Bookkeeping for your Travel Business with Stephanie Cannon

Welcome to this strategic travel entrepreneur. My name is Rita Perez. Hello. I've been a travel Advisor for over 10 years and am navigating this winding road of entrepreneurship with you. I created this podcast because I wanted to share all the things I've learned from leaders both in and out of our industry that I really wish I would have known way back then. But alas, the important thing thing is I'm aware of them now, and I want you to be too. Ready for this week's show. Let's jump in.

Hello, everyone. Welcome back to the podcast. So nice to have you here again. Today we have another amazing speaker. Yes, I say that every week, but everyone, I feel, is very amazing because they bring such insight to the different operations in your travel business. And today we, we are talking all about the finance operation with friend, colleague, support, and fellow travel business owner, Stephanie Cannon. So welcome back to the podcast, Stephanie.

Hey, Rita. Thank you. I'm glad to be back here again.

Yes, yes. And I am glad you're talking about this, because I know when we all think about bookkeeping, especially during tax time time, we all shudder. Like, I almost. I almost got goosebumps literally just thinking about it. Like, ooh. Because I don't know about you guys, listeners, but I have not done my taxes or even looked at them. So before we start talking about bookkeeping in regards to taxes, what is bookkeeping and why. Why is.

Do you even know how that term got started? Why we call it bookkeeping? Keeping the books.

Yeah, keeping the book. So. So first, bookkeeping is basically the process of recording the financial transactions of your business. So you have a way to accumulate them and put them into buckets and keep track of things in regards to not just how the IRS wants them reported. We can make them do more than that to be beneficial on our end. But that's the basis of what most business owners start with.

Okay.

But I think bookkeeping never really looked it up, but, you know, keeping the books like you said. When I first started in the industry as an accountant fresh out of college, we didn't have programs, so everything was manual. And we have these really large ledger pads and ledger sheets, and there were different kinds you could buy, you know, to help you with different things. And everything was written out by hand.

Okay, so what were you writing in these ledgers? Because I remember high school bookkeeping. I was really good at bookkeeping. Like, if you, like looking back, I probably could have been an accountant, but it wasn't fun for me.

Yeah. So a lot of it, especially with some of the. I forget how many columns. Like these 16 column pads. They were huge. So literally you would go through and you would write like you're probably putting into an actual bookkeeping system, a program. Now, you know the details of the transaction, the date, who you paid, how much you paid, what it was for, what account or bucket are you putting it into. That way everything was separated out.

So all you had to do. Let's get out your handy dandy adding machine. If anybody remembers those with the tape. You know the white roll of tape.

Yeah. And the sound. I'm pick. I'm imagining the sound.

Yeah. And add all that up and so you get your total.

Now, do you only put expenses in this ledger?

No, this was used for a full set of financial books. So every possible transaction based on the account that it went to. So income, expenses, assets, liabilities, all of them.

Okay, so what is the difference? I know income expenses, I think that's pretty normal. But why do we keep track of assets and liabilities? And for our travel business, what would that look like? What kinds of things? Like, we don't have to go into the details of recording it, but what are they?

Yeah. So basically the concept of accounting is everything comes into balance. So we have different types of reports. And maybe people have heard of a trial balance or a general ledger. I know most people are familiar with a profit and loss statement that, you know, accounts for your income, your expenses, showing you your net profit. But in the accounting world, we operate under this, what they call a double entry accounting system. So everything balances. So when you look at your income statement, you have the number at the bottom, which is your net profit.

But then you go over to the balance sheet. Right. And everything on your balance sheet has to balance. So there's a couple of parts to that. Your assets, which are the things that you own, your cash, your equipment, buildings, if anybody has any building, those types of things. So these are physical and monetary assets. And then you have your liabilities, which is the debt that you have. So whether that's a credit card, a business loan, there can be all kinds of things that go on as a liability.

And then the next section of that part of the balance sheet is your owner's capital or your. Your equity in the business. So depending on what type of business, the accounts in that are going to be different. But when you look at a balance sheet in particular, the assets have to totally your liabilities and your equity. That's why it's called a balance sheet. So when you add all those up, those Two things balance in total. So how the profit and loss statement comes into this, your net profit is part of your equity, and it may be a loss. We don't always have profits in business, but.

So that flows over to your balance sheet and your equity section. So everything is in balance.

Yes. You just, you said, was it double entry?

Double entry Accounting.

You said double entry. I'm like, whoa. I like, I got flashbacks of being in my accounting class and doing the okay, plus $50 here. Let's see where the minus is to make exactly everything balanced out. I'm like, I am slightly tripping out here.

For anybody listening, if you've ever had a bookkeeping or an accounting class, I'm sure you rem. Remember learning which have, you know, debit or credit balances using T accounts. And you make the little T on your paper title the account, like, which side does it go on? And that it was just something you had to memorize basically because there was kind of. There was a rhyme and reason to it. But for some people, it's just like, it's easier to just memorize and take it as, you know, somebody else has already proven this theory. So don't question it, just do it.

Right? Yeah. Yeah. So we got some foundations of bookkeeping, and we kind of know a little bit about the why. So when do we get started in bookkeeping? Because I know for me and many other travel advisors, bookkeeping starts maybe a couple weeks before we want to submit our taxes. Every year.

Yes. So as a finance person and knowing the what word do I want to use, the stress that waiting an entire year puts on an individual business owner, my, you know, recommendation is that you take care of your bookkeeping every single month. It doesn't matter if you have five transactions or 500. It should be a monthly process and documented so that you know exactly what you're doing every single month. And as you go through it, it becomes easier and easier and quicker to complete and more comfortable to actually execute. But monthly is always my recommendation.

Okay, and when you say documenting processes, like, what exactly are. Are we talking about? Because I know at the time, the day that we were recording this, we talked about, like, some operations tracking or process documenting some operational processes. Like, the client comes in, I give them my contract, they sign the contract, they come back to me, I start researching things, send them an itinerary. We all, all those are part of documenting your operational process of booking a client. So what are, like, what are some of the things that we. We're not accountants, but at least as travel advisors until we can hire an accountant or a bookkeeper should be aware of.

So the main things is basically you're recording all of the transactions that have either come through your bank account, credit card statement, or any other financial accounts related to your business each month. So you record all the deposits that have come into your bank account, any checks you write, any automatic withdrawals out of your bank account. And then many of us probably don't write many checks anymore. Everything's, you know, going on a credit card or maybe being paid through PayPal or however they have it set up. But going through and recording all of those details and categorizing them into what I'll call the buckets. So is it advertising? Is it office supplies? Those types of things? So it's all accounted for. And the next step, which is where I think a lot of people probably miss, maybe don't know about, is reconciling all of those accounts. So you enter things into your system, and your system could be anything.

It could be a spreadsheet, it could be the paper ledgers like we talked about earlier, and it could be a QuickBooks type or any kind of accounting or bookkeeping system. But once you enter those transactions in, reconciling them simply means that you're verifying everything you entered is the same exact dollar amount that what's come through your accounts. So you're not missing anything. There's usually some things that get missed pretty commonly, but yeah, you would just want to reconcile those at the end of the month, then everything's complete and, you know, you can set it aside and go through it again the next month.

Okay. Two things that kind of came up from that is I feel like having a separate bank account makes this much easier so you're not having to sort through, like, personal expenses. How soon should someone get a business bank account?

So my opinion is as soon as you decide to start a business.

Okay.

That they should be separate. But in reality, that doesn't always happen. You know, some people may dabble for a little bit. It's kind of a hobby. They aren't quite sure. But even if you don't want to set up a business bank account, have a separate personal bank account, and it may be a separate personal credit card. Yes. So at least all of the transactions related to your business activity are in one place, not commingled with personal bills that you're paying each month.

It's a lot easier to keep track of them and find them than if it's all mixed together.

Okay, perfect. And then the second thing from there, reconciling. So I feel, I feel like I can do the bookkeeping and I feel like most travel advisors would be like, okay, yeah, I can go ahead, start recording expenses, income, itemizing where it's at. But I would want. And so my, my thought is how soon, like when should we start hiring some of this stuff out, like reconcil styling? Because I feel like that is going to be a more time consuming process than the actual recording of items. Am I correct in that?

It's actually not. It doesn't, it should not take very long to do the reconciliations at the end. So if you remember, you know, in the older days when so a lot of people do online banking now, but we used to receive, we didn't have access to our accounts information online. And you would be mailed a paper bank statement every month. And then you take your checkbook register, right? And on the bank, on the back of one of the pages on your paper bank statement is a checkbook reconciliation. So that's what we're talking about, just doing the reconciliation to make sure everything that's come through your bank account is reflected in your check register, which is part, you do have a check register electronically with your bookkeeping system. And then maybe you've written some checks and they're recorded in your checkbook, but they haven't cleared the bank yet. So that's really what the reconciliation is to make sure that we understand if there's any differences, what they are, because they'll eventually clear out.

But the same thing with your credit card. You know, you're entering all these numbers in and some businesses have a lot of transactions that go on a credit card every single month and you don't want to miss anything. And luckily in these days, most banks will give you the option to download your transactions in some type of a CSV file or some type of a spreadsheet that you know, if you're savvy and you know how things work, you can upload it into your system or you can copy and paste and it's minimal effort on your part instead of keying everything in by hand. But the gist of reconciling a credit card statement is to look at all the charges they're saying came through in total and is that the total you entered for the month into your system? So we're just making sure that everything balances okay.

Is there? Because it's sounding like this is a very hands on process. Is there a way to streamline any of this if you're not ready to hire somebody out.

Yeah. Just really leverage technology, because there is a lot of technology out there, and that doesn't mean that you have to use, you know, some fancy bookkeeping system. Really. Some of this can just be done in Excel.

Okay.

If you can familiarize yourself or even Google Sheets, some kind of a spreadsheet system that has a little bit of robustness to it, you can easily download some transactions and then copy the elements that you need or format that download so that you can just copy the whole thing. And then all you're doing is selecting the bucket that it goes in. And then we summarize from there.

Okay. Now, what are some. So I know, like, we've been talking a lot about what the importance is to do book bookkeeping, and specifically in regards to taxes, because we know they always come around every single year. They have to be done. But why? What are the reasons should we be bookkeeping in our business?

So, in my opinion, the biggest one is if you're really looking to grow your profit and not feel like you have to work more hours, sell more trips, you really need to understand your numbers. And the only way you can understand your numbers is to know what they are first.

Okay.

And then dive into them deeper and see where, you know, you can make some changes in the way you operate your business in order to grow your profit.

Okay, what are. What are some of these? Because, like, when I think about the ledger, I think, okay, we have the income expenses. So what. What exactly are we looking at? Is it just. I feel like it's almost like we can make better decisions knowing how many fees that we get paid or how many trips that we get. And if I'm making, I'm just throwing out a number, like $2,000 a month. But I really want to be making $3,000 a month. That's kind of like I can look back on.

On the ledger or the Excel sheet or the QuickBooks to see what's coming in via fees and then raise my fees from there.

You can raise your fees. You can change the types of trips that you book that would automatically warrant a higher fee, and from that, you'd almost inevitably be earning higher commission. You can monitor your expenses because this is the big one. Like, how many things do we sign up for? And especially things that go out monthly, quarterly, or even some of those annual ones that sneak in there and they're like, oh, I forgot I had that in the charge already. Credit card or was taken out of your bank account. So if you don't know your numbers and you don't know when to expect these things or what you even have, you, it's very difficult to keep track of it on a routine basis and stop it before it gets to that point again.

Yeah. Now on top of cause you just said quarterly. And I was like, oh, yeah. Because on top of like taxes happening around now, most organizations are also doing a quarterly review, kind of like correlating with that to see if they're on track with the sales that they said that they wanted to make with the year. So when we're thinking reviewing quarterly, what are the things that we're reviewing? And if we didn't hit our goal exactly for the first quarter, are there things that we should be doing differently for the next quarter or for the rest of the year? Ready to play bingo in your travel business? Did you even think you could play bingo in your travel business business? The monthly bingo board is more than just having fun while working your business. It is a tool to help you stay focused and hold you accountable while taking the necessary actions to move your business forward. You can even enter to win special rewards when you achieve a bingo for the month. Join our travel bingo community by visiting the link in the show notes.

We can't wait to cheer you on in success.

Yes. So. Well, the first thing is, you know, setting annual goals should be number one priority for any business. Like, how can you hit a goal if you don't know what the goal is and it doesn't have to be exact? It's a goal. It's like, it's a target. And most of the time, you know, we're not hitting exactly on our target. We could be a little under, we could be a little over. But if you don't have it, you don't know what to go for in the first place.

And then within your annual goals, having 90 day plans to me are very beneficial because it's kind of hard to see everything for an entire 12 months. And you're like, oh, I have time. It's 12 months, right? So I can, I can kind of relax a little. But then you get further into the year and you're like, oh, wait a minute, I'm way far away from that goal and I only have two months to make it up. So having that 90 day plan broken out so that, you know, this is what my goal is for this 90 days. And then that's when you do your quarterly review and then you can plan out the next 90 days. So the things you're Looking for. I mean, some of them are pretty straightforward.

You know, did I make the. The sales or the bookings that I anticipated or that I wanted to. Did I charge the fees for those that I was expecting? And even look at the commission. Even though you're not receiving the commission in that quarter, per se. But is it in line with what I want to receive for the year? And then the same thing with your expenses. You know, am I paying too much? Is this what I planned for my expenses? Or am I going to go way over and then find out that I don't have enough money to pay for it all when we get further into the year?

Mm. Yeah. Because one of the things that I was thinking operationally when you were mentioning that, too, is we can also review what types of trips that we're selling and if they align with what we want to be selling. Because maybe we're promoting a different type of trip and that's why it's selling more. And we need to focus, like, switch our marketing. It's very interesting now to kind of see how everything works together once you have the bigger picture mapped out.

Yes, it all comes full circle. So, you know, a lot of people, especially when they're newer and get started in. In the industry, their main focus is selling and marketing, but they don't have any process or system set up to help manage the money when it starts coming in. But how do you know what to sell and market if you don't have your goals set? And how do you know what goals to set if you don't understand your money? So this big circle, and everybody starts in a different place in that circle.

Right.

With a finance background, mine has always been the numbers first, at least to get started. But a lot of people, that's not where they tend to start, just because that's how things are taught in this industry.

Right, right. And I think it's a good point, like, where people are like, I just don't want to be selling cruises anymore. But that's all I'm getting. Well, what are you communicating to people about? Are you only commute? Well, that is why they know you as the cruise person. Which, I mean, for me, that's. That's what I want to be selling. So that's what people come to me about. So it.

It is. I think it's a little neat now. I'm like, geeking out over here. I'm like, that is so cool how you can take all this different data that you've. As long as you're making sure. That you're keeping track of it and how it works visionary wise. Especially when we're thinking like four phases of the travel business. My fourth phase is Ascend.

So once you've kind of like gone out of your growing pains and you have a sustainable, like, client base now, you're able to overlook and oversee all the operations of your business. And financials is one of the reasons why you've been able to look at that, because you have the data. It's like financials is data for me.

Yeah. And that's really what it is. But, you know, it's numbers. And a lot of people see individual numbers, not summarized numbers. And I think that's what muddies the water a lot because they don't know how to summarize it in a way that actually means something. But without having those numbers at all, you know, how are you going to reach your profit goals if you don't even understand what it takes to reach those profit goals?

Right, right, right. So I know you love helping us with finances, and you have something coming up very, very soon that I think everybody who is not financially savvy needs to be participating in. So can you please let us know a little bit more about your bookkeeping challenge? What's your official title?

Yeah, it's the travel advisors know your numbers challenge.

Okay.

So, yes, this is the lead in to just setting up your systems so that it's a routine and a process and understandable, all of those things to make it easy. Because we all know when something's not easy, we tend to keep pushing it aside and then we'll, you know, we'll work on the stuff that we know how to work on and then maybe come back to it later. Then it gets pushed aside again. And, you know, we love doing that. I mean, I'm guilty of it myself in other areas, but. So it's a three day challenge starting March 28th. And I do have a bonus day on here because we're going to dive into that thorn in your side. For pretty much all travel advisors, it's probably the number one question that I get asked is about the chart of accounts.

So we're doing a bonus day.

Yeah.

And for those who aren't familiar with the chart of accounts, it's basically the buckets that you put your money in for your income, your expenses, like all of those different categories that you see on a financial report. So that is the thorn. But we're starting with the money stories because everybody has stories and everybody has beliefs around all of this. And whether you realize it or not, most people don't realize it. That the reason most people aren't diving into this in their business is because they have a story behind it. And it could be, you know, as simple as I'm bad at math or numbers aren't my thing when that may be the case. But there's ways around that, so we're going to work through those. And then, you know, just look at the business in general and make sure what you have is legit and in compliance, because that is goal number one to have your system satisfy what is required for irs, state governments, local governments, all of those things.

But you need a process and a system to be able to do that and add more beyond just tax reporting. And then, of course, like I talked about the buckets breaking down those money buckets so you can use it to your advantage more easily.

Yes. No, I, I'm all in for that. Day one. I'm like, okay, let's get started. Because I know two of mine are. Money is hard and I need to have a job in order to make money are two things that I know I've been working on myself this past year.

Yes. And. But, you know, there's so many people out there that don't even realize you're working in your business. And of course, travel is sales, so. And it's direct sales that we put a lot of our money stories on our clients and our potential clients, and we don't even realize it. Yes. Yes.

I, I love that you said that because I, I just sent out an email to somebody and I remember posting, like, thinking, I'm. I feel like I know this person enough to know that cost is probably important factor. But I reworded how I sent the message and I'm like, if this is an important factor, instead of just downright leading with it, that, that's, that's another thing is that I'm trying to get rid of assumptions of what I think other people might be able to afford or whatnot. I don't want to pin them down on something. But that's something that runs rampant in our industry, too.

Yes, it does. And then because of that, we have a lot of advisors, and I used to be one of them that wonder, why can't I break through my money goals? Why am I. I feel like I'm constantly selling and booking trips and still not making the money that I want to make. And it wasn't until I really addressed those things that I became more aware and set up a process for me to figure out and know, like, when those pop up for me, how to kind of identify those pretty quickly.

Right.

And change those stories, you know, little by little. And it's made a huge difference.

Yeah, yeah. No, something else just popped up and I'm like, we could talk about this so, so long. Because, yeah, something else that has come up was you need to figure out what type of client you are for somebody else's business. Because if you're frustrated with the types of clients that you're getting, you're probably frustrated at the type of client that you are because you might be acting just like your frustrating clients are acting.

Yeah, there's a lot. And it's. It's funny because, you know, when you think about numbers and finances, it's a very logical type of thing. Right. Oh, my gosh. It's not that woo woo that most people think about, but really the magic happens when you can combine the two things together and make them work in unison and harmony. Because you can go so much further when you embrace both sides.

Yes. Yes. So how can people sign up for your challenge?

So I will send you a link to the website and the challenge again, it starts on March 28th. It's a free challenge and we'll put that out there. So, yeah, we'll go for 30 to 45 minutes each day with an introduction, the challenge post or item for the day, and then Q and a time, of course.

Nice. Awesome. Yeah, I'll make sure to go ahead and put that in the show notes. If people are wanting to stay connected with you before the challenge starts, where can they find you?

Yeah, so my website is with Stephanie cannon.com so all the major links will be on there. I have a couple of other freebies available currently, but the link for the challenge will be on there. And then I also have a Facebook group called the First Class Profit Lounge. So everybody is welcome to join that. The challenge will actually take place inside that group. So. So if you're not a member already, then you will want to be anyway.

Yep. Love it. Love it. Any other things that we should know before we head off, Stephanie?

So, you know, the. The one thing that I always like to leave people with, no matter where you are in your business, if you're just starting or you're a veteran like Rita and I are, it doesn't matter. But just start somewhere with your finances. Don't feel bad about it. Don't beat yourself up. It's just a product of what happens and how things are taught and presented in our industry. And maybe you're just not aware. And today's always a good time to start.

So take that first step.

I love that. I love ending. On that note, thank you, Stephanie, so much for being here. Thank you, listeners, for tuning in. Make sure go to the show notes, sign up for this challenge because we all could use it. Even if you think you're pretty good, I think brushing up, especially just on that money mindset, will be super, super helpful in any business at any stage. So stay tuned to next week's episode. But you guys have a wonderful week and we'll see you next week.

Bye. Thanks for joining me on the Strategic Travel Entrepreneur. Please subscribe and leave the show a rating on your favorite podcast platform. Oh, and don't forget to take a look at the show notes for important information and links. See you next week.