Understanding Your Finances in Business with Katie Ferro
Dealing with numbers is something that many of us have found to be challenging, scary even, ever since our school years and maybe even more so now (although in a different context) being entrepreneurs and proud owners of our own businesses.
In this week's episode of Aligned & Ambitious Radio, I’m going to share the stage with Katie Ferro. Together, we’re going to talk about the importance of knowing your numbers in your business.
But before we dive on in, let me introduce myself. My name is Taylor Slango and I’m the host of Aligned & Ambitious Radio and a business coach who helps women make major bank through their own online businesses. Meanwhile, Katie Ferro is my personal bookkeeper and one of my really great friends.
So if you’re an ambitious millennial, wanting to get more out of life and learn how to combat those who doubt you along the way, stick around. This podcast episode is for you!
Today, Katie and I are talking all about how empowering it can be when you fully understand the numbers going in and out of your business. Tune in to episode 72 on your favorite podcast streaming platform for even more details!
Understanding Your Finances, Point #1:
It is empowering when you check in with your numbers. If you don’t like what you see, you use this to adjust and get to where you want to be.
People are so timid when it comes to looking at their numbers. There is this fear that they're afraid of what the numbers are going to tell them. They're afraid of seeing how much they might have invested in their business if it’s during the startup phase and they aren't making sales yet.
Then if you are making sales, you may be making 10K months, but you’re turning around reinvesting more of it into the business and actually still losing money. It’s common that people get afraid to see how much of what they're bringing in and essentially losing.
You just have to rip the Band-Aid off, see where you are so that you can adjust to get to where you want to be. It's really just as simple as that. It's a journey. These numbers are just showing us what's happening. There's a really big difference between what we feel is happening and what is happening.
You should be empowered to check in with your numbers – if you don’t like what you see, you can utilize this to make adjustments. If you do like what you see, it can be incredibly motivating to see what’s working and what’s not. In either scenario, it becomes a profit increasing exercise.
Understanding Your Finances, Point #2:
The profits are what allow you to do all the things you want to do.
What can profit do for you? Some examples are, pay down personal debt, save for home renovation, travel, quit your day job to spend time with family. Profit is what makes those life changing stuff happen – not sales.
Numbers can be scary, every month is reframing. Not every month is the highest month of profit – even in high months of profit, you wonder why you didn’t make that one extra sale. Like anything else, you want to have a guideline but you don’t need to be married to results. For example if you shoot for a 20k month, but don’t quite meet the goal, utilize this to learn what’s working and celebrate parts of it.
What is business capable of doing for your life? Celebrate it, and understand some months will be lower in profit. You have to analyze what you did in that month, did you really have a low profit month or were you spending money on things you wanted to do anyway which is the whole point of you making that money?
Be aware of what money is coming in, where it’s going, what is a business expense, personal expense. Having a grasp on this concept helps income grow.
Understanding Your Finances, Point #3:
Having the knowledge and understanding behind your numbers helps you make better business decisions.
For me, I know what programs do well, what to scale more, the forecast for my business. This allows me to anticipate a higher profit month and plan around that.
You rip the band aid off, and analyze how does it feel? When you have a target and know what you’re working towards, everything comes together. It gets done when you know what you’re striving towards as opposed to creating an offer and just seeing how many you sell.
It’s as simple as making money, spending money. At the end of the month, doing your books or having it done for you to see what you’re profiting. Putting aside your profit each month to prepay taxes. Don’t ignore your numbers, before Katie, I was making 3-5k months consistently, I finally decided to get a bookkeeper when I made 10k. Set your goals monthly, know your tax deadlines, see how you did the month before. Then ask yourself, do you want to increase your profit? If so, you either increase your sales price, how many sales you make, or decrease your costs.
Understanding Your Finances: Main Takeaways
It was such a pleasure to have Katie Ferro on this week’s episode, I hope this gives you guys further insight on why knowing your numbers is so crucial. Additionally, this doesn’t have to be overwhelming or stressful! In fact, knowing your numbers can bring so much benefit and motivation to yourself and your business.
Connect with Katie Ferro
To connect with Katie, check out her Facebook group.
Use code TAYLOR for 15% off when you get Katie’s kit.