In this episode, I’m digging deep into a case study of a recent Cash Flow Intensive client. This luxury spa business was hitting high six-figures in revenue, but they were not very profitable. The owner has goals of opening a second location and stepping back from the day-to-day to spend more time with her kids (a lot of us can relate!), so we took steps to untangle their financials and get clear on their numbers, so we could set measurable goals that will majorly increase their profitability.
In this episode, you’ll learn:
Why it’s important to have good financial reports
Two important questions that I ask my clients to get clear on reporting
How I reorganized this client’s reports in order to help them quickly see if they were on or off track with their goals
How to categorize your sales into buckets to make needle-moving decisions in your business
Why you should have a financial scorecard and what KPIs you might include
The difference between a bookkeeper and a CFO (not knowing this could be costing you money!)
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Key takeaways from the episode:
Having good financial reporting in place is key for maximizing your profit by knowing your numbers. It should be fast and easy for you to see how much money is coming in, and how much is going out each month.
It is so beneficial to categorize your sales into buckets in your accounting software! Categorize sales by the types of services and products you offer, so you can quickly see what services or product types are bringing in the most revenue, and what could be improved or cut altogether.
Create a scorecard to track your Key Performance Indicators (KPIs). These are the most important metrics you want to track and improve. Your KPIs might include sales by bucket, total expenses, gross profit margin, and utilization or capacity rate.
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Resources mentioned in this episode:
I’m Sarah Young - a CPA, Virtual CFO, and the Owner of Young + Co! I have over a decade of experience in helping entrepreneurs scale their businesses and build wealth at the 6- and 7-figure levels, and I started the Profit + Prosper podcast to help you do the same. Profit + Prosper is a business finance podcast created to help entrepreneurs build their wealth in a way that’s fun and empowering. This is NOT a boring numbers podcast - I will share tactical tips to increase your profit so you can truly prosper in your business and in life. I hope you’ll subscribe so we can Profit + Prosper together!
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