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Boosting Profits with Financial Dashboards - Nate Jensen #6000 · Financial Survival Network

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  Financial dashboard is simply a way to get the relevant numbers, the relevant data
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  in front of a business owner at all times. Most business owners that start
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  to work with me will typically look at their profit and laws statement on a
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  monthly basis, or maybe even their balance sheet, and with that information try
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  and run their business. You are listening to Carrie Lutz's Financial Survival Network,
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  where you get valuable information you just can't find anywhere else to thrive in today's
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  trying times. You need the Financial Survival Network now more than ever. Go
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  to Financial Survivalnetwork dot com and get your free newsletter and gift. Financial Survival
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  Network now more than ever. Welcome you are listening to when watching the Financial
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  Survival Network. I'm your host, Carrie Lutz. Well, if you run
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  a small business like me, you have a practice. Whatever you really want
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  to hear from the next person, name is Nature. It's a certified management
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  accountant. Not a term I'm familiar with. But what you do, Nate,
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  if correct me if I'm wrong, is you help businesses manage their finances
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  by creating a financial dashboard. So sounds interesting, sounds exotic. What exactly
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  is a financial dashboard? Well, I don't know. How exotic it is,
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  but a financial dashboard is simply a way to get the relevant numbers,
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  the relevant data in front of a business owner at all times. Most business
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  owners that start to work with me will typically look at their profit and laws
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  statement on a monthly basis, or maybe even their balance sheet, and with
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  that information try and run their business. But without doing some deep analysis,
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  there's not a lot of information that someone can just get from just looking at
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  the P and L. You know, just looking at that data, you
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  don't know you know which employees are your best employees, you don't know which
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  clients are your best clients. And so I create a dashboard that updates in
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  real time. But let's companies see, you know, these are my numbers
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  of thet matter, my targets for those numbers, and here's I'm performing.
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  And then when you see those gaps between your your actual performance and your targets,
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  it's very easy to identify where in your business needs to be short up,
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  where you need to focus to improve your profit he So oftentimes in a
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  small business, especially your best customer isn't necessarily your highest and volume customer,
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  right you could be losing money on a high volume big customer, and that
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  it's the smaller ones you're actually making the money on, right, absolutely.
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  And it's it's interesting because when most people think, ah, my business is
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  not profitable enough, I'm not making enough money. I need to I need,
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  you know, to do better. All they know how to do,
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  or like they're they're at least their reflex or gut instinct is I need to
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  I need to sell more. I need more clients, I need more business.
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  And so they go and they focus on how do I get more clients,
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  more clients, more clients. And yet if they have an inefficient process
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  or an inefficient let's say segments of their business, so maybe they have a
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  team or a department that isn't really performing that well, simply adding more fuel
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  to that it's going to sort of maximize that inefficiency, right bringing in the
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  new client fact, I've seen many times clients of mind bring in new customers
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  only need to find that there as owners working twice as hard and really not
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  making any more money. And so before you focus on growth, focus on
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  making things efficient and understanding your numbers internally. And then when you've got a
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  good system and you say, okay, I know that my employees are good,
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  my departments are good, my utilization rates or whatever the metrics are that
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  matter. When everything's in place, then growth maximizes your profitability. Growth without
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  that again, it just if you have inefficient processes. I think it was
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  I think it was Bill Gates that said that, you know, growth maximizes
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  an inefficient profit or inefficient processes, You've got to focus on that internal stuff
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  first. Gotcha, makes total sense. So tell us some companies. You
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  don't have to name names, but tell us about companies you've helped in the
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  past. So let's think of a good example. I've done work with a
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  lot of marketing companies. One of my biggest customers there, they were classic
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  of what I just just was talking about. You know, they had when
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  I started that they had roughly roughly twenty five employees, and over over five
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  or six years, I think they're now at about forty. And they've gone
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  through cycles where they've done really well and that growth actually did drive greater profits.
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  And there's other times where they focus just on the growth. But then
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  you know, if they have their their creative departments or their digital marketing departments
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  that weren't as efficient to sworn as good at at delivering consistently, we could
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  quickly see the profits fall off, and so for them, it's it was
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  a matter of saying, okay, what really matters well, Because they're in
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  the service industry, profit by client is a key factor, right, and
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  they have some huge clients and they have some very small clients. And by
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  putting things in a dashboard and when I say a dashboard, it's charts and
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  graphs, right, it's pictures, so you're not reading through tables of data,
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  you're just looking at graphs. Is it going up? Is it going
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  down? With them, we started with sort of the financial statement level,
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  right, we could see month over month, am I improving my profit or
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  my decreasing and profit if you're decreasing a profit between your revenue and your gross
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  profit line, so your costs of good soul is kind of that middle factor.
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  We realized we needed to go deeper to figure out not just profit as
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  a company or gross profit as a company, but gross profit by client.
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  And we could very quickly see that somewhere between ten and fifteen percent of their
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  clients, we're generating about ninety percent of their gross profit, which means if
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  you could see their graph, it goes up, you know, kind of
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  shar the beginning with those those relatively few clients. It goes flat for most
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  of the rest of the graph, and then it actually drops at the end.
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  Do is they have a few clients who are unprofitable Exactly? What about
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  like salespeople, You think your best salesperson is the one who sells the eye
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  as dollars, But in reality that's not always the case, is it.
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  No? In fact, I can give you another example that you just reminds
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  me of. I had a client who sold well, they were a dietary
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  supplement company, and they had they had different sales channels, but one of
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  them was their retail channel. They had I think ten or twelve different products
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  that did you know, depending on what supplement you wanted to take, itamins
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  and different things. And they did have a sales team, a small sales
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  team that were given commission based on the total revenue, the total amount that
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  they could sell. Well, what I went analyzed each of those those twelve
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  different products and figured out which ones were the most profitable products Actually, in
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  that case was the least the lowest cost product that was the highest profit because
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  it cost us so little to make that when I pointed that out, we
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  completely changed the commission structures, like, hey, everybody sell this product,
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  will make twice as much for every bottle of this product and for that product.
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  And so just understanding that again they didn't have to increase their total volume,
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  they could actually just shift what they were selling and double their income.
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  So insights like that are pretty pretty powerful. Let me give you one more
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  example real quick. A client of mine that's a restaurant. It was kind
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  of a newer restaurant, well older restaurant, but open a new location,
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  and the new location was not doing very well. They kind of broke even
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  every month some months, a little over, some months, a little under
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  we built his dashboard and one of the metrics that we included, well,
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  two of the metrics were how many tables he turned over every month and then
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  his average ticket size, right, so how much was each each check each
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  time he had people sit down for dinner. And we did a little figuring
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  between those two metrics and realized that if he would increase the average ticket size
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  by two dollars and fifty events, he would go from breaking even to making
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  about ten thousand dollars a month. And so with that information, He said,
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  well do I how do I do that? Like, well, it's
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  just training, right, that's like selling one more drink per meal or one
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  more deserved or whatever it is. And the very next month he actually did
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  that. You could see the spike in his sales from one month to the
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  next just by understanding that that tiny shifts and how he looked at the profitability
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  of his business. So stimmer for everybody. Again, restaurant's going to have
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  way different metrics that are important than a marketing company. But if you know
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  what those metrics are, and you know what your cars are, and all
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  it is is comparing how do we do compared to our target? If there's
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  a gap, fix it, figure out why. It just tells you where
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  to focus, all right, All right, Well, so so what the
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  information does? I always say, it's all about the story. No,
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  all numbers do is tell a story. But you know without words with numbers,
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  and the numbers tell all, don't they? Yeah? But see,
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  I would go one step further carry because when again, if you look at
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  your P and L, let's say you want to see how you did for
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  the year, and you look at a P and L month over month over
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  month, you're looking at, you know, possibly a couple dozen rows of
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  data, twelve columns, you know, one for each month. Just looking
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  at a sheet of numbers, it's very hard to understand that story. And
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  I think until you take that table of numbers and turn it into a picture,
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  you know, a chart, it's going to be very hard to figure
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  out what to do. And especially because a lot of things on your P
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  and L. You need to understand ratios. Right, what's my gross profit
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  as a percentage of sales? What's my net income as a percentage of gross
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  profit? Sure, so you've got to I don't want to say dumb it
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  down, but it's I want you simplify it. Right. If something simple,
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  you're going to do it. If it's complicated, I see business owners
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  have lots of data and I don't do anything with it because it's just too
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  much time to sit and analyze it. Well, you got to have the
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  right right, You got to have the right numbers, and they have to
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  be presented in a way where effectively tell that story. Right. It's not
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  enough just to get numbers, but you got to have them presented properly.
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  Absolutely, Yeah, And I think you could either need you need a CFO
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  or at least a fractional CFO in your business to do that for you,
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  or if you have a dashboard, that's very and I'll retailored to your business.
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  Most CEOs are smart enough they can you know, figure it out if
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  they have a picture and they can try to take the next steme. So
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  is that something you do too, fractional CFO, Yeah, sort of.
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  So my model is, my main product is putting together those dashboards, and
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  most of my clients, for the first couple of months, they'll need a
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  little you know, training teaching, so I'll show them how to read it,
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  how to interpret it, how to take action on it. But then
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  once they're up and running. In fact, the reason I built this business
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  the way that I have is because my last business, it was a fractional
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  CFO company, and people would hire me to come in and after depending on
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  the company bafter that three to six months, we kind of had things in
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  order. I would have a regular meeting with them and often felt like I
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  wasn't providing value because like you know, they knew how to read the dashboard
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  without me at that point. And so I realized if I could provide that
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  dashboard, give them a little training up front, and then they can you
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  know, people can still retain me back, you know, for like an
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  hourly fee later down the road if they need to. But again, if
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  I give people that picture that's in real clime, that's updated automatically, they
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  have what they need to make good decisions, and they the dashboard needs to
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  be updated periodically, right, yes, And so I use a couple of
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  different software tools to build these dashboards, and for the most part they get
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  updated automatically. They sync with somebody's you know, quick books or net Suite,
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  or know, many different kinds of whether it's counting softwares or project management
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  softwares or whatever. So as much as I can, I automate that process.
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  All right, cool, all right? So how do we find you?
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  How do we connect with you on the internet. Best way to get
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  a hold of me is just go to my website. It's zero to CFO
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  dot com. That's Z E R O T O CFO dot com and there's
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  a there's a contact form there you can reach out. I'm very happy to
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  talk with people in sort of an exploratory way. Right, Some people might
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  think, O, do I really need this? I don't know in my
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  opinion, maybe everybody needs it in some sense, but if they're not ready
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  for it, I'm happy to talk through someone's numbers with them and just tell
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  them what I see. Yeah, well, we ye, we used to
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  have the company who had a printing company. Nothing nearly as sophisticated as what
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  you have, because the technology just wasn't there before. But we had ten
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  key numbers that we tracked every single day, you know, how much how
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  much we build out, how much we collected, how much we paid out,
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  and how much we were built among other numbers. And then we tracked
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  new customers. We tracked you know, sales by individual. But that was
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  about the best we could do. So I can see this having way more,
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  way more applicability and way more utility than what we were doing way back
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  when. Well, if I give you your listeners some just some value here,
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  you know, if someone's not interested in a dashboard right now, I
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  would just make a recommendation is figure out what are the top three numbers that
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  matter right Maybe it's revenue, maybe it's again gross profit as a percentage of
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  sales, or whatever it is that moves your needle. Know, at least
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  the top three and know what those should be every single month, and if
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  you're only using three, you should be able at least, you know,
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  get in your books and measure them well once a month and see how you're
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  doing. Most of my dashboards are gonna have a lot more metrics than three,
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  But if you're not doing anything, start with three and see if it
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  doesn't provide you some insight in your business that you didn't have before. All
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  right, very cool, I like it. That's useful. And hey,
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  the link to Nate's website is in the show notes this interview on Financial Survival
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  Network dot com. Make sure you click it go there. While you're at
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  the site, sign up for your free newsletter Nate. It's a pleasure.
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  Appreciate your stopping by. We'll talk to you again soon. Thank you,
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  Katy, thanks for listening to Carrie Letz's Financial Survival Network, your solution to
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  today's trying times. For the latest, go to Financial Survivalnetwork dot com.
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  Financial Survival Network now more than ever,