Jon Clayton:

How can knowing your numbers, transform your

Jon Clayton:

business and personal finances.

Jon Clayton:

I chat with Mamood Raza.

Jon Clayton:

All about it.

Jon Clayton:

In this episode of architecture business club, the weekly podcast for solo

Jon Clayton:

and small firm architecture practice owners, just like you who want to build

Jon Clayton:

a profitable future-proof architecture business that fits around their life.

Jon Clayton:

I'm the host John Clayton.

Jon Clayton:

And if you want a business in architecture that gives you more freedom,

Jon Clayton:

flexibility, and fulfillment that go to architecture, business club.com

Jon Clayton:

forward slash blueprint and download the architecture business blueprint.

Jon Clayton:

It's the step-by-step formula to freedom for architects, architectural

Jon Clayton:

technologists and architecture designers.

Jon Clayton:

And it's absolutely free as a gift from me.

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Now let's discuss money matters and getting to know your numbers.

Jon Clayton:

Mahmood Reza is a business finance fixer, tax advisor, and author of I Hate Numbers.

Jon Clayton:

He has helped thousands of sole traders, business owners, artists, creatives,

Jon Clayton:

and social enterprises have businesses, not hobbies, make money, save tax,

Jon Clayton:

improve their money mindsets, and reduce their financial stress and anxiety.

Jon Clayton:

Mahmood believes that once you understand what your numbers are, where they

Jon Clayton:

come from, what they mean, you can use them to make better decisions and

Jon Clayton:

ultimately make or keep more money.

Jon Clayton:

You can learn more and connect with Mahmood at ihatenumbers.

Jon Clayton:

co.

Jon Clayton:

uk.

Jon Clayton:

Mahmood, welcome to Architecture Business Club.

Mahmood Reza:

Thank you very much, John.

Mahmood Reza:

That was a beautiful introduction.

Mahmood Reza:

It made me go slightly misty eyed, but yeah, thank you for that.

Mahmood Reza:

Thank you for inviting me.

Jon Clayton:

Don't start crying.

Jon Clayton:

That wasn't, you know, the,

Mahmood Reza:

I'll do my best not to, I've got my Oscar speech ready, just in case.

Jon Clayton:

we'll save that for later if you've got time.

Jon Clayton:

Mahmood, um, I know, uh, outside of, of the work that you do

Jon Clayton:

you're a bit of an adrenaline junkie on the quiet, aren't you?

Jon Clayton:

You'd like to do a bit of scuba diving.

Jon Clayton:

You've done some of that in, uh, in your time, haven't you?

Mahmood Reza:

have done.

Mahmood Reza:

I've done some of that.

Mahmood Reza:

I've done some app saving.

Mahmood Reza:

I've done some various other activities.

Mahmood Reza:

I know you probably think very calm accountant, finance y person once

Mahmood Reza:

you're doing things like that, but yeah.

Jon Clayton:

It's not, as you say, it's not what you expect.

Jon Clayton:

It's the kind of typical.

Jon Clayton:

Accountant to do in the free time.

Jon Clayton:

So I love it.

Jon Clayton:

I love all that sort of stuff as well.

Jon Clayton:

Not that I get much chance to do it these days.

Jon Clayton:

But yeah, scuba diving and bungee jumping.

Jon Clayton:

Awesome fun.

Jon Clayton:

But we're not going to talk about that today.

Jon Clayton:

What we're actually here to talk about together is Well, it's the

Jon Clayton:

start of the new tax year when this episode is being published.

Jon Clayton:

So we're going to talk about money and the importance of

Jon Clayton:

getting to grips with our numbers.

Jon Clayton:

So why is it important that we get to grip with our numbers?

Mahmood Reza:

That's a great question.

Mahmood Reza:

I think fundamentally, John, uh, if we look at any business that goes in there,

Mahmood Reza:

whether it's a private business, a not for profit, a social enterprise, a charity.

Mahmood Reza:

Ultimately, in order to deliver your wire, Simon, our friend Simon would say.

Mahmood Reza:

If you don't have funds, maintaining your costs, providing a living for the

Mahmood Reza:

people who work with you, uh, find a living for yourself, then ultimately

Mahmood Reza:

your ability to serve and deliver impact is going to diminish and wave.

Mahmood Reza:

And therefore money is an important consideration.

Mahmood Reza:

It's not the only one, but it's absolutely critical.

Mahmood Reza:

It's like the fuel that goes into your car.

Mahmood Reza:

If you don't have the fuel, you can't drive your car.

Jon Clayton:

I totally agree with this.

Jon Clayton:

I've, I guess, sort of learned this the hard way that I have never.

Jon Clayton:

Never been motivated by money, but it's come to kind of bite me on

Jon Clayton:

the bottom over the years by not, by not getting to grips of it.

Jon Clayton:

So I'm, I'm fascinated about the, this topic and what we're discussing today.

Jon Clayton:

So I think it's going to be really helpful which I guess that sort

Jon Clayton:

of leads us on to thinking about.

Jon Clayton:

Money mindset.

Jon Clayton:

So, you know, how the way that you think about money, I've just

Jon Clayton:

mentioned, I've never, never really been motivated by money.

Jon Clayton:

So how can your mindset that you have about money, how can that affect

Jon Clayton:

your finances in your business?

Mahmood Reza:

What's a great question, John.

Mahmood Reza:

I think if I look at, um, if I, for example, focusing in that world

Mahmood Reza:

of business and that sort of big overarching business that Carrick

Mahmood Reza:

has a lot of players in there is your behavior and your attitude.

Mahmood Reza:

Mixed with your skills and abilities.

Mahmood Reza:

It's a thing that combines to give you that ability to do whatever you're doing.

Mahmood Reza:

And for me, you know, whether it's a family issue, background, cultural,

Mahmood Reza:

whether you've never worked before, whether you've come from money,

Mahmood Reza:

whether you've not come from money.

Mahmood Reza:

I'm I, I myself have come from a family of nine, got a great deal of money

Mahmood Reza:

on the table and all the rest of it.

Mahmood Reza:

That influences how you interact with people that influences.

Mahmood Reza:

Invoicing clients, invoices, that money being in a consideration there as well.

Mahmood Reza:

And I think if you don't win that battle that goes on between

Mahmood Reza:

your ears in business, uh, then I think you find it very, very

Mahmood Reza:

difficult to maintain a business.

Mahmood Reza:

I would imagine it's the same, you know, in your world, John, that you could

Mahmood Reza:

have brilliant skills and really be academically minded, but if you don't

Mahmood Reza:

have the right stuff in terms of how you interact with people, how you interact

Mahmood Reza:

with clients, your right attitude there, basically, you're going to be a useless.

Mahmood Reza:

Individual in that post.

Jon Clayton:

Absolutely.

Jon Clayton:

Yeah, yeah, I totally agree with that.

Jon Clayton:

So it's interesting actually that you mentioned about how things like your, your

Jon Clayton:

background, your upbringing, those things can influence how we think about money.

Mahmood Reza:

Oh, yeah, very much so.

Mahmood Reza:

And I think it also about wishing to be a marriage guidance counselor.

Mahmood Reza:

It also happens in when you've got businesses where you've got husband

Mahmood Reza:

and wife working together, friends working together and all the rest of it.

Mahmood Reza:

People in the UK, I think, still generally speaking, Uh, have a

Mahmood Reza:

very focused and myopic view about how they should discuss money.

Mahmood Reza:

Talk about it for something that's a very grubby word.

Mahmood Reza:

Some people react against their past.

Mahmood Reza:

So where they may have come from a very impoverished background

Mahmood Reza:

or money wasn't a particularly, uh, something that was plentiful.

Mahmood Reza:

That influences how they react in terms of conserving money, not necessarily

Mahmood Reza:

investing in their business, being very cautious in terms of how they

Mahmood Reza:

invest their time and money and energy.

Mahmood Reza:

Some people go the other way around and they say, look, I had a very, you

Mahmood Reza:

know, my background was such, uh, that I'm actually just going to be reckless.

Mahmood Reza:

Some people have left a job that's very well paid.

Mahmood Reza:

They go into the world of business and expect that same replica because

Mahmood Reza:

they don't really discuss it.

Mahmood Reza:

And I don't really talk about it with their friends.

Mahmood Reza:

Their colleagues, people in their business and all the rest of it.

Mahmood Reza:

It becomes a thing they have to figure out in their own heads,

Mahmood Reza:

which is not really probably the best conversation space to have.

Jon Clayton:

Yeah, I think it can be something that's quite a taboo subject.

Jon Clayton:

For a lot of people, and it really shouldn't be, but it is, um, it's

Jon Clayton:

something that I, in particular, noticed in the world of architecture, particularly

Jon Clayton:

when it comes to how transparent practices are about what they charge

Jon Clayton:

and why they charge what they charge.

Jon Clayton:

And, It can be very difficult to find out, you know, particularly thinking about

Jon Clayton:

this from a consumer's point of view.

Jon Clayton:

If you're looking to find an architect or an architectural practice to

Jon Clayton:

work with, it's, it's real cloak and dagger when it comes to the numbers.

Jon Clayton:

So it's not just within the business themselves.

Jon Clayton:

It's also how they talk about numbers with their clients.

Jon Clayton:

You know, it's a real

Jon Clayton:

mystery.

Mahmood Reza:

agree.

Mahmood Reza:

I don't know if you find it in your own space that, uh, that actually

Mahmood Reza:

you can sometimes raise a barrier.

Mahmood Reza:

It can be an inhibitor.

Mahmood Reza:

to actually clients interacting with you because I think my own personal

Mahmood Reza:

perception, if I think architects, okay, I also actually think it's going to

Mahmood Reza:

be an extremely expensive investment.

Mahmood Reza:

I think it's not, you know, I won't necessarily have the funds, even though

Mahmood Reza:

I don't actually know what the value and the cost of an architect services and what

Mahmood Reza:

they do, and if you're not going to be comfortable talking about money, I think

Mahmood Reza:

with people, especially in a business context, it's going to be difficult.

Mahmood Reza:

My personal view is when I interact with a new person, client and all

Mahmood Reza:

the rest of that certainly don't be driven by money in its own right.

Mahmood Reza:

But I think if you're not comfortable having a conversation about money

Mahmood Reza:

with prospective clients, with your fellow partners, with investors at the

Mahmood Reza:

outset, that doesn't bode very well when you do start generating value.

Jon Clayton:

Absolutely.

Jon Clayton:

Yeah.

Jon Clayton:

It's going to be, uh, it's going to be difficult to, uh, to run your business

Jon Clayton:

if you not willing to talk about it.

Jon Clayton:

Yeah.

Jon Clayton:

So Mahmood, you, you came up with a concept related to money and

Jon Clayton:

finances planet do it profit.

Jon Clayton:

Can you tell me about that and just explain what that's all about.

Mahmood Reza:

Absolutely.

Mahmood Reza:

So I think there's two or three things that come to play here.

Mahmood Reza:

I've always been a big a believer in what I call planning, not, not a plan, not

Mahmood Reza:

a document, not a straight jacket that says, this is what I said I was gonna do.

Mahmood Reza:

Therefore, that's it.

Mahmood Reza:

I mustn't do anything outside of that.

Mahmood Reza:

And it's going to be a fixed rigid because I think the whole idea about

Mahmood Reza:

a plan, as soon as you say, this is my plan of action for the next six

Mahmood Reza:

months, 12 months is out of the moment.

Mahmood Reza:

You've signed it off in your own mind.

Mahmood Reza:

So for me, unless you have some perception, what's going on through the

Mahmood Reza:

windscreen of your business going forward.

Mahmood Reza:

Okay.

Mahmood Reza:

It's very difficult to know what you've got to do in

Mahmood Reza:

order to get to that end goal.

Mahmood Reza:

So for me, it's always been, what is your end objective?

Mahmood Reza:

Your end destination?

Mahmood Reza:

What is the route?

Mahmood Reza:

What is the thing you're actually going to be doing to get you that route?

Mahmood Reza:

And I'll have to take give some credit also to a lady called Joe Watson, who

Mahmood Reza:

edited my book for me, my copy editor, and in a conversation with her, we came

Mahmood Reza:

up with that phrase planet doing profit.

Mahmood Reza:

And for me, it encapsulates exactly what a business is going to do.

Mahmood Reza:

In order to actually get to that, you know, that end destination

Mahmood Reza:

that you will live on if you want for want of a better term,

Jon Clayton:

Got it.

Jon Clayton:

Got it.

Jon Clayton:

So the planet bit is the, obviously.

Jon Clayton:

The planning stage, kind of having some foresight into where you're

Jon Clayton:

heading and what the destination is,

Mahmood Reza:

correct?

Jon Clayton:

the do it bit is presumed that's the implementation of the plan,

Mahmood Reza:

I mean, what I'd probably add to that, John, is the

Mahmood Reza:

planet for me, as you're right, is about destination first, story.

Mahmood Reza:

What's the story that you present to yourself, the activity?

Mahmood Reza:

Think about things like some people might, for example, be very, uh, what

Mahmood Reza:

I would say, very cautious about, say, I want to get to this stage.

Mahmood Reza:

And some people might be completely reckless.

Mahmood Reza:

It says.

Mahmood Reza:

For example, you know, I wish to make a million pounds, for example, but if

Mahmood Reza:

you're starting from a base of zero and you're thinking to yourself, it'd

Mahmood Reza:

be similar to somebody says, you know, I want to appear at the Albert Hall.

Mahmood Reza:

and perform a concert.

Mahmood Reza:

Now, if you're like me, you probably wouldn't be let loose because my voice

Mahmood Reza:

would probably drive dogs insane.

Mahmood Reza:

However, if I'm actually a professional songster or I've actually got some

Mahmood Reza:

experience there, the aspiration of the alcohol may not be that unrealistic.

Mahmood Reza:

So it's about an objective.

Mahmood Reza:

What's your goals?

Mahmood Reza:

What's your ambitions?

Mahmood Reza:

What's your mindset saying?

Mahmood Reza:

And what is your behavior saying there as well?

Mahmood Reza:

The doing is the actual implementation.

Mahmood Reza:

And it's about the mini milestones that you set yourself

Mahmood Reza:

as you go along that journey.

Mahmood Reza:

And if we think about anybody who's at the top of their relative game, singer,

Mahmood Reza:

performer and all rest of that, they think to themselves, what do I need to

Mahmood Reza:

do to actually be able to get to that where I've actually set myself out to be?

Mahmood Reza:

So the doing it is a combination of that, how we avoid procrastination,

Mahmood Reza:

how we avoid things like imposter syndrome, how we actually become more

Mahmood Reza:

confident in ourselves, the actual investing the money, investing the

Mahmood Reza:

time, the energy and the profit.

Mahmood Reza:

It's the end objective, you know, whatever that figure or that, you

Mahmood Reza:

know, your Nirvana looks like to you is the is the result of all those

Mahmood Reza:

and it's not necessarily a linear.

Mahmood Reza:

You know, but for me, those are three key segments.

Jon Clayton:

Could we talk a little bit more about profit?

Mahmood Reza:

Absolutely.

Jon Clayton:

Are there any guidelines or yardsticks that small business owners

Jon Clayton:

can, can use when it comes to profit, because this is a question that has

Jon Clayton:

come up within some of the communities that I'm in with people in architecture.

Jon Clayton:

What is reasonable to expect or to aim for maybe as a percentage of turnover.

Jon Clayton:

Have you got any thoughts on that from your experience

Jon Clayton:

working with other companies?

Mahmood Reza:

Yeah, I have.

Mahmood Reza:

And I would say it's a, it's a classic finance person's response

Mahmood Reza:

by their job to say, it depends.

Mahmood Reza:

But so here's, here's what I would say, depending, I think you as the business

Mahmood Reza:

owner, whether you're an individual, whether you're a part of a partnership

Mahmood Reza:

or you're a big conglomerate here, you've got to first of all decide, okay, On

Mahmood Reza:

that bit that I get to at the end, you know, in terms of where I want to achieve

Mahmood Reza:

there as well, I need to make sure that I've got enough funds to take me through

Mahmood Reza:

to cover my cost, give myself a half decent living and that level of profit,

Mahmood Reza:

I would say as a startup, I would aim for to getting to a break even situation

Mahmood Reza:

probably within a couple of years.

Mahmood Reza:

If you do it much quicker than that, that's fantastic.

Mahmood Reza:

But typically a break even situation for year one and year

Mahmood Reza:

two, where you've actually managed to reward yourself to some extent.

Mahmood Reza:

I think it's a great achievement.

Mahmood Reza:

Real value and profit actually comes from most businesses after

Mahmood Reza:

about five years, by the way.

Mahmood Reza:

And beyond the five years, could you sustain people know who you are, they've

Mahmood Reza:

engaged with you and all the rest of it, then that's where you're going

Mahmood Reza:

to make some excessive profits there.

Mahmood Reza:

If you're talking about what should that figure be, it varies

Mahmood Reza:

so much from sector to sector.

Mahmood Reza:

So if you're a sole trader, so proprietary in your world.

Mahmood Reza:

It may be that your target profit is such that you can retain maybe a

Mahmood Reza:

couple of months, three months worth of ongoing costs, and you managed

Mahmood Reza:

to give yourself a salary or reward that's commensurate with a more than a

Mahmood Reza:

living wage as far as that's concerned.

Mahmood Reza:

If you've got obviously extra financial pressures because of home,

Mahmood Reza:

that might be a different landscape.

Mahmood Reza:

If you're working in the retail sector, you know, by benchmarking

Mahmood Reza:

other companies, what that can be.

Mahmood Reza:

So really for me, I know it's a bit of a long answer.

Mahmood Reza:

It's shaggy dog type story here.

Mahmood Reza:

It's very much depends on the nature of the business you are and whereabouts

Mahmood Reza:

you are in your business cycle.

Jon Clayton:

Got it.

Jon Clayton:

Got it.

Jon Clayton:

Yeah, that makes sense.

Jon Clayton:

So for thinking of the listeners of the show who are going to be working in

Jon Clayton:

architecture, small business owners, many of them are going to be the sole, sole

Jon Clayton:

practitioners, so sole traders, or maybe it's a small business with, you know,

Jon Clayton:

two or three staff, something like that.

Jon Clayton:

Yeah.

Jon Clayton:

So for those people, do you have any further thoughts on any sort

Jon Clayton:

of typical margins for those

Jon Clayton:

people in the audience?

Jon Clayton:

Remember.

Jon Clayton:

Don't forget to download the architecture business, blueprint the

Jon Clayton:

step by step formula to freedom for architects, architecture, technologists,

Jon Clayton:

and architecture designers.

Jon Clayton:

You can grab the blueprint without any charge@architecturebusinessclub.com

Jon Clayton:

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Jon Clayton:

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Jon Clayton:

Now, back to the show.

Mahmood Reza:

That's an interesting point.

Mahmood Reza:

I would probably say where I would start from.

Mahmood Reza:

If you want to get some sort of a, If you look at that typical practitioner

Mahmood Reza:

that's got two or three members of staff, I would probably say, in terms

Mahmood Reza:

of service margin, I'd probably be looking for what they call a net margin.

Mahmood Reza:

So after you've paid all your own costs, reward yourself.

Mahmood Reza:

If you can aim for about 10 15%, that would be a good

Mahmood Reza:

benchmark figure to begin with.

Mahmood Reza:

That gives you enough funds to leave in the business, gives you

Mahmood Reza:

enough reward on top of that.

Mahmood Reza:

Obviously, you know, I would imagine all practices, John, are going to differ.

Mahmood Reza:

Are they in terms of the client base they deal with?

Mahmood Reza:

So a high street practice might be different for somebody working from home.

Mahmood Reza:

Somebody who's working with a certain target section in terms

Mahmood Reza:

of wealth they've got might be earning a slightly different figure.

Mahmood Reza:

As long as you've got enough to cover your costs.

Mahmood Reza:

Pay yourself what you think is a decent level of salary.

Mahmood Reza:

Okay.

Mahmood Reza:

And have, you know, three months worth of overheads costs left over and your

Mahmood Reza:

lifestyle is as you want it to be.

Mahmood Reza:

That to me is probably a good measure of, you know, a first

Mahmood Reza:

initial target to go for.

Jon Clayton:

I think that's a good idea because I think sometimes we

Jon Clayton:

can get a little bit hung up on like what other people are doing and

Jon Clayton:

how other businesses are operating.

Jon Clayton:

And the truth is that particularly if you're a business of one.

Jon Clayton:

Like the way that you set things up in terms of your numbers and your

Jon Clayton:

targets is very much related to you and your, the lifestyle that you've

Jon Clayton:

set out that you want to achieve.

Jon Clayton:

And it's not necessarily going to be aligned with what the practice down the

Jon Clayton:

road is doing in terms of their numbers.

Jon Clayton:

So I guess it's sort of taking it at the, an individual approach to it.

Jon Clayton:

Yeah, that's, that's really helpful.

Jon Clayton:

Thanks for that, Manita.

Mahmood Reza:

As you were saying that, John, I think there's one

Mahmood Reza:

more thing I would factor in.

Mahmood Reza:

If I go right back to the start, you know, uh, I mean, for example, I would

Mahmood Reza:

imagine for yourself, you could have, if you wanted to, you know, if you like,

Mahmood Reza:

it's actually said, you know what, I'm going to work for another practice.

Mahmood Reza:

I'm not going to bother with this high risk rollercoaster world of

Mahmood Reza:

self employment work for myself.

Mahmood Reza:

And if people make that decision to work for themselves by accident or

Mahmood Reza:

design, what you've gotta factor is there's elements they say that they

Mahmood Reza:

want from that self-employed life.

Mahmood Reza:

So freedom, control, the flexibility, the ability to say

Mahmood Reza:

to somebody, I don't actually like you, I don't wanna work with you.

Mahmood Reza:

Or actually say, I'm gonna go down this partake weeks off the scuba diving.

Mahmood Reza:

So you've gotta factor that in, I think as a social return on top of the

Mahmood Reza:

financial return that you're making.

Jon Clayton:

That's an interesting point because the truth is that in my

Jon Clayton:

experience, that most of us, when we start our own business or become a, an

Jon Clayton:

entrepreneur or sole, sole trader it's not necessarily all about the money.

Jon Clayton:

It often, it isn't.

Jon Clayton:

Anything to do with the money, you know, we obviously we need the money

Jon Clayton:

to, to get by, but the reasons for leaving a potentially secure job at

Jon Clayton:

another architecture practice and going out on your own is usually because

Jon Clayton:

you want more freedom, flexibility and fulfillment in what you do, and not

Jon Clayton:

necessarily about wanting more money.

Jon Clayton:

But then that's comes back to something we mentioned earlier about Having

Jon Clayton:

said all that, that if we neglect to get to grips with those numbers,

Jon Clayton:

even if we're not motivated by it, it can cause problems down the line.

Jon Clayton:

So I think that's the kind of caveat that I would say on this, that, you know, even

Jon Clayton:

if you're not motivated by making loads of money, that this is so important that

Jon Clayton:

we do get to grips with our numbers.

Jon Clayton:

Absolutely critical.

Mahmood Reza:

Yeah, I think you are absolutely right.

Mahmood Reza:

Now here, here's another way, another spin on that.

Mahmood Reza:

I would say if I was starting over again, I've been doing this for over

Mahmood Reza:

29 years now is to say Your first target is going to be to say, what

Mahmood Reza:

is it you need in your household?

Mahmood Reza:

Okay.

Mahmood Reza:

So actually keep your head above water to actually not starting to

Mahmood Reza:

get stressed out because you haven't got enough money to pay bills.

Mahmood Reza:

That's your first level of target.

Mahmood Reza:

And if you can generate enough profit that goes to ideally cover that.

Mahmood Reza:

So you can actually cover, keep your head self a float, maybe

Mahmood Reza:

a little bit on top of that.

Mahmood Reza:

That is your first profit target.

Mahmood Reza:

Then you could move out because you take the pressure off.

Mahmood Reza:

You take the stress off thinking when we're going to get the money from this

Mahmood Reza:

month to go towards the mortgage, the bills, kids, and all the rest of it.

Mahmood Reza:

Once you've moved past that, you then find that actually

Mahmood Reza:

you're just topping up the tank.

Mahmood Reza:

And that means instead of taking a couple of weeks off in a year, You could take

Mahmood Reza:

three or four weeks off in the year.

Mahmood Reza:

So I would say if you want a profit margin test, it should be such

Mahmood Reza:

that actually doesn't, you're not having undue financial pressures

Mahmood Reza:

at home and in your personal life.

Jon Clayton:

Got it.

Jon Clayton:

Sage advice.

Jon Clayton:

Let's talk about record keeping.

Jon Clayton:

I mean, what is that and why is it important keeping those records?

Jon Clayton:

very

Mahmood Reza:

companies, our charity commission, if it's relevant, that's fine.

Mahmood Reza:

That you've got to do that.

Mahmood Reza:

If you don't.

Mahmood Reza:

You could at worst case scenario be eating prison food and keeping company with

Mahmood Reza:

people you don't necessarily want to.

Mahmood Reza:

That's a really extreme situation.

Mahmood Reza:

So it's not the compliance side.

Mahmood Reza:

It's not about doing the things.

Mahmood Reza:

It's also by the way, a criminal offense if you don't maintain records, but

Mahmood Reza:

it's, it's what's happening in between.

Mahmood Reza:

So if you imagine at the end of the year, somebody says, right, here's my books.

Mahmood Reza:

I have to do that myself, take this to my accountant to get

Mahmood Reza:

all those tax returns done.

Mahmood Reza:

But if you don't have that information that runs throughout the year to say

Mahmood Reza:

what are things costing me, how much profit am I making or how much money

Mahmood Reza:

am I losing, which clients give me best value, which clients are losing

Mahmood Reza:

me money and all I say, if you can't get access to that, then you're going

Mahmood Reza:

to find life really difficult here.

Mahmood Reza:

And that's where the records come.

Mahmood Reza:

It says, keep a track on what you're spending.

Mahmood Reza:

Who your customers are chasing up money from people who owe you money.

Mahmood Reza:

Nowadays, I mean, we can talk about formats later on, but that's what I

Mahmood Reza:

mean by record keeping because your brain is a useless finding cabinet.

Jon Clayton:

So what we're trying to avoid is not turning up at the accountant's

Jon Clayton:

doorstep at the end of the year with a big carrier bag full of receipts

Jon Clayton:

and disorganized mess saying, there you go, you sort the accounts out.

Jon Clayton:

So ideally, essentially this is like bookkeeping, isn't it?

Jon Clayton:

We're keeping track of the ins and outs of, uh, the money going in and out of our

Jon Clayton:

business on a, you know, weekly basis.

Mahmood Reza:

hundred percent.

Mahmood Reza:

And what I'm probably saying, the risk of probably getting shoved out.

Mahmood Reza:

If people are listening to the finance people.

Mahmood Reza:

Actually keeping the records just to keep your counselors happy.

Mahmood Reza:

It should not be your primary aim.

Mahmood Reza:

That's a consequence of keeping good records.

Mahmood Reza:

It's about, I mean, look, John, typically you, we've known each other,

Mahmood Reza:

uh, for a while, uh, I know in your practice, as you're evolving and you're

Mahmood Reza:

pivoting and doing different things.

Mahmood Reza:

You'll want information to help you inform the decision and if you don't have that

Mahmood Reza:

financial information that goes with other information here Your decision

Mahmood Reza:

making is going to be quite narrow quite lopsided So for me, it's about knowing

Mahmood Reza:

what goes on So if you're not somebody who likes record keeping I would say as

Mahmood Reza:

a bare minimum Even if you know what your bank account is looking like what who

Mahmood Reza:

your customers are that owe you money having that access I In relative terms

Mahmood Reza:

at your fingertips is such a, what I call an eye opener and it's so illuminating.

Mahmood Reza:

It's so powerful.

Jon Clayton:

One of the best investments that I've made over

Jon Clayton:

the years is in a cloud based.

Jon Clayton:

Bookkeeping software the particular one that I use is called free agent.

Jon Clayton:

There's all sorts out there.

Jon Clayton:

Zero, that's another popular one.

Jon Clayton:

Uh, QuickBooks.

Jon Clayton:

So there's, we could go on and on, but essentially that, that has made

Jon Clayton:

it so much easier for me to just keep tabs on the finances and use it for

Jon Clayton:

invoicing, for consolidating, explaining transactions in and out of bank accounts.

Jon Clayton:

My.

Jon Clayton:

Accountant has access to the software.

Jon Clayton:

So when it comes time to sort out the company accounts, it's, it just

Jon Clayton:

makes everything so much simpler.

Jon Clayton:

And I'm so glad that I took the advice of the advisor.

Jon Clayton:

It was a business advisor at my local bank that had said, when I

Jon Clayton:

was setting up, I really strongly recommend that you, you, you.

Jon Clayton:

Pay this subscription and get this software and start doing

Jon Clayton:

this from the very beginning.

Jon Clayton:

And I'm, I'm so glad that I did.

Jon Clayton:

It's one of the few, one of the few things that I did right from the very beginning.

Mahmood Reza:

You've done lots of things, right?

Mahmood Reza:

But listen, you know, that advice is exactly as I would say as well as spot

Mahmood Reza:

on is don't look at something as a cost.

Mahmood Reza:

And that's another mindset issue.

Mahmood Reza:

Look, it is a good investment about the amount of time.

Mahmood Reza:

And the access to knowing what's going on.

Mahmood Reza:

It just gives people peace of mind.

Mahmood Reza:

And I think if you're going to do nothing else, invest in accounting.

Mahmood Reza:

So it's not that expensive these days either.

Mahmood Reza:

But it's a worthwhile, you'll get your return back quite easily.

Jon Clayton:

Absolutely.

Jon Clayton:

And actually there's some of the banks now that offer it for free.

Jon Clayton:

They will offer a package for free.

Jon Clayton:

So it's worth checking out what offers are available from the banks.

Jon Clayton:

What, what about tax Mammut?

Jon Clayton:

Could we touch upon that briefly?

Jon Clayton:

Okay.

Mahmood Reza:

Yeah, we can actually.

Mahmood Reza:

I would say there's two things.

Mahmood Reza:

There's the actual what taxes impact on an individual.

Mahmood Reza:

And I think there's also what I call the psychological thought

Mahmood Reza:

process behind tax as well.

Mahmood Reza:

So typically, most businesses tax will affect them in

Mahmood Reza:

probably one of three key areas.

Mahmood Reza:

And the fact that as an individual, you might have to

Mahmood Reza:

pay tax because of your business.

Mahmood Reza:

To me is actually a good sign.

Mahmood Reza:

It means you're earning enough money who might not feel like it that the

Mahmood Reza:

tax plan wants to slice off you.

Mahmood Reza:

Number two the in theory, the simple tax like VAT Again, most businesses

Mahmood Reza:

at the startup phase, unless they choose to voluntarily register

Mahmood Reza:

for V-A-T-V-A-T won't affect them.

Mahmood Reza:

They'll be just, they'll ch they'll pay it to their suppliers and all you

Mahmood Reza:

are is a tax collector as far as hs.

Mahmood Reza:

CC is concerned when you've got to a certain level and you've gotta

Mahmood Reza:

do what they call register of that.

Mahmood Reza:

You'll basically be a tax collector.

Mahmood Reza:

Unpaid, no holiday, no benefits.

Mahmood Reza:

You'll be working on behalf of the government collecting

Mahmood Reza:

it and paying it over to them.

Mahmood Reza:

So the other two, the other main areas are, is where an individual has to

Mahmood Reza:

pay tax and where their organization or their company has to pay tax,

Mahmood Reza:

but you cannot get away from it.

Mahmood Reza:

From the moment we're born to the moment we die, everybody at

Mahmood Reza:

some point will be paying tax.

Jon Clayton:

Deaf and Taxes, the only two certainties in life, that's what they

Jon Clayton:

say, isn't it?

Mahmood Reza:

And it's the things that freak us out the most as well.

Mahmood Reza:

Even though we know they're there, they're probably the ones

Mahmood Reza:

that cause us a lot of stress.

Jon Clayton:

Yeah, um, something else that I did when I started out

Jon Clayton:

was The, the software I use gave me an approximate estimate of what

Jon Clayton:

my tax liability was likely to be.

Jon Clayton:

And I had a savings account, but I used to set aside some money, you know, as

Jon Clayton:

the money came in, I thought, Oh, okay.

Jon Clayton:

That tax liability numbers going up.

Jon Clayton:

And it wasn't.

Jon Clayton:

Perfect at the end of the year, but it was not far off and it was just an easy way of

Jon Clayton:

making sure that the money was there when it was time to come and pay the tax bill.

Mahmood Reza:

Uh, that's a good discipline.

Mahmood Reza:

A great discipline.

Mahmood Reza:

I mean that approach, okay.

Mahmood Reza:

If you do it either through software, what we normally advise

Mahmood Reza:

clients to say, look, if you invoice a client for a hundred quid.

Mahmood Reza:

X percentage of that so much in a pound to take it out of the system,

Mahmood Reza:

put it away in a deposit account.

Mahmood Reza:

You're going to earn a bit of interest on that.

Mahmood Reza:

So you might even get a drink out of the tax people the end of the year.

Mahmood Reza:

But when you're looking at your bank statement, you know that more likely

Mahmood Reza:

belongs to you, not to somebody else.

Mahmood Reza:

And I think it doesn't present false optimism in terms of put that money aside.

Mahmood Reza:

It's all saved up.

Mahmood Reza:

And therefore, when it comes to that time to pay the bill, you've really got the

Mahmood Reza:

money there, you know, bingo, because when you work for somebody, you're having

Mahmood Reza:

that money taken off you each week, each month, when you're working for

Mahmood Reza:

yourself, you are your tax collector.

Jon Clayton:

yeah, it does require a little bit of discipline.

Jon Clayton:

Mahmood, that's been absolutely fantastic, really informative.

Jon Clayton:

So thanks for joining us today, but what would be the main thing

Jon Clayton:

you, you want people to take away from this conversation?

Mahmood Reza:

Okay.

Mahmood Reza:

I would say probably three things.

Mahmood Reza:

If I'm allowed three things.

Mahmood Reza:

Obviously my strapline plan it to a profit, but I actually have an idea of

Mahmood Reza:

what for you, not anybody else, what for you represents your end point,

Mahmood Reza:

your destination within 12 months, two years, three years time, and then figure

Mahmood Reza:

out the journey you've got to make.

Mahmood Reza:

What does it mean in activity?

Mahmood Reza:

And then translate it into a financial plan.

Mahmood Reza:

Number two, don't be scared.

Mahmood Reza:

Okay, that you don't know things.

Mahmood Reza:

Okay.

Mahmood Reza:

You know more about financially give yourself the credit ball.

Mahmood Reza:

Uh, so don't be hijacked by language.

Mahmood Reza:

Uh, and number three, enjoy it.

Mahmood Reza:

Money will come if you do things well, but don't set unrealistic

Mahmood Reza:

expectations for yourself there as well.

Mahmood Reza:

And I just think you've got to be comfortable and confident in what you do.

Mahmood Reza:

I have lost count amount of mess ups I've made in my business

Mahmood Reza:

life from the very beginning.

Mahmood Reza:

Even, you know, in the last few years, I've made decisions that

Mahmood Reza:

have cost me lots of money.

Mahmood Reza:

I've worked with people that have cost me lots of money.

Mahmood Reza:

So you've got to have a real strength of sense of resilience and

Mahmood Reza:

strength and just enjoy the ride.

Jon Clayton:

That's great advice.

Jon Clayton:

Thanks Mahmood.

Jon Clayton:

Was there anything else you wanted to add that we haven't already covered?

Mahmood Reza:

No funds.

Mahmood Reza:

That's very kind of you to give the website address.

Mahmood Reza:

Obviously, I will plug my book, I Hate Numbers, which is not

Mahmood Reza:

written for accountants, but they would be pleased to know.

Mahmood Reza:

Obviously, I want to appear on that Richard and Judy show one morning to

Mahmood Reza:

say, tell us about your bestseller book.

Mahmood Reza:

But no, if anyone wants to check out, we've got loads of resources.

Mahmood Reza:

We've got a YouTube channel.

Mahmood Reza:

I hate numbers and a podcast and a weekly vlog.

Mahmood Reza:

They're all there.

Mahmood Reza:

We're all accessible.

Mahmood Reza:

But if you don't know, speak to your advisor, speak to your accountant.

Mahmood Reza:

And just as I said, uh, I think that's all I know.

Mahmood Reza:

Thank you very much again, John, for inviting me onto your show.

Jon Clayton:

You're very welcome.

Jon Clayton:

I'll make sure those links go in the show notes so people

Jon Clayton:

can access those resources.

Jon Clayton:

Mahmood, I've got one very quick final question.

Jon Clayton:

It's nothing to do with numbers.

Jon Clayton:

I love to travel and discover new places and I think architecture is about place.

Jon Clayton:

So could you tell me one of your favorite places and what you love about it?

Jon Clayton:

It could be near or far.

Mahmood Reza:

Okay.

Mahmood Reza:

I'm going to say Barbados, actually, but not actually for the beaches in

Mahmood Reza:

the north of the island in Barbados.

Mahmood Reza:

Barbados is a lovely island.

Mahmood Reza:

I've been there quite a number of times with my wife.

Mahmood Reza:

There's a north part of the island called Bathsheba, and it faces

Mahmood Reza:

on, my geography is terrible.

Mahmood Reza:

I think it's the Atlantic it faces onto, but it's very rough.

Mahmood Reza:

Very ready, but very fascinating.

Mahmood Reza:

You know, sometimes when you look at fires, for example, they can entrench

Mahmood Reza:

you and you just look at them.

Mahmood Reza:

You've got the ocean crashing against the rocks and all the rest of it.

Mahmood Reza:

So it's got an element of stillness and beauty.

Mahmood Reza:

And you just look at it and you think, do you know what?

Mahmood Reza:

You're just a mere pimple on the backside when you look at

Mahmood Reza:

mother nature and it's raw.

Mahmood Reza:

So in the context of the beautiful island, that's a part of the world

Mahmood Reza:

that I find particularly tranquil, uh, and particularly fascinating as well.

Jon Clayton:

Oh, it's an awesome place.

Jon Clayton:

I was fortunate enough to visit many years ago just for a short holiday with

Jon Clayton:

my wife and we absolutely loved it.

Jon Clayton:

And if you go back, Mahmood, um, Carlisle Bay, recall was

Jon Clayton:

a great spot for scuba diving.

Jon Clayton:

They had about five, five different wrecks that was just not far off the beach.

Jon Clayton:

So, um, put that on your to do list next time you go.

Mahmood Reza:

I will do John.

Mahmood Reza:

Listen, thanks again.

Jon Clayton:

All right.

Jon Clayton:

Thanks Mahmood.

Mahmood Reza:

Take care.

Mahmood Reza:

Bye.

Jon Clayton:

Next time I chat with architect Syrah.

Jon Clayton:

Kolata about how you can craft a location, independent architecture business.

Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

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Jon Clayton:

Running your architecture business.

Jon Clayton:

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Jon Clayton:

This is architecture business club.