directly related to the primary operations of the business) (ex. interest income) |
| - Business income taxes |
| |
| = Net income (loss) (measure of the earnings performance of the company after considering all elements of income and expense) |
| |
Another term to be familiar with is EBITDA (earnings before the deduction of interest expenses, taxes, depreciation and amortization) is an approximate measure of a company's operating cash flow based on data from the company's income statement. This measure is also of interest to a company's creditors, especially bankers, since EBITDA is essentially the income that a company has free for interest payments.
The Statement of Cash Flows
This provides information about the sources and uses of cash for the period, as analyzed onto three major classifications:
| | |
| Cash provided by or used in operations | |
| +/- | Cash provided by or used in investing activities |
| +/- | Cash provided by or used in financing activities |
| | |
| = | Net increase or decrease in cash
|
- Operating activities include selling products and providing services. Cash inflows include all receipts from the sale of products or services and from interest and dividend income. Cash outflows for operating activities include cash payments for the purchase of inventory, wages and benefits to employees, etc.
- Investing activities include purchasing and selling property and equipment (ex. computers and exam equipment), buying and selling stocks or bonds, and lending money and collecting on those loans (ex. usually loans to business owners).
- Financing Activities include borrowing and repaying money to owners and lenders as well as money paid to owners out of equity (profits).
Standards and Regulations
Generally Accepted Accounting Principles (GAAP) is a set of guidelines that provides the basis for the preparation of most financial statements. In situations where GAAP-basis statements aren’t necessary because the bank or licensing board may require something different, an OCBOA (Other Comprehensive Basis of Accounting) may be used. Common examples of OCBOA statements include income-tax-basis, cash and modified-cash-basis. Generally, OCBOA financials are less expensive than GAAP basis ones a CPA would prepare for you.
Sharon Dunn, CPA, is a financial services and audit professional. She has 25 years’ experience in public and industry accounting. She may be reached at sharondunnwright@yahoo.com.
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