284 How to manage your Business Finances, Master Your Money Mindset & Become Cash Confident with Melissa Houston
Meet Melissa Houston, The Founder of the She Means Profit & Author of Cash Confident.
Melissa is a Certified Professional Accountant (CPA) and a Business Finance Strategist, where she helps successful business owners increase their profit margins so they can put more cash in their pocket and increase their net worth.
Melissa is the founder of the She Means Profit™️ podcast and blog, she is a Financial Strategist for CEOs, and she has over 20 years of experience working in business accounting.
Melissa is a regular contributor at Forbes and Entrepreneur and writes about managing personal finances and business finances. Managing business finances is an essential skill for all business owners, and Melissa believes in the responsibility to share information and inform business owners.
In this episode, we chat about:
The most common Limiting Beliefs & Money Mindset Stories that entrepreneurs face
The 5 Part Cash Confident Framework
Why is it important to treat our money with respect?
Abundance vs scarcity mindset.
When to raise your prices
The difference between profit vs. revenue
When is the right time to hire a Bookkeeper
Best tips for keeping profit in the business
What holds us back from our Most Profitable Business
Why do we need to become comfortable offering our services in exchange for money?
What’s possible when we have a solid financial plan?
To connect with Melissa
To order her new book, click here
Access the transcript for this episode:
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You're listening to the visionary life podcast. I'm your host, Kelsey Reidl.
Each week, I'll bring you conversations with the most visionary humans on this earth, in hopes that you'll be able to absorb their wisdom, avoid their failures and feel less alone on the roller coaster ride that is entrepreneurship.
This season, I'll be chatting with creative thinkers, masterful marketers, brick and mortar shop owners, brand builders and people just like you who have a story to share or a vision that inspires. If I can share one quick secret with you before we get into the episode. It's that we all have a little bit of visionary inside of us, you know, that spark that nudges us to pursue our full potential in this lifetime.
But perhaps somewhere along the line, it got covered up. I'm here to tell you that it's never too late to explore that inner voice and access the brilliance deep down inside of you. It's in you. It's in all of us. Let's dive in. Hey, visionaries. Welcome back to the show. This is a really exciting episode for me. Because I am interviewing a former client of mine, Melissa Houston, her and I actually worked together three years to get her business off the ground. She is the founder of the she means profit blog and podcast. She is a certified professional accountant. And now she is the author of cash confident Melissa from the moment I met her had this spark and I knew she was going big places. And I helped her to set up her online business. And now she is absolutely rocking it helping entrepreneurs to figure out their money, their money management, their money goals.
And one of the big things that we chat about in today's episode is the topic of money mindset and the money stories that we carry around that affect how we run our profitable businesses. And so her and I dive into her five part cash confident framework, which actually starts with addressing your limiting beliefs around money, and some of your money mindset.
And this was almost like a free therapy session for me because I am someone who started my business out of a passion for marketing and business growth and supporting small business owners. I didn't start my business because I wanted to do my bookkeeping each month because I loved you know, figuring out where to allocate money and how to call my expenses and look at what I should pay myself each year.
And so I eventually had to outsource that. But a lot of the journey too, has been in understanding the importance of money and the importance of creating a profitable business so that I can properly find the right people to bring in.
So in today's episode, not only are we celebrating the launch of Melissa Houston's new book, but we're also going to do a deep dive into her five part cash confident framework. We go through money mindset, understanding financial statements, creating a plan, how to monitor your progress, and what to do with all of this cash flow that you're going to have.
So I think you're really going to love this episode, Melissa is so approachable in the way that she talks about money, especially as it relates to running and growing a business. And I also just want to mention that she has her new book out right now. So if you go to Melissa Houston cpa.com, you can see the tab for the cash confident book, it is an entrepreneurs guide to creating a profitable business. I mean, hello, who doesn't want that, right? So I'm just so proud of Melissa and all that she's accomplished. And if you are listening to this, and you're like, damn, I want to write a book, I want to launch a course I want to host a podcast, I want my own column in Forbes magazine, all of which Melissa has achieved. It all starts with getting visible and getting your offer out there and establishing your niche and your expertise, putting that first website up and sharing that first Instagram post. And that's what the visionary method is all about.
So if you're in those early stages, like Melissa was three years ago, feel free to reach out to me I'm at Kelsey Rydell on Instagram, I would love to book a discovery call with you and let's get your business off the ground to so in the meantime, enjoy this episode with Melissa Houston. Don't forget to pick up a copy of her book now. And she also has some really epic book bundles if you go and purchase in the next few days. So again, Melissa Houston, Melissa Houston cpa.com See my excitement is getting the best of me and then click on the cash confident tab and you can go grab a copy of her book All right on to the episode. Melissa, welcome to the visionary life Podcast. I'm so excited to sit down with you today you and I have known each other for a few years now we started working together many years ago. And I have just been completely amazed at the growth you have had the journey that you have walked over the last few years. And today we are sitting down to talk about your new book cash confident, and we'll get there in a moment. But first, I just want to say, how has the journey over the last few years been? As you've evolved from being a full time CPA to now being an entrepreneur, an author, a podcast host, a Brand Builder? How has it all felt?It has been crazy busy. So first of all, Hello, and thank you so much for having me. Secondly, I want listeners to know that you are the person who catapulted me into this journey. So I started working with you, just before I opened my business.
And I remember and I have to share with this because I think it's so important. I remember you said to me, you never know Melissa, one day, you may write a book and I said, No, Kelsey, I will never do that. And three years later, look where we are. So I owe a lot to you for planting that seed. And I just want you to know, I definitely appreciate that.Oh, my gosh, well, I really appreciate hearing that. And I received that. But then I also feel like from the moment, we had our first zoom call together, I was like, there is something different about her. She is driven, she is motivated, she has a fire within her. And I knew that you were kind of unstoppable. So I'm curious, Have you always had this burning desire to just grow and evolve and reach for more? Or was that something that hit you, like 20 years into your more corporate career? Like where did that fire?
It's such a good question, because I definitely always had this fire. And I think when I had my kids it that fire just kind of it did burn out. But it was like you know that what did they call it that embers burning stage. And then when the kids got older, and I kind of led myself into a little bit of trouble financially. And coming out of that I realized a lot of what I was missing was, you know, putting fuel on that fire again, getting moving, getting going and just I get exhilarated by the changes that I've made in my life in the last five years, and pursuing the dreams that I have.
And just the fact that I in achieving these dreams, it just gives me more energy to to push harder, and further and just keep going because I have so much impact to make in the world. I want to reach so many entrepreneurs, and help them make money that it's really important to keep going with this.Mm hmm. That's so so cool. And just to give some context, before we kind of get into money and money mindset and the cash confident framework, you actually spent the majority of your career as a CPA. But even before that, I think you started as a social worker. So you went to kind of a completely different line of work. And one of the through lines of this podcast is that it's never too late to make a change whether you've been in a career for one year, 10 years, 20 years. So I'm curious, when you were in your social work career, what was it that prompted you to make such a shift into becoming a certified accountant? And like, how did you know that social work was not the career for you?
It's such a good question. Because my whole life I had dreamed about helping others, right? I really wanted to be in that social work capacity. But when I was working in it, I was in it for about six years working in the front lines, I realized that if I wanted to get married and have kids on my own, like a family, that's a high burnout job, right? So I wanted to be able to emotionally provide for my family when the time came. So that's what prompted me to change. And, you know, it's funny that you ask this because truthfully, my grade 10 business teacher said to me, you know, you've got a real ear for AI for business, whatever. And that always stayed with me. So when it was like, you know, trying to figure it out, I was still pretty young. I think it was like 24 or something, trying to figure out my next move was like, Oh, I'm gonna try business.
So I just ended up in business. And then I'm like, Hey, wait a minute. Accounting seems to be like a really good prosperous career. I'm gonna get end up there. And then I started working in accounting, and to be honest, I hated it. I just felt like I wasn't making a difference with people's lives. Right. And I spent, I mean, I shouldn't say totally hated it, because I had a lot of really interesting projects that I worked on. I gained a lot of knowledge, a lot of experience, but I didn't just helping people. That was the key core component. So when I decided to start my business, I knew, and I actually knew what I was going to do in 2004. But because my daughter was only one year old by then, and my son was two years old, I had to wait a few years before I went out on my own. And then I just went for it. And I knew I wanted, I could see the gap between helping business owners, with their finances from the CPA, where, you know, you take your, your, your accounting records and your finances for the year, and you bring it to your CPA at the end of the year, and they do your tax return, and then they give you all this valuable advice. And a lot of business owners would just look blankly and say, Okay, sure. And I saw that gap. And I'm like, we're giving them such good advice, but they don't have the the the skills to understand it. We need to change that. Right. And of course, the people I was working with no, no, no, that's not a good idea, and blah, blah, blah. So I ended up starting that myself.Hmm, so, so, so good. I'm curious, why do you think so many business owners are either scared of looking at their numbers or are not inclined to learn more about where their money is going? Because I feel that like, I'll admit, personally and professionally, like, I don't love looking at money, I just, I prefer to spend my time doing other creative endeavors. I prefer to get on my bike and ride. And when it comes to bookkeeping, doing my taxes, I put up a wall. And there's just something there. Like, I don't want to deal with it. Why do you think and I know, I'm not the only one. Why is there such resistance to the numbers behind our business?
Yeah. And first of all, I commend you for sharing that, thank you very much, because a lot of people won't even talk about that about how they fear it, or they don't want to look at it. And there's a lot of avoidance, and the kids, it's money mindset, right? And the way we've been conditioned, we go to school, high school, we never talk about money, we don't talk about personal finance management, let alone entrepreneurial finance management, right. If you go to school, or if you you know, expand your studies in what area that you're passionate about, chances are, it's not about money, right? So everybody's going into business to do what they're passionate about. But the money skills they don't think about because you're going to do what you love doing. But every business owner has to look at their finances, every business owner needs to know the numbers. And there's a lot of emotion tied to those numbers, right. So a lot of people don't want to look at their numbers, because they fear the feedback they're gonna get from them. It's like you attach your self worth to these numbers. So if you create goals for yourself, and you didn't have a plan in place to reach them, and you go to look, and you see that you haven't reached them. That's a huge disappointment. Nobody wants to deal with that. That's not a happy story, right? So people would be like excited if they see that they surpassed their financial goals. But if you don't have a plan, it's really hard to get there.
So most people don't. So tying yourself worth to these numbers is really what people do. And we shouldn't do that. Because the money, it's really numbers. And it's a tool to help you get to where you want to go. It's not something that you should attach yourself worth to. Because when you're in business, your financial situation is going to change from year to year. And you're always going to have bigger goals and grow in scale and grow and scale. I mean until you get to the point where you don't want to. But that's a totally different conversation. So you want to make sure that you're looking at your numbers as the feedback, not as the emotional self worth component.Hey, visionary, I want to quickly interrupt this episode to ask you if you've been curious what it's like to work with a private business and marketing coach. If you're a business owner, and you feel like your marketing plan is all over the place, you haven't figured out your search engine optimization or your SEO strategy, you have no idea what your social media marketing plan is, and you are not doing so well on the self Express content front. I call these the marketing trio. It's the three S's SEO social media self expressed content. And by dialing in all three of these pillars, you too can get more visible, generate more income and increase your lead generation where you're actually turning your followers into paid clients and you're constantly bringing new people in at the top of the funnel. If you're not familiar with my work, I am a private business and marketing coach and I have spent the last 13 years working in the marketing industry. Many of those years doing consulting with clients like you who want to finally get more visible and get in front of their dream clients. So when we work together You have me for four months, as your marketing partner, I'm going to do a full audit of your business, put you on a private project management software with me. And then based on your innate skill sets based on your strength, based on where you are curious and where your dream clients are paying attention, we're gonna build out a custom marketing strategy, we're going to track it, we're going to optimize it. And by the end of the four months, you have a plan that works. And you're seeing results. It's truly incredible. Christina crook, just landed a $100,000 consulting contract after implementing just one of my marketing strategies. Emily Fraser signed multiple new clients in one day, after just one month of working with me. And now she is having consistent five figure months. And Natasha, she started leveraging her email list in December, and 30 days later, in January, she pulled in $25,000, from one single email that we created. So these results are possible for you too. But don't sign up yet. Just had to Kelsey rydell.com. And check out how we can work together, learn all about it, make sure you feel informed. And if you'd like to book a discovery call with me, just fill out the application on my website, we can get on the phone and see if it's a good fit for you. So anyways, I don't want to interrupt this episode anymore. I cannot wait to work with you, to support you and getting you more visible. And let's get back into the show. Mm hmm. So interesting, as you were saying that you said something along the lines of we fear looking at our numbers, just because what if they're not good? Or what if that kind of like shows us the truth behind our business? And I think this is almost the same in sales and marketing, like in sales, we're afraid to do the follow ups. Because what if that person says no, we might be afraid to do our marketing and get visible, because what if our aunt who lives across the country is going to say something rude about us. And the same with our numbers? What if we were to get really clear and actually spend time, every week looking through our numbers and not being afraid of them, while we would actually see the truth behind our business, which could actually be a really, really good thing. But there's that small chance that you're going to identify some leaks, where your money is, you know, disappearing or the truth behind a month that didn't go as well. So I think it's important though, that as entrepreneurs who are growing, that we're okay with facing the truth versus avoiding it.
Exactly. And I love how you put that because, you know, whether you're looking at your marketing, or you're looking at your financial statements, or what have you, you are looking at these numbers. And these numbers are just giving you feedback, right, you have to take the emotion out of them, not tie the self worth to them. But we all have money stories. So whether we're carrying money stories from as early as our earliest childhood memory, or some you know, financial trauma that you've experienced, or what have you that you've gone through life, you have to realize how your money stories are impacting you as you run your business. Because there is nothing in business that happens, that doesn't affect your profit line. So whether you're looking at your marketing, or you're looking at how you streamline the efficiencies in your business, or you're looking at your financial reports or anything, you have to remember that everything is going to impact your your profit line. So if you've got money mindset issues that are holding you back as a business owner, it's going to be very difficult to get that financial success in your business, if you haven't let go of those blocks, right. So the key there is to be self aware as a business owner to see how your money stories are affecting how you're performing in your business. Because your business success is most definitely as much as people want to deny it. It is most definitely tied to your financial success.
Absolutely. So to kind of queue this up. So you wrote a book called Cash confident and inside of the book, in the books amazing, by the way, so I want to just make sure you pause, click the link in the show notes and go get yourself a copy of Melissa's new book and we'll talk about it more later. But in the book, you actually talk about a five part cash confident framework. And Part One it kind of surprised me. It's all about money mindset and addressing these money stories and addressing the limiting beliefs. And I did a lot of self reflection as I read through these first few chapters and tried to identify my own money story. So I'm curious, when you were writing this chapter and probably thinking about a lot of the clients that you've worked with. What are some of those common money stories or limiting beliefs that you see pop up in a lot of your clients that they need to address or become aware of and work Real before they can really start succeeding with this cash confident framework.
Yes, I love this question such great questions Kelsey, and I work with 90% of my clients are women. And the thing I love to talk about the most, is the fact that women hold themselves back financially. The mindset issues I see are being hesitant to claim what your financial goals are, right? Not having the courage to stand there and say, I want to make X amount of dollars takes a lot of courage to stand into that. And a lot of women are conditioned, well, I only need to make as much money as I need to survive. And I always challenge that with my clients, because it's like, do you want to survive? Or do you want to thrive? Because money offers opportunities, money does not offer happiness, money will not be the root of your happiness, but it will provide you opportunities, you have opportunities to enjoy life better, you have the opportunity to not stress out about your financial situation, excuse me, you can, you know, take family vacations that you can afford to take. You can you know, help your kids through school, you can pay for weddings, like whatever the case may be, or you can open charities and you know, not for profits, there's so much good that money can do. But we are conditioned to believe that if we want money, it's greedy. It's selfish. There's a lot of negative connotations to it. And I really love to challenge, especially female entrepreneurs on that topic.
I like that, that we don't have to be ashamed if we want more money than just to survive, right. And I think you're right, a lot of us have been conditioned to just, you know, don't be too loud, stay in your bubble, you know, work hard, but then don't work too hard. And don't be boastful when you start to succeed. And all of these things that we hear growing up, they kind of download into us, and they're like our operating programs. And then we don't realize that we're actually kind of blocked. And I know for me, one of my big money stories. You know, as I kind of grew in my corporate career, I remember my parents saying, well, Kelsey, your marketing manager, like this is a great job opportunity. Take it $70,000 is a lot of money. And that's probably what like the job that you're going to hold on to forever. So in my mind, my maximum income was $70,000. And I knew my parents were really proud of me. And then when I made a shift into entrepreneurship, for my first few years of running my business, I noticed that my goal and how much I wanted to pull in how much I wanted to pay myself was $70,000. And I was like, where am I getting this number from? I've run a business now I can go bigger. What about going for 150k? What if I want to make a quarter of a million dollars, but I kept having this limit around 70,000? Right? I really had to deprogram that story that Oh, Mom and Dad are gonna be so proud of the $70,000 salary and be like, I could make 10 times 10 times as much. But I need to rewire everything inside of me to say you can have whatever you want, like write it down. What is the goal this year go big. So I don't know if you see that often. But it's like these. So often corporate mindset programs that we download our parents programs, but we don't know,
exactly, it's the expectations that were put on, whether it's at a young age, or, or at some point in our life, somebody told us, you know, this is the ceiling, right. And I love to talk to entrepreneurs, because as business owners, like you mentioned, there's no ceiling to the amount of money that you can make, you can make your business as big or as small as you'd like to. So you shouldn't feel limited. And I just did a panel was yesterday or the day before, where we were talking about money mindset with a large group of women. And one of the comments that really stuck out to me was, you know, she was she was dealing with her money mindset issue. And she's like, you know, I posted that I took a vacation with my kids and my husband, and you know, life was great. And I was really happy. And then one of my clients posted saying, Oh, so this is how my fees are or, you know, providing fear. And it was just like, you know, yeah, yeah. And it's like, you have to let that stuff go because you have no control over what people are going to say. But you have to be comfortable in the fact that yes, you have worked hard. There's absolutely nothing wrong with making a lot of money. If you came by it, honestly, right. If you were stealing from that person, it would be completely different. But you earned your money you're charging what you're worth, you are, you know, building a business, you're not building a charity, you're building a business, this is not a hobby, and people are going to have to pay for your services. And if they don't like that, or if they come up with, you know, the snide passive aggressive remarks or what have you, you have to let that stuff go. Right. And it can be challenging.
Yeah, totally. So before we get into part two of the cash confident framework, just one other aspect of the money mindset chapter is that you mentioned something around treating our money with respect. And I kind of like went over that and highlighted a couple times, what are some of the ways that we show respect to our money as entrepreneurs? And then I'm curious, on the other side, what are some ways that you see entrepreneurs disrespecting their money,
I'm a firm believer that you need to have a positive relationship with money. And what that means is, when you're respecting money, you're caring for it. So you're looking at your bank balance, you know, on a daily, weekly basis, you're looking at your financial statements, you're understanding where your money's going, and you are managing your money. Well, when you're disrespecting your money, you are going into debt, you're spending like crazy, you're not thinking about it as a tool, how it can help you, you're robbing from your future, right? When you respect money, you're going to care about your financial security, and you're going to set yourself up for that. It's very much like diet and exercise, right? Where we have to yes, you have to invest the effort. Now, if you want to look a certain way, right. And it's the same with money. If you don't take the time to invest, now, you're not going to enjoy your retirement or what, whatever it is that you want to save for, right. So having that relationship with money, and respecting money is key.
So that takes us into part two, which is understanding your financial statements. And I know that a lot of us we got into business, because we love the work that we do. And we love showing up for our clients and customers. We love product innovation, we don't want to understand financial statements and look through and do our bookkeeping once a month. Like that's not why I started fun. But I now know the importance of doing that. But I want to shine a spotlight there. Why is it important that entrepreneurs and specifically female entrepreneurs, why don't we need to understand our financial statements? Why can't we just turn a blind eye and be like, whatever the money's coming in, I don't have to look at it till next tax season,
because there's a huge difference between making revenue and making profit. And a lot of people mistake that so your revenue is what you're selling. But your profit is what you get to keep for you at the end of the day. And so often, I see business owners understanding their profit as though because it's not but as though it was the bank balance that they have. So it's like, at the end of the month, if they had $1,000, then that's what they could pay themselves with. Or that how much money they could, you know, have for Mad Money or whatever. And that's not how it works, you need to have a whole system in place, which sounds really overwhelming at first. But once you get that system in place, you realize it's really quite simple. But understanding how much money you're making, because you're running a business, not a charity, not a hobby. This is a business and it should provide for
you. Hmm. And in that book, or in that chapter to you mentioned, or there's a quote written by someone else, but it says beware of the little expenses, small leaks will sink a great ship. So I think what you're saying here, it's so important to actually look at your monthly statements, because there could be a whole plethora of little expenses that maybe you don't actually need to incur each month that only you can really be the decision maker to say, get rid of that. Right. So what are some of these little expenses that actually might be cutting into our profit? And yeah, can you just share some of the top ones that maybe we should watch out for?
Top? Definitely, number one top is advertising costs. So tied into your marketing, you want to make sure that any like Facebook ads for coaches is a huge one. But any advertising, it's always a big part of the budget. You want to make sure that you're getting a return on that investment. And if you're not looking at your numbers, your marketing numbers and your financial statements and stuff, you will never get that feedback to understand that maybe you need to pull back. Maybe it's not working. Maybe you're just wasting money. Another one is like you know the litter. The smaller costs are like you know, subscription fees or things that we keep paying that we never really use that so calm And, and what is often not in people's expenses, which which has to be is payroll, you have to pay yourself. So when you understand your numbers and you build an A, we're jumping ahead here. But when you build that business financial plan, you can incorporate all the expenses that you do need, like payroll, like consulting fees, whatever you build your budget, and then you understand how much you have to sell to first of all, breakeven, secondly, to make profit. So you want to be able to make profit on top of what you're spending for yourself, especially if you want to grow your business without debt.
And inside of the book, I'm assuming you kind of show us how we can actually sit down, make the financial plan and really start to come up with a system of how to pay yourself and how to identify. Yes, yes.
And there's book bonuses. If you order the book by May 20, you get a plethora of book bonuses, there's like five, where there's a big money mindset workbook that you can use. There's templates, there's courses, there's a ton of stuff that you take, and, and the business financial plan is in there at the template. Yeah, where you take and you understand how to implement this stuff. Mm hmm.
And these are so so important. And for anyone listening, who hasn't yet spent the time to kind of put on their CFO hat and figure this out, especially if you're a solopreneur. And it's all you right now, and you haven't outsourced any of your bookkeeping, I think this is so vital to listen to, and to really take advantage of some of these bonuses, because these are templates you're offering that I'm assuming you use with all of your clients that can really help us to clean things up on the back end of our mind.
Absolutely. And one thing I want to add, which we haven't talked, touched on, is that you know, especially with online, there's so much online noise. And we see a lot of people are like, I've got this seven figure business, eight figure business, what have you, whatever, whatever they're bragging about, you have to understand that they're not telling you the profit numbers, they're telling you the sales that are coming in, yeah. And in my over 20 years of experience, as a CPA, you might be astonished to learn how many businesses fail that are making that much revenue. So you could be making seven or eight figures in your business. And if you are, congratulations, that's a huge accomplishment. But if you are not making a profit to go along with those business numbers, your business will fail. And many businesses claim bankruptcy at that point as well. So you have to be cognizant of this.
It's fascinating because like you say, it's easy to open social media and see how well everyone is doing. But sometimes I just want to send them a message and say, Well, have you duplicated these results year over year? And what are your expenses? How much did you have to spend on ads, in order to get this type of
a million barrels of product? Exactly
crazy. It's just we have to be able to discern and to realize that not you can't take everything at face value, right? There's a lot happening behind the scenes,
there's a lot happening, and somebody who's making let's just say $7 million. And then you've got another entrepreneur who's making $500,000. If that $7 million company is only making $100,000 worth of profit, but that $500,000 entrepreneurs making $400,000 worth of profit, who's who's doing better, right? It's the take home money that values, the performance of a business, it's not how much money you're bringing in. Because like you're going back to that quote, where you know, you've got leaks in your business, it's gonna sink a big ship.
Yep. Mm hmm. So important to talk about. So going back to the framework, part three, and Part Four are create your financial plan and then monitor your progress. Can you share some of your top tips for creating a solid plan? And how often do we need to monitor and how often are we checking in to optimize this plan,
these two components are my most favorite part of the entire process, because this is where you really get to know what's going on in your business. When you create that business financial plan, what you're doing is you're looking at where you're at now, and where you want to grow to in the next 12 months, if you want to grow because that's entirely up to you. But it plans out month by month, how much revenue you're bringing in, how much expenses you're spending and how much profit you're gonna have. And what you do is every year at minimum, you have to review your prices. Bracing is what gets most entrepreneurs, right. And they're so afraid of raising their prices because they're afraid they're gonna lose their clients. And that goes back to money mindset. So you have to remember it's a bit snus, and especially during these high inflationary times, right now, so many business owners come to me, they're like, I don't want to raise my prices, because they're getting hit everywhere. Unfortunately, it's a reality. And yes, you may lose some. But that's a turn rate turn rates happen in all businesses. So you may lose some clients, but you will gain new ones. And you have to make sure that you've got those profit margins, right. So you've got your gross profit margin for selling products, and then you've got your net profit margin for how the business is running as a whole. I'll give you an example. I have a client who owns a nanny agency, and she spent most of her time on products, while services that were not profitable. And when I pointed that out to her, she was like, oh, because it's so much easier for me to sell this one, which had an 80% gross profit margin. Yeah, so just by doing that switch, she went from barely breaking even, to now she's got a 35% profit margin. So this is a seven figure business or Yeah, seven figure business. So she's pulling in a little bit over a million dollars a year. So going from making nothing. And now she's making $335,000 of profit before taxes in a year, just by focusing on the most profitable service changed her life. Right. And it literally took a couple of months for her to turn her entire business around. You know, so you have to, like when you make that financial plan, it helps you understand where your money's going, what you should be focusing on, and how much profit you should be making. So then the other thing is, you have to monitor. So that's the fourth step, because there's absolutely no point in making this plan, if you're not going to follow through with it. So this is your roadmap to success. Because you're planning out the next year, you want to make sure each month you go back, and you monitor your progress against that plan. So if you had planned to increase your sales by 10%, the following month, you got to make sure that you did that. And if you didn't do it, that's where the feedback comes in. Right? That's where it tells you what went wrong. And how you can fix it. Because those numbers don't lie. People lie. But numbers don't lie. You know, you may be finding somebody a business manager, whatever, who's gonna tell you? No, no, everything's great. Don't worry about it. But when you look at your numbers, you see, everything's not so great. It's not rosy, and I need to fix this before it gets worse. So that's part of what's being a financially successful business owner. That's what you have to do to get there.
For somebody who they're listening to this, and they're like, Okay, I'm gonna read the book, I'm gonna get a grip on my business numbers. But I don't want to be the one who is checking in and always looking for ways to optimize I'd rather outsource this, like, who is the right person to hire or to bring in for support?
That's a good question. There's so much confusion out there about accountants, right, because a lot of people think that bookkeepers are the same as accountants, and your accountant that does your taxes, is going to advise you on the performance of your business, and it's really all jumbled. So I'll break it down. Yeah, bookkeeper, does your books, that's what they're qualified to do. They're not qualified to interpret numbers for you. Your tax accountant is likely the person that you bring your your taxes to, at the end of the year, get your corporate tax returns filed. So often, for small business owners, there's that huge gap in between. And if you look at large businesses, they have CFOs. But they're CFOs are full time. Now what has emerged in the market is they've got fractional CFOs. I mean, we've got fractional C suite, everything right. So a fractional CFO can be brought in to give you guidance and advice on a part time basis, but work with you every month, or every quarter, or whatever you need. So that you as a small business owner, you're not missing out on that vital information, that vital feedback, you get what you need, and it's cost effective. So you've got your bookkeeper, you've got a fractional CFO, and you've got a tax accountant.
And what would you say for somebody who is maybe just in the early stages, what's the first one that maybe they should consider looking into? Or how should they know which of the three would be the best fit if they just have a little bit of money that they want to start outsourcing?
Now, I always recommend that you get that base knowledge because even if you're outsourcing, you don't want to 100% depend on somebody who may be lying to you. Okay, and it sounds harsh, but it's true. It happens all the time. Hmm. So, definitely invest in a bookkeeper and invest in a good bookkeeper because a good bookkeeper is going to make a difference for your financial side of your business. Yeah, I have seen far too many, far too many incidences over my over 20 years of experience. When people hire bookkeepers that aren't qualified, it makes a mess of the books. And it's 10 times more expensive to fix than it is had you just hired somebody who was a little bit more but qualified. And then obviously, you're going to use your tax accountant, you can't get away from that you have to use your tax accountant every year to file your taxes, I highly recommend going with a professional because not only is your tax accountant there to make sure that you're you know, you're filing and you're following everything per CRA or IRS, but they're gonna give you tax saving financial advice as well, right. So that's really key. And usually you're gonna get the advice, that's going to save you money and cover the costs of hiring a professional. So there's usually that ROI on that. And then if you're a small business, and you don't know, like, you can't quite afford that fractional CFO, you need to learn it yourself. And it's really not that hard to learn when you've got somebody to guide you through it. So you can look for coaching, you can look for courses that cover it. I mean, she means profit covers all of this. That's what we're here for to help the small business owners get through that. So starting with a course is more cost effective. If you can afford a coach, you know, that's your second step. And then your third step is hiring that fractional CFO, until, you know, eventually you grow. And I mean, you're at this point, you're in millions of dollars of business, where you would hire a full time CFO.
Awesome. And going into the fifth part of the cash confident framework, you say manage your cash flow. So I'm huge. Tell us a little bit more about Part Five, managing your cash flow, and any top tips that you would suggest for entrepreneurs who are just getting started with this framework,
I'm gonna hit you with a scary statistic, where 82% of businesses fail due to financial mismanagement. And the number one cause of financial mismanagement is your cash flow. So you have to make sure that you've got a cash flow system in place to ensure that you won't run out of cash. And that means being proactive. So you're going to be always looking six, eight weeks ahead of schedule, and chart, you know, what's coming in what clients are supposed to be paying, and what goes out each day. Like basically, that's what it boils down to, to make sure that you don't have any cash shortages that you can't cover. And another big tip too, and I always say this, is make sure you're planning for your taxes payable, because profit is good. But you're gonna have to pay tax on that profit. So you have to, and that's part of the monitoring process where you allocate, you estimate how much taxes you're going to be paying, you take that money, put it in a separate account, make sure you don't spend it. And then you can live with without financial stress. So cash management is key because cash is queen in a business. And if you run out of cash, you You will find you will quickly close the doors. And it's as finals, that it's really sad to see you kind of the best business idea in the world. But if you don't have your financial management system in place, it's not going to be enough to have just the best idea in the world.
So good. And I think that tip alone of making sure that you put money aside for paying your taxes is so important. Because if it just sits in your regular account, you're going to assume that that money is yours to spend, and then it disappears. And then you get hit with 20,000 30,000 $40,000 tax bill. And it has been stressful.
It is stressful. I have a client who got hit with $100,000. And she had no idea it was coming and of course came to me after the fact and had to dig yourself out of that. And it is stressful. Yeah.
So I'm assuming you wrote your book, cash confident because you want to remove those stressful situations that can arise as we run a business and like we've touched on and like I've disclosed, money management is not all of our strong suit. But when we can get a good system in place and really get a grasp of these different phases and who we can bring in for help. It makes us feel so much more empowered as business owners and perhaps as people who have avoided money our whole lives and who have, you know, not necessarily been confident around money management. I think this is the book that we can read to really cue us up for a successful money foundation that can carry you through for years to come. So from your perspective, like who's should be reading this book and what are some of the top outcomes that we will receive as business owners from implementing these five steps?
Anybody in a business, if you're thinking of starting a business, if you've got a hobby business, if you've been in business for a few years, or if you've been in business for a long time, if you don't know your money, your money management, pick up the book and read it. And yes, I understand it's the less sexy part of the business. But when you think about how much money you're going to be making, after you read the book, and implement all the tips and tricks, you will be like, so grateful, it'll be like the most sexy thing in the business, because that's where the money is coming from, right? The financial management part of your business is the engine that runs the business. So you just, you can't afford to keep avoiding it.
Mm hmm. It's so true. That is, I'm going to replay that in my head, you can't afford to keep avoiding it. Yeah, Melissa, this has been so fun. We wish you all the best in promoting this book. And I would encourage everyone to get their hands on it. So before I let you go, can you just tell us a little bit more about where people can learn about your work, where they can grab their copy of cash confident and get some bonuses, and all the places we should connect with you? Yes, so
I am the founder of she means profit. If you go to she means profit.com. Everything's there. If you if you grab a copy of the book, but before May 20, go to my website and enter those details to get the five free bonuses that you get. So it's the cash confident book bundle. Bonus. So make sure that you get that so you can enjoy the freebies that go with it. And that will definitely give you a good solid starting foundation.
So exciting. We'll put all those links in the show notes. And you know, again, best of luck as you promote the book. But once you're done with this whole book promotion, what's next? Like? Where do you go from here?
Personal Finance, my friend. Love that. Yes, more to come? Oh, absolutely. Because you know, like we're teaching you how to make profit in your business. And the next step is what are you going to do with all that profit?
Oh, that's such a juicy question to leave off on. It's like, okay, now that we are bringing in more money into the business, we're seeing more profit. What do you want to do with it? What are you dreaming up? What do you want to like? Yeah, invest that into. So I think that's a really big question, again, can be a little bit scary to think about. But I think it's very exciting to also realize that with extra money, anything is possible. And like you said earlier, it is a tool towards us living the life that aligns with our values, our dreams, and where we want to go for the rest of our time on Earth. So well. Exactly. Thank you so much for your time here today and for coming on the visionary life podcast, and we wish you all the best.
Thank you so much for having me. This has just been such a fun conversation. Thanks, Melissa.
Thanks for tuning in to this episode of visionary life. I love bringing you these conversations on a weekly basis. So it would mean so much to me. If you could help me out by rating and reviewing the show on either iTunes or Spotify. It just takes a second. And if you don't want to rate the show, you could also just take a screenshot of the episode and share it on your social media platform of choice tagging me at Kelsey Reidl. I'll catch you in the next episode.
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