Jesse Mecham — How Bookkeeping Tripled My Revenue in Two Years (and Other Unexpected Cash Flow Advice)


(This article is part of the MicroConf 2015 Recap. Want to explore more talks from the event? Go back to the Recap Hub)

Main Concept

“How a presentation on bookkeeping caused every conference attendee to suddenly “need to use the restroom.”

Four Key Points

  • Anytime you can teach and make that your competitive edge as a company, you’ll have success.
  • The adaptation — changing your plan — is where the win happens.
  • Budgets can change at any time at any reason for good or bad.
  • Instead of having a pile of bills and waiting for the money, you have a pile of money and you’re waiting for the bills.

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Talk Recap

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Four Secrets To Spend Less Time Getting More Done

I don’t believe the third secret, but then I tried it… unbelievable!)

  • We’re always looking for ways to maximize our time — to get things working well
  • And if we do that well, we convert our time into money
    • …but then we just don’t care about it (like we do when it’s time)
  • Think about it like this: Double Dipping
    • you turn time into money.
    • Then, you maximize your effort on maximizing how you use that money
  • Money is time.
    • Time is what we’re after. Not money.
    • Money is a way to get us more time.
    • Surprised when we see people who are savvy and smart — but say ‘I don’t have time to focus on money”

Finances

  • Financial History
    • 2008: $450,000, stressed
    • 2009: $771,000, stressed
    • 2010: $1,200,000, stressed
    • 2011: tired oe being stressed
  • Always stressed!
  • If stress was the constant and revenue was the lever I was constantly moving, what was the problem.

“Jesse, you’re an idiot” — Jesse

“No knock on Quickbooks, but it’s horrible, horrible software” — Jesse

Be Purposeful With Your money

And you’ll be healthier, happier, and richer. 

  • Bookkeeping adds no value to you as a business owner
    • It allows you to comply. You’re looking back and analyzing what has happened.
  • We aren’t talking about bookkeeping today.

Four Rules

Rule #1: Give every dollar a job

  1. Don’t forecast. Embrace clarity. Relish scarcity. One question.
    • If you forecast, you waive a magic wand of revenue.
    • You need to feel your resources are scarce.
    • Everyone takes their pile of money and they say ‘What will this money do before more money comes in?”
  2. When you remove scarcity, you remove clarity.
    • When you remove clarity, your purposes becomes muddy.
    • …and then you don’t understand what the money has to do.
  3. “What would you do if you had $5”
    • “I’ll go to the gas station”
    • But as soon as his son had the money, he spent it on something else.
  4. Forecasting — the jobs that money is supposed to do — is the key.
What should this money do?

before more money comes in?

  • Saving money just to save money is purposeless.
  • You can’t pass judgment on people on what they’re doing with their money.
  • Worry. About. Yourself.
  • Make sure your money is lining up with what you truly value.
  • The key is: this is all about what you want 
  • You have to sit down and be honest about yourself: what do you want?
    • What do you care about?
  • Using your money — lining your money up with your values — you start spending less.
    • …because you start spending more purposefully.
  • 11 years ago — Jesse needed $350 to cover his rent. That’s why he started YNAB.
    • If his requirement was higher, it would have been harder to start the business.
  • As you follow these rules, your personal needs drop as you spend in line , and you’re able to better able to your

Rule #2: Embrace Your True Expenses

Every expense is a monthly expense

  • Monthly, you have normal expenses
    • You’re planning with normal, monthly blocks
    • “This is what I’ve got, this is what I’ll do”
    • …And then the holidays hit and you have ‘surprise’ holiday expenses
  • So you need to make these ‘one time’ expenses regular, recurring expenses.
  • You need to give ever dollar a job with a nod towards your regular expenses and your irregular expenses.
  • This is a conversation between you and future you.
  • When you’re planning and giving every dollar a job, you need to be thinking about your advance expenses
    • You’ve got to eat
    • You’ve got to pay the electricity
    • You’ve got to plan for…. the future
      • But you might not know how much or when!
    • Scenario A: The Car Breaks Down… and you haven’t saved anything
    • Scenario B: The Car Breaks Down… and you’ve saved $1,000
      • Throw yourself a future bone and save something towards the future!

Rule #3: Rolling With The Punches

Change, adapt, adjust…

  • Imagine you’re sitting down with a chess grand master
    • And then there’s a counter move!
    • The grand master can keep playing along the same opening move or they can adapt their strategy!
    • The adaptation — changing your plan — is where the win happens.
  • Do you think that a coach says “No matter what happens, we’re sticking to the same plan and not adjusting?”
    • No! That’s how you lose games!
  • Imagine you’re driving home from work and there’s a disaster on the road
    • Do you immediately stop driving, get out of the car and give up?
    • No! You keep driving!
  • Similarly, with a budget, you reprioritize.
    • It doesn’t matter what someone else spends their money on.
    • Likewise, it doesn’t matter what you spend your money on.
    • Budgets can change at any time at any reason for good or bad.

Rule #4: Age Your Money

Spend money that’s at least 30 days “old.”

  • The oldest money is what sinks down to the bottom
  • Be spending money that you earned 30+ days ago
    • You earn money in your business in June
    • Don’t even plan on spending that money until July / August
  • Think of it like this: aging your money helps you eliminate the valueless activity of timing your money to when your bills are paid
    • There is no value to that game.
    • Then provider doesn’t care. You’re simply paying that bill.
  • When a bill comes, you’re just paying for it.
  • Instead of having a pile of bills and waiting for the money, you have a pile of money and you’re waiting for the bills.
  • When you follow these rules, you ask yourself ‘what do we want this money to do’
    • Sometimes the answers are the same!
    • But you answer these questions.

Finances — Version 2

  • 2008: $450,000, stressed
  • 2009: $771,000, stressed
  • 2010: $1,200,000, stressed
  • 2011: Not Stressed

Stress

  • You don’t know how to grow — because you don’t know how much to spend
  • You don’t know how to live — because you don’t know how much to pay yourself

No Stress

“Jesse, you’re an idiot” — Jesse

  • Viewing money this way, Jesse was able to see that he has the capital to invest in himself and his company
  • When he broke that money up and lined the money with the priorities, it was magic

Your Action Items

  1. It doesn’t matter what software you’re using, use what works.
  2. Check out one of the YNAB webinars to reinforce the rules
  3. Log into your bank account, tally up what you have on hand, and write down what you want that money to do. You will feel better. Being intentional about what you want to do with what you want to do with your day will feel like magic. 

Questions

Q: “Do you have practices that help you make better financial decisions?”

The key is try and increase awareness.

We walk a fine line between “Do everything for them” and “Make sure they’re engaged”

The key with a new habit? Make it small. Do it infrequently.

When I work with someone who can’t get the behavior down, start small. Just start by building the awareness in and building the habit in. 

When you can get frequently aware of what your money is doing, it naturally falls in line with your intention. There needs to be a rhythm to when you look at your finances. What’s most important? Behavior change.

Asking yourself: “What does this money need to do?”

 

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Recommended Resources

  1. You Need A Budget
  2. You Need A Budget Webinars

Links to Speaker’s Websites

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(This article is part of the MicroConf 2015 Recap. Want to explore more talks from the event? Go back to the Recap Hub)