Latest / Profit Points Podcast / Small Business Financial Check-In: 5 Questions to Finish the Year Strong

Transcript

Small Business Financial Check-In: 5 Questions to Finish the Year Strong · Profit Points Podcast

• 0:00
  SPEAKER_00: Hey, glad you're here.
• 0:01
  SPEAKER_00: This is Profit Points, and I'm Megan Schwant, your accounting sidekick and certified Profit First Professional in Fix the Snex Advisor.
• 0:09
  SPEAKER_00: If you're a small business owner who wants to actually understand what is happening in your business financially, not just survive it, but genuinely get it, you're in the right place.
• 0:20
  SPEAKER_00: Every episode covers one concept, uses real numbers, and ends with something you can actually do.
• 0:26
  SPEAKER_00: That's the deal.
• 0:27
  SPEAKER_00: Let's talk about today's topic.
• 0:35
  SPEAKER_00: At this time, at the time of this recording.
• 0:38
  SPEAKER_00: And I want to ask you something that most business owners don't stop long enough to actually answer.
• 0:45
  SPEAKER_00: The question: where do you stand?
• 0:49
  SPEAKER_00: Not where did you plan to be?
• 0:52
  SPEAKER_00: Not where you hope to be by December.
• 0:55
  SPEAKER_00: Where are you right now in real numbers relative to where you said you wanted to go way back in January?
• 1:04
  SPEAKER_00: Do you even remember where you wanted to go?
• 1:07
  SPEAKER_00: At least that's for me, because this year has been super crazy, flown by, but slowed down all at the same time.
• 1:14
  SPEAKER_00: But today, if that is also you, we are gonna do a check-in at this second for this to see what we need to change for the second half of the year.
• 1:25
  SPEAKER_00: I'm Megan Schwan, your accounting sidekick.
• 1:29
  SPEAKER_00: This is Profit Points, where we help you use the halfway point in the year to make the second half of the year count.
• 1:38
  SPEAKER_00: So let's look at these numbers together.
• 1:41
  SPEAKER_00: The mid-year point is uniquely powerful because you still have time.
• 1:46
  SPEAKER_00: Not time to panic, so don't worry about that, but time to adjust.
• 1:51
  SPEAKER_00: By December, you'll have all this data, but there's no runway.
• 1:55
  SPEAKER_00: There's no let's finish the year out strong kind of a conversation.
• 1:59
  SPEAKER_00: But this time of the year, you actually have both.
• 2:03
  SPEAKER_00: You have time to review and you also have time to adjust.
• 2:07
  SPEAKER_00: You have the data and you have the ability to use that data to finish the year strong.
• 2:14
  SPEAKER_00: The patterns you identify now, the slow months, the expense categories that crept up, the revenue streams that have underperformed, they can all be addressed before the end of the year.
• 2:27
  SPEAKER_00: This is the moment when product proactive financial management actually earns its value.
• 2:34
  SPEAKER_00: So today I want to guide you through five questions that you can ask yourself and evaluate and make into your mid-year check-in.
• 2:44
  SPEAKER_00: Sometimes, and you may have experienced this in business and in life.
• 2:49
  SPEAKER_00: Sometimes the best way to speed up is to actually slow down.
• 2:53
  SPEAKER_00: And this gives you the opportunity to do just that.
• 2:56
  SPEAKER_00: So are you ready?
• 2:58
  SPEAKER_00: Okay, great.
• 3:00
  SPEAKER_00: Question one is my revenue on pace with my annual goal?
• 3:06
  SPEAKER_00: Take your year-to-date revenue and multiply it by two or the first six months of this year by two.
• 3:12
  SPEAKER_00: Is that projection higher or lower than what your annual target was?
• 3:17
  SPEAKER_00: So for instance, if you're tracking$78,000 in revenue through June, your annual goal was probably$100, or your annual goal was$180,000, which means that at this point in time, you're a little bit behind.
• 3:31
  SPEAKER_00: Because if you're only at$78,000 halfway through the year and you're supposed to be at 90, there you go.
• 3:38
  SPEAKER_00: Easy math.
• 3:39
  SPEAKER_00: And you know what?
• 3:41
  SPEAKER_00: That means that you can do something about it, right?
• 3:44
  SPEAKER_00: Because we still have five and a half-ish months to do something.
• 3:49
  SPEAKER_00: So you can take a look at what's worked, what hasn't worked, what revenue streams are up compared to other revenue streams that maybe are stagnant or down.
• 3:59
  SPEAKER_00: Um, so take a look at that data point and ask yourself that question.
• 4:03
  SPEAKER_00: Question number two is my profit margin where I want it to be?
• 4:08
  SPEAKER_00: Calculate your net margin, revenue minus all expenses divided by revenue.
• 4:14
  SPEAKER_00: If that target number is 25%, and if your target was 25% and you're at 16%, now you have that five and a half-ish months to identify and close that gap.
• 4:28
  SPEAKER_00: Question three: Am I on track with estimated tax payments?
• 4:33
  SPEAKER_00: That's always a huge pain point for business owners.
• 4:35
  SPEAKER_00: So have you addressed it?
• 4:37
  SPEAKER_00: Review what you've paid in in estimated taxes or saved if you're just doing a savings account.
• 4:43
  SPEAKER_00: Are you within 90% of your prior year tax liability?
• 4:49
  SPEAKER_00: If not, or if you're not projected to get to that 90%, then quarter three might be where you need to compensate, save a little bit extra, pay in a little bit more, but take a look at that.
• 5:00
  SPEAKER_00: That's going to be helpful to see where you are in the year so far and what adjustments you need to make for the remainder of the year.
• 5:06
  SPEAKER_00: Question four, have I paid myself consistently?
• 5:10
  SPEAKER_00: Review your owner's pay from January through June, July.
• 5:15
  SPEAKER_00: Was it consistent?
• 5:16
  SPEAKER_00: Did you get paid around the same amount?
• 5:18
  SPEAKER_00: Was it what you committed to?
• 5:21
  SPEAKER_00: If not, ask yourself, why not?
• 5:24
  SPEAKER_00: What happened?
• 5:25
  SPEAKER_00: Keep in mind, too, that when you're asking these questions and you're reviewing this data, that it's not for judgment.
• 5:31
  SPEAKER_00: These questions are for clarity.
• 5:33
  SPEAKER_00: So even if you're not hitting your goals and you're coming up short, or maybe you're overexceeding them, that's great.
• 5:39
  SPEAKER_00: And it's information, and even if it's under, it's still information.
• 5:43
  SPEAKER_00: Treat it as such, think about it as such, because then you're not going to be bogged down by the mental load that comes from the negativity.
• 5:50
  SPEAKER_00: We want to make sure that we're leaving space in our brains to address what's happening versus beating ourselves up about it.
• 5:58
  SPEAKER_00: So I just want to throw that in there because the owner's pay is a big one where people are like, I should have paid myself more.
• 6:03
  SPEAKER_00: Taxes is also one where people are like, Oh, I haven't saved anything for taxes yet.
• 6:09
  SPEAKER_00: It's okay.
• 6:10
  SPEAKER_00: There's still time to catch up for this year, and that is the whole point of doing this review at this time of the year.
• 6:15
  SPEAKER_00: Okay, finally, question number five.
• 6:18
  SPEAKER_00: What was my biggest unexpected expense?
• 6:21
  SPEAKER_00: Take a look, name it, quantify it.
• 6:25
  SPEAKER_00: Was it a one-time event or is it a pattern?
• 6:28
  SPEAKER_00: That answer tells you whether there's you need to do a budget adjustment or if there's a system that failed.
• 6:35
  SPEAKER_00: These are all data.
• 6:38
  SPEAKER_00: Let me go through those five again.
• 6:39
  SPEAKER_00: Question one, is my revenue on pace with my annual goal?
• 6:43
  SPEAKER_00: Question two, is my profit margin where I want it to be?
• 6:48
  SPEAKER_00: Question three, have I made estimated taxes?
• 6:51
  SPEAKER_00: Where am I?
• 6:52
  SPEAKER_00: Am I on track with estimated tax payments or savings?
• 6:55
  SPEAKER_00: Question number four, have I paid myself consistently?
• 6:59
  SPEAKER_00: If not, why not?
• 7:01
  SPEAKER_00: And then question five, what was my biggest unexpected expense?
• 7:06
  SPEAKER_00: Okay, so a complete check-in might reveal a few different things.
• 7:11
  SPEAKER_00: I want you to take a moment for me and imagine there's a therapist.
• 7:15
  SPEAKER_00: You're a therapist, you know somebody who's a therapist.
• 7:18
  SPEAKER_00: This is their second year of operations.
• 7:21
  SPEAKER_00: Last year, first year, a lot of figuring things out, right?
• 7:25
  SPEAKER_00: So she didn't really know what she was doing or what to expect.
• 7:28
  SPEAKER_00: But by the time last year was closing, she had a steady flow of clients.
• 7:32
  SPEAKER_00: She started noticing who she was working with and who she wanted to work with.
• 7:36
  SPEAKER_00: She had her pricing set and was confidently setting goals at the end of last year for this year.
• 7:43
  SPEAKER_00: After an interesting first half of the year, she is sitting down to review her finances, just like we've talked about.
• 7:50
  SPEAKER_00: She pulls her goals and budget from the end of last year and then pulls her profit and loss from QuickBooks.
• 7:58
  SPEAKER_00: She also pulls the statement of cash flow report and a month-to-month comparison of the balance sheet.
• 8:06
  SPEAKER_00: Those are gonna give those different reports, they are gonna give her the data to put all these numbers together.
• 8:12
  SPEAKER_00: So from these, she's able to collect and review the following information.
• 8:17
  SPEAKER_00: Her revenue is currently at 67,000 year to date, January through June.
• 8:23
  SPEAKER_00: She wanted to have a hundred and sixty thousand annual goal.
• 8:28
  SPEAKER_00: So at the pace that she currently is, at that 67,000, if we multiply that by two to do her projected annual income, her projected annual income is going to be 134,000.
• 8:41
  SPEAKER_00: That's with nothing changing, with everything staying steady, all of that good stuff.
• 8:45
  SPEAKER_00: But that means she's$26,000 short of her target.
• 8:50
  SPEAKER_00: So the pace is that that number of doubling what's already happened for the first half of the year.
• 8:57
  SPEAKER_00: Now she can take a look at why that is, what can fill that gap?
• 9:02
  SPEAKER_00: Can she do a promotional thing?
• 9:04
  SPEAKER_00: Can she uh, you know, bump up another stream of revenue?
• 9:09
  SPEAKER_00: All those kind of things she can take a look at.
• 9:11
  SPEAKER_00: Her profit margin is at 19%.
• 9:14
  SPEAKER_00: Her target was 25%, probably a little bit in alignment with the revenue, but again, something she can take a look at.
• 9:21
  SPEAKER_00: Estimated taxes are on track, so that's good.
• 9:24
  SPEAKER_00: We can continue on with what that's gonna be.
• 9:27
  SPEAKER_00: Her owner pay was$35,000 per month consistently, but her goal was$4,000.
• 9:34
  SPEAKER_00: Now she doesn't have that much of a gap there.
• 9:36
  SPEAKER_00: Um, and it's been consistent, which is great.
• 9:39
  SPEAKER_00: Biggest unexpected expense was an emergency laptop replacement that cost her$1,600.
• 9:46
  SPEAKER_00: That's gonna be a one-time thing.
• 9:48
  SPEAKER_00: She can maybe start to think about putting a little bit of money towards a fund like that for things that need to get replaced.
• 9:55
  SPEAKER_00: Now she has this real picture, she has the adjustments that are needed if she wants to meet her goals.
• 10:01
  SPEAKER_00: Um, roughly it's about$2,200 per month in the second half of the year in order to close the margin gap and um the revenue gap.
• 10:11
  SPEAKER_00: She can also do a pricing review to help close those as well.
• 10:15
  SPEAKER_00: That gives her a plan.
• 10:16
  SPEAKER_00: That's what doing this kind of a check-in gives you as well with your own numbers, taking a look at what's happened, taking a look at where you are compared to what your goal was, and being able to make the incremental steps that are needed to be able to close that gap on what your goal actually was.
• 10:34
  SPEAKER_00: Okay, so the action item of the week, because we always do an action.
• 10:39
  SPEAKER_00: I want you to answer all five of these questions.
• 10:42
  SPEAKER_00: I want you to actually write down the answers.
• 10:44
  SPEAKER_00: I want you to put it on paper.
• 10:47
  SPEAKER_00: And then I want you to identify one adjustment that you're going to make in August to move at least one of those numbers in the right direction.
• 10:57
  SPEAKER_00: What is one change, one commitment, one thing that you can do to move the needle?
• 11:04
  SPEAKER_00: That's how part two of the year goes differently.
• 11:09
  SPEAKER_00: This mid-year check-in isn't about what went wrong.
• 11:12
  SPEAKER_00: Like I said, this isn't a negative conversation.
• 11:14
  SPEAKER_00: This is a really empowering conversation because you get to see what's actually happening and take the time to assess, to think, to plan, to adjust.
• 11:26
  SPEAKER_00: All of those things are really, really important for CEOs to do.
• 11:29
  SPEAKER_00: And sometimes it can be hard when we're caught in the technical and day-to-day bustle and hustle of what's going on.
• 11:37
  SPEAKER_00: So just taking a little bit of time to go through this process can be really instrumental in helping you really make actionable steps towards what's going to happen the next half of the year.
• 11:50
  SPEAKER_00: Um, if you need some help, per usual, if you want to do this, check in with a professional, someone who can look at your actual numbers and help you build a real second half strategy, book a call with me.
• 12:03
  SPEAKER_00: We can have a conversation, no commitments, no nothing like that.
• 12:07
  SPEAKER_00: Um, these are the kind of conversations that we do have with clients, but sometimes just talking it through can get things going in your brain as well.
• 12:15
  SPEAKER_00: Um, so when we work with clients, we do that as well.
• 12:18
  SPEAKER_00: We have we do this type of reporting.
• 12:20
  SPEAKER_00: The different reports that I mentioned are something that we help pull so that our clients can take the look at that information as well.
• 12:28
  SPEAKER_00: Um, so if you want to do that, go ahead and go to chatwithmeg.com.
• 12:32
  SPEAKER_00: It'll take you to my website where you can check out all of our services and our about page and book a call if you would like to learn more and get the support you need to help your business be successful and sustainable, not just the second half of the year, but every year going forward.
• 12:48
  SPEAKER_00: All right, so that is it for today.
• 12:50
  SPEAKER_00: Thank you so much for listening to Profit Points, and I will see you next time.
• 12:55
  SPEAKER_00: All right, that's your episode this time.
• 12:57
  SPEAKER_00: Don't forget your action step.
• 12:59
  SPEAKER_00: I want you to actually do it, not just add it to the list.
• 13:02
  SPEAKER_00: If this episode was helpful, share it with a fellow business owner who needs to hear it.
• 13:07
  SPEAKER_00: And if you're ready to go deeper on your specific numbers, book a strategy call with Sidekick Accounting.
• 13:12
  SPEAKER_00: Go to chatwithmeg.com, and I'll see you next time on Profit Points.