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The Secret to Managing Your Business Finances with Confidence and Ease with Iyanna Vaughn

Episode 37: The Secret to Managing Your Business Finances with Confidence and Ease with Iyanna Vaughn

How do you feel about the finances of your business? Do you feel confident or intimidated? 

As entrepreneurs, we have to learn the many ins and outs of creating a successful business. With that success, however, we also need to know how to manage the financial aspects of our business. 

In this episode of the Empowered Business podcast, I sat down with Iyanna Vaughn to chat about knowing your numbers and increasing your confidence with your business finances. 

Iyanna Vaughn carefully curated the Lovely Financials Group made up of accountants and financial analysts seeking to guide each client through their financial goals in order to increase profit margin, improve cash flow, heighten financial awareness, and increase company value. 

At Lovely Financials Group, they pride themselves on making sure your company, business, or brand is organized and prepared to make and surpass financial goals of 7 figures or more.

As the owner, she strives to empower women entrepreneurs by bridging the financial awareness gap through education, leadership, and guidance.

In Today’s Episode We Discuss:

  • Marrying the operations, marketing, and the sales for financial success
  • The different types of finance professionals that can help you in your business
  • Books you can read to increase your financial literacy
  • The importance of separating your business from your personal finances
  • The numbers you need to know to run your business
  • Understanding your business cash flow
  • Planning ahead for slower months
  • When to hire a bookkeeper

 

Iyanna has so much valuable information to share on the topic of business income. You’ll be glad you tuned in! 

If you are searching for your million dollar formula to easily sell digital products, make sure you sign up for The Passion To Profit Experience. In this free training, you’ll learn how to build an offer your audience can’t refuse!

Resources Mentioned:

Monica Froese 0:04
You’re listening to the empowered business podcast. I’m your host, Monica fros, a mom of two and your secret weapon to creating a six figure digital product business. I’m on a mission to help 1000 women make $100,000 a year. That’s right $100 million towards financial independence for women. As an online business expert, I am teaching you everything I know, right here week after week. So you can join us on the journey to $100 million dollars. Sound good? Then let’s jump in.

I am talking about one of my favorite topics today. And I’m doing it with one of my favorite humans today. I am talking to Iyanna Vaughn from Lovely Financials. And she is my bookkeeper in the business. And she I’ve been working with her for two years and she has helped me so much get a better grasp on my numbers and just be a better business owner. And so I knew that if I was going to help my audience understand their numbers better that the person I needed to have on the show was Iyanna. So let me tell you a little bit about Iyanna. And then we’ll jump in so Iyanna says this is her speaking, I carefully curated the lovely financials group made up of accountants and financial analysts seeking to guide each client through their financial goals in order to increase profit margin, improved cash flow, heighten financial awareness and increase company value. At lovely financials group, we pride ourselves on making sure your company business or brand is organized and prepared to make and surpass financial goals of seven figures or more, which of course, is the ultimate goal. Not the ultimate, but a goal that many entrepreneurs are always seeking for always looking to reach I should say, which is that seven figure mark. So Iyanna is one of those people that can help you do that. So let’s bring her on and hear all about how we can leverage our numbers in our business to work for us. Iyanna, welcome to the empowered business podcast. I’m so excited. You’re here.

Iyanna Vaughn 2:26
Thank you, Monica. I am so excited to be here today. Thank you for having me.

Monica Froese 2:31
Iyanna and i have worked together now for I was trying to look back at I think it’s at least two years, right? Yeah.

Iyanna Vaughn 2:39
Yeah, just about two years, almost two years. We’re like literally right there.

Monica Froese 2:43
So Iyanna and her team, they are amazing. And they have saved my butt when it comes to finances in terms of like it was the game changer. I was gonna preface it was like the game changer. actually know my numbers, get them timely. Something we could talk about, um, which Iyanna seems great. And she has, she just has a fantastic team that’s so pleasant and easy to work with. So I’m excited that you’re here because I know since you’ve helped me so much in my business, that you’re going to help all of our listeners get their money stuff in order. So the first question I always like to ask everyone is to tell us about their entrepreneurial journey. What made you want to be an entrepreneur, the journey to get there, and what you’re doing now?

Iyanna Vaughn 3:29
Yeah, well, first, I want to thank you so much for the amazing compliment. It’s been a joy to serve you these past two years. And I really want to thank my team shout out to the team. Without them. Yeah, thank you so much. It’s it’s amazing to have people on your team that really serve our clients as if their family, you know, just me wanting to just make sure we have their best interests at heart. But back to your question. So my story and entrepreneurship is really interesting. So I’ll start back in college, because that is the pivotal point and where accounting became an interest to me. So in undergrad, I was a Healthcare Management major. And I took accounting and I fell in love with it, oddly enough. And I was I wasn’t an accounting major, but my professor just pushed me to change my major. However, I was expecting my daughter at that time. So I was near the end of my college career. And I was telling myself Hey, I’ll come back to accounting since that’s what I love. Let me just get through this degree so I can have this child.

Monica Froese 4:43
I know that feeling right.

Iyanna Vaughn 4:48
And after I had my daughter, I was just overwhelmed with the state of just me thinking okay, if I’m going to work at a nine to five position and you You know, work to have daycare, right? And just things not kind of happening in the way that I that I would like, how can I change this aspect of my life. So and my family at the time, they did something called being a host parent. And that’s where they foster adults with developmental disabilities, to live in their home, as family, be an advocate for them to do things on their own. Right, live their own and their way, the most independent life. So being immersed in that for, you know, throughout some years, I was it was suggested to me to do that within my own home. So I was, so that’s when we invested in that area. And we had individuals living with us as family. And it was a really great situation. However, I was a mom, I felt like a mom of three overnight, and I was like in my mid 20s. So it was extremely hectic. So with that in mind, I said, How can I do things for myself? How can I have a life of my own outside of being a mom taking care of everyone else, and running a home. And that’s when I started doing like crafting, I started getting into the blogging world at the time, it was around 2015 ish. And that’s when I was immersed in women and online business. You know, I was taken aback by how these women were just changing their family legacies, you know, and the one thing that they were afraid of what were their numbers. So thinking back to accounting in college, hey, maybe I can be of some support to these one, because I’m no one’s blogger, let’s just make that clear. But I can actually, you know, be helpful in a different way that I’m passionate about. So at the time I was researching, how can I conceptualize what I’ve learned and accounting to actually make it a business. And that’s when I came across a bookkeeper course, where it one conceptualizes, kind of the financial accounting system. And financial accounting is really just documenting the numbers of the ins and outs, like revenue expenses, and creating financial reports such as the income statement, the balance sheet and the statement of cash flows. So with that knowledge, and then with the course, I was able to then create a workflow to offer as a service so that I can start start my business. So we started as a bookkeeping only firm at first. And that’s where I started serving women. And now they had their reports to them. However, what do we do with these reports? When when we receive them? That was the next question.

Monica Froese 7:50
That’s a good question. I mean, personally, I look at them, but I am a freak of nature in that regard, in terms of probably a lot of people you work with.

Iyanna Vaughn 7:58
Right, right. Monica is she definitely understands what’s going on. So that is really, it’s really fun when we talk because we could just kind of go straight into how can we plan for the next thing, and you have your own set of plans, too. So it’s just good to collaborate together. Whereas a lot of entrepreneurs, this is a point in which they need some support on and I’m happy to deliver that support. So as I was doing bookkeeping, we were sitting in these meetings, and since I was working with only online entrepreneurs, I kind of understood how their business was in a way and saying that is hey, this strategy can work for I’ve seen this strategy work for one of our other clients, maybe you can incorporate this or just thinking holistically of not just the financials, but how can we marry the operations, the marketing the sales, so that we can create your financial future for success? So then we started developing add, like advisement? You know, when our meeting advisement, then it was like, how can I take this a little step further, and be more intentional about the service that we offer our clients? So now as of I think we started, just like positioning ourselves as a CFO firm, more so than bookkeeping alone. Around 2019 ish is when we kind of did that, like hey, we are here to serve you and more.

Monica Froese 9:27
Just to define the difference between bookkeeper and Chief Financial Officer,

Iyanna Vaughn 9:31
right? Okay. Yeah, this is a great question. So a lot of times people use these interchangeably. So I’m going to go over a bookkeeper a bookkeeper is someone who reconciles or codes or categorizes your transactions in your accounting system, and then they produce for you your financial reports. Again, that’s the income statement, aka the p&l, the profit and loss statement, that is your balance sheet and that is also your statement of cash flows. Now I want to point this out here. Please do not, do not do not think that your bookkeeper is going to offer you advice, they are offering the service to produce the financials, they may or may not meet with you to help you understand what the numbers mean. But do not unless it is explicitly written out in your scope of service think that they’re going to help you strategize for your future, right? An accountant is very similar to a bookkeeper. However, they also they’re able to do more higher level services with you. Now there’s a financial accountant versus a tax accountant. Now, the financial accountant is basically doing really similar things to the bookkeeper. But they’re able to, if they have a CPA license are able to do more advanced work for you. And a tax accountant, the once the numbers are complete, they go on to show the compliance of those numbers as a return to the state into the federal government,

Monica Froese 11:00
which is what I have. So I have you as my bookkeeper, you get all my numbers together, you make sure all my financials are in order Chart of Accounts, all that stuff. And then I have a tax accountant who’s local to me, he understands New York State law, how to file my taxes. And and what I have learned a very important thing, which I’ve we’ve talked about is that a tax accountant is reactive and cares about complaints. So he’s going to make sure that I don’t get audited by the IRS. If I do, he will be the point person for making sure that he works with the IRS for but that would have never happened because I’m very Taipei. I have all my stuff in order. But there’s a gap there, which I think is probably where that CFO services. Because I learned this that, hey, great, it’s good to have timely reporting from my bookkeepers. It’s great that I don’t that I am in compliance with the federal and state government paying my taxes filing my returns. But there’s a lot of strategy that goes into numbers

Iyanna Vaughn 11:57
100% 100%, I’m glad you mentioned that, too. Because after you get through compliance, you want to go into the strategy. And right before we get to the CFO, there’s someone that can help you strategize your taxes, right? Because we’re going from reacting to planning, how can you know exactly what your liability can look like, once you’ve mapped out your financials. So where the CFO comes in, think of them as an executive to your to your business, and that person is helping you they’re coming in? And they’re saying, Okay, I’m coming in to help you with the financials. However, CEO, what is your vision? Where do you want the company to go? Okay, see, oh, if that’s the same person, as a CEO, just fine, but we want to understand the operations of your company, so that when you are wanting to make x and revenue, how can you deliver the deliver on that revenue? By what you’re doing in your business day to day? Is it going to be your service? Is it going to be your digital program? Is it going to be executing on selling your your product, your physical product? What happens operationally to be able to execute and how can we be most efficient? Also, the CFO helps you understand what will it take team wise financially to be able to create your vision or bring your vision to fruition? Right? Then also they think of that CFO as someone who also thinks, okay, how do you make sales? Where do they come from? What are your conversion rates? So what are your things of that nature? And a lot of times, I’m asking these questions, and maybe it’s the first time they may have had this conversation totally fine, but let’s talk about it. So by the next time that we meet, we have some numbers to go off of, because I want you to deaf, I’m not going to tell you ever that your goal is too lofty, I wanted to, I want to break it down, right? And know exactly what it takes to get to that goal. Maybe it takes a little bit longer. Or maybe it takes a little bit more aggression in one area. But I want to know all the things so that we can create that financial picture, and I loved how you said you’re type eight, so you have all the data right? So when you’re thinking about bookkeeper or bookkeeping, it’s really a picture of your financials of where you inspired.

Monica Froese 14:19
That is also something very important. I learned more when when Iyanna gives me my reports that ship has sailed it’s gone You know, and so here’s the thing that people do and so let me also say I have my MBA in finance, which is why I think the CFO part I’m very good at because right right, right actually like what I got my advanced degree in and so that makes me a little bit of a unique entrepreneur. And so but the like, Okay, so what I realized was when I get my reports back, it’s like, Okay, great. I can see things you can pick up on like I can see Oh, wow, like that line item. That thing that we sold did really well last month, but like barely putting focus in there. How can I like, recreate the success? And so it’s always good to see where you’ve been. Right? projecting out where you’re going, is also equally important. And it’s so it’s more abstract to people. So like, if you’re not someone like me who I, when I fell down the stairs two weeks ago, I told my operations manager, she I was like, yeah, I’m in bad, I’m doing forecasting, it’s so fun. You are weird. You are weird individual. And it’s definitely a skill set that I just don’t think a lot of entrepreneurs have. So the fact that you’re offering it, because like, we had talked about it, and you even said, You’re like, I think because we check in quarterly, and you’re like, like, I probably don’t need that right now. And then yeah, and I’ll get more stretched then over the years to of course, you know, as as the business continues to grow, but right now I have a pretty good handle on like, the forecasting and stuff. So okay, this leads me to my question is, do you have a certain type of client that you either enjoy helping the most or that you’ve really focused in on in the business?

Iyanna Vaughn 16:03
Mm hmm. Good question. So we work primarily with online entrepreneurs, and that person may sell their intellectual property online, whether it be through coaching, consulting, they have a service, they have an agency. So the difference between that service provider versus the agency is service providers. Usually it’s like solo in a sense, where you provide that service, whereas an agency is more so team heavy, so now the team helps you execute on the offering to maintain revenue. And then we also service entrepreneurs who ecommerce as well. I really love working with entrepreneurs who have either coaching programs where they sell their digital products or offerings as well as agencies just because that’s kind of like how my business is ran to. So I like to kind of know, how can we be most efficient as you add to your team so that and this is a sidestep to when we think of the cashflow quadrant by Robert Kiyosaki? How can we go from self employed to have in business where the business runs without you eventually? How can we think about replacing yourself from your business?

Monica Froese 17:17
What was the name of his book? What was in it? Yeah,

Iyanna Vaughn 17:19
cashflow quadrant, cashflow quadrant,

Monica Froese 17:23
we’ll link to that in the show notes. Probably be reading it very shortly that Lovering recommendations like that nerd who wants to read about cash flow or you know, which cash flow is a big thing we need to talk

Iyanna Vaughn 17:34
about too. Yes, yes, yes. Yes. I love talking about cash flow

Monica Froese 17:40
it’s one of my favorite topics as well so that book must be good if you’re recommending

Iyanna Vaughn 17:44
Yeah, it’s been a few years and just to quickly quick summary. The cashflow quadrant is the four areas in which you gain your your money and first the first quadrant is as an employee right then the second one is self employed so a lot of entrepreneurs who have their businesses they are just positioning themselves at first as self employed because they have clients but then they really work just as much or more if they were an employee right? But then biggest shift is how can you go from self employment to a business owner and then having your systems and your team run the business on your behalf and then investor being an investor to gain whoa

Monica Froese 18:26
Yes, I’m gonna love this book because I’m definitely in the business owner category like when I was the solopreneur I was working 60 to 80 hours and it’s weird because it was very like I worked regular work hours but then I just never really disconnected and that’s because I was very determined to make this a thing but now unless freak circumstances like maybe I actually want to work on a project on the weekend that I’m excited about right? I actually take 2021 was the year I was like I am taking vacations again and closing my laptop I’ve taken three this year where I no touch and that is like that’s the power of the systems having employees and during the irregular week I’ve been very transparent I have a full time nanny she’s here 40 hours a week actually I think she’s technically here 42 because my husband starts there’s an overlap when he has to be on calls and when I’m driving to school, but I work about 35 because I’ve actually carved out time now for self care um take walks Yeah, and I don’t and I chose to take it on then on the nanny time so that I’m present and spending time with my kids when the nanny is not here that that was the life that I wanted. Yeah, so now I guess I’m gonna be an investor next time I’m one of them there Yeah, but man, that’s a that is I’m excited to learn so I will definitely read that book. Okay, so we will I do want to get to the cash flow conversation, but first I want to ask what makes online business financial Different from like the brick and mortars and like traditional business finances.

Iyanna Vaughn 20:05
The top thing is there’s no ceiling to what you can earn, right? And in this type of business, so for example, we’ve had multiple clients go from, you know, hitting within their first six figures to over seven figures that next year and say their traditional CPA and they’re like, Wait, is this a thing? What is going on?

Monica Froese 20:29
What do you do?

Iyanna Vaughn 20:33
And then you produce the financials, and it’s like, oh, and that goes from reacting to planning, right? So it’s like, Okay, how can you know that this growth can happen, you know? So another thing that I see with online business owners is a lot of their lifestyle is immersed in their business, right? So you got to think how do you separate that cost wise because you want to definitely take advantage of tax deductions and getting things on the bookkeeping platform. However, how can you make sure that you’re not commingling? Those finances, it’s easier to commingle when your lifestyle is immersed in your business. That’s another thing that I see a lot. I’m really like, just like a mindset shift of like, Hey, you know, this needs to be on the business versus this needs to be on personal and the The good thing with all my business is you can expend some things that may seem like a gray area and other types of industries. However, that’s where you have bookkeeping coming place so that you can create that crystal clear picture to back up.

Monica Froese 21:38
There’s been a lot of discussions about like, one of the things I did this year was we did a team photo shoot, and we I took my team to the dry bar to get their hair done. For the photoshoot. I would not be paying for my team to get blowouts. For the photoshoot that is used in our branding on our website, that is a business expense like straight up that’s not like we just got our hair down for fun having martinis and kicking back we were getting it done and it was a direct relation to serving the business. So, right I expensed it.

Unknown Speaker 22:11
Right and then also even if you think it’s a great day in the case where you weren’t as confident always keep those receipts and have context that’s all you need is context as to why you’re spending this on your business. And is it something that is normal? Yes, it’s absolutely normal so that when you take a picture on your website everyone looks presentable and everyone looks polished and everyone looks like they belong together

Monica Froese 22:38
Yeah, I mean there’s like a direct correlation to someone like especially the the bigger you get you know showing the fact that there’s I’m not like a one woman show there are people behind me there’s part of me it’s good for them to get that exposure to like I don’t want people to think I do all this by myself and I want to present them in a good light and a professional light and the brand as well. So I will Yeah, cuz okay CPAs typically, too when you have a local CPA they are very used to brick and mortars like my CPA works with a lot of lawn care companies and like local dentists and stuff like that and so I’m very foreign to him. Like what are we writing off? Why do you have this charter? Job education, what are you educating yourself? Right? It is it is a very different, it’s different, it’s different which is why when you have a bookkeeper who can understand that uniqueness and put your expenses and cash in categories that they belong, it actually does make your CPA who’s filing your taxes it makes his or her life so much easier because they’re likely not used to that kind of stuff with online business and where things go and even Cost of Goods Sold which is probably someone’s like what Cost of Goods Sold? which is essentially like the I would say that simple definition of that personally is a expenses that relate directly to the sale like if you So Facebook ads, for example are direct correlation I get a lead from Facebook and I make a sale from it. So is that like the I don’t know if that’s a question

Iyanna Vaughn 24:15
Oh, put an asterisk because when you think of cost of goods sold you think of physical product however direct expenses, then yeah, directly relates to your sale in your business. Now this is also a conversation piece, you know, what can be a direct expense for you can be simply an operating expense for someone else. And that goes into having someone on your team that knows right, the vision of the entrepreneur, what would make them understand their numbers best? And then also how do they relate those accounting terms to you that is understandable, so that you know you know exactly what’s going on?

Monica Froese 24:51
Well, so so for someone out there that like now Okay, again, this is where my finance background comes in. So like I get the gist of what’s going on, but some Do you might be like, wait, operating expenses versus Cost of Goods Sold? They’re both expenses, why would we separate them?

Iyanna Vaughn 25:07
Mm hmm. So you want to separate them. Because say, for instance, if you have a physical product, you have cost of goods sold, because they directly relate to the selling of that actual good. That can be materials that can be shipping so that it can be shipped out to your customers. And that can also be, let’s say, has materials, shipping, maybe raw materials, things of that nature. If you have an online business, though, this is really up to the business owner, whatever helps you conceptualize your numbers, the best we can say, if you have let’s use an example, because you had Facebook ads, so Facebook ads directly relate to the sale of your offerings. So that’s a direct cost for you, as we map it out in your reporting for someone else may not.

Monica Froese 25:57
Yeah, same thing with like affiliate Commission’s exactly, it’s direct. So what makes a sale with their affiliate link, I pay them a commission, it was it’s a direct correlate. So we put for us, we do Facebook ads, affiliate commissions, and then there are certain contractors we put up there. Because like, for example, we will have some contractors create some of our digital products. Well guess what that is a direct cost to selling that product. That’s how I see it. But from like an actual roll up standpoint, for your accountant filing taxes, cost of goods sold, and your operating expenses, it’s all expenses.

Iyanna Vaughn 26:32
Exactly. And then the difference with operating is whether or not you make the sale, most likely this will be an expense. However, there’s also something within operating expenses called overhead, which is like your rent, if you have an office space utilities, if you have an office space as well, that whether or not you made $1 or $100,000, you know gonna be an expense. So operating overall, it’s like you just need them just need these expenses to operate your company, maybe you have a virtual assistant. And that’s an operating expense. They don’t directly relate to your sale, but they directly relate to the operations of your company. So that would be another another thing, they’re not going just another quick thing about direct expense. Let’s say you’re a photographer, and you have Junior photographers on your team for different projects, that will be a direct cost because they helped you execute on that project to get

Monica Froese 27:26
Yeah, yeah, yeah. So it is very unique. Which is why if you’re sitting there thinking what well, this is why you need someone to be helping you with this done. So okay, my next question then is what numbers as online business owner, when it comes down to it, when you do all your fancy stuff in QuickBooks for me? What number should I care about? What is going to help me actually run my business?

Unknown Speaker 27:50
Yes. Okay. So I have a few. Not a ton. But we have just say the core, the core numbers, of course, is your revenue. But we do not want to stop there. Everyone do not stop at your revenue, okay. total expenses, whether you categorize direct expenses, operating overhead, all the expenses, you want to know, expenses, right? We want to get your profit. So after so revenue minus expenses equals your profit, we want to get those margins, what is your profit margin? What does that look like? And then what do you want it to be? So say, for instance, say for every dollar cost you 50 cents to basically keep that business running, then that means your profit margin is at 50%. So I want you to understand that profit margin. Now this is the big one. And this is something that we miss out on a lot, your profit, your bottom line is not the same as your cash on hand. So we need to know what is your cash on hand as it relates to the runnings of your business. Now I’m going to put basically how cash flows to your business. So that you know, okay, this is what actually transpired cash wise in my business. So say at the top of the month, you have your beginning bank balance, right, all the revenue came into your company, so cash went up by X amount. Now you have all your expenses that went out of your business that decreases your cash. But say you are an entrepreneur who has an LLC tax as a sole proprietor, that means whatever you pay yourself isn’t only a straw, and that is not seen on the p&l. So if you took out a draw, then that further decreases your cash on hand. Then say if you pay off a credit card, that’s another option of decreasing your cash on hand. So now we have the net cash, right? And then we have the final balance of your bank, your the final bank balance, that is something that you need to look at.

Monica Froese 30:00
Okay so, as you get further along, and you’re in the States, we have something called being taxed like an S Corp. So I’m an LLC taxed as an S corp, which essentially means now, I pay myself on payroll. So that’s an expense in my business. And I, someone told me this a couple years ago, when I, like made the switch to payroll for myself, they said, you pay yourself on payroll as the owner for the work you do in the business. And the profit that you take as distribution is like the benefit of being the business owner and all the hard work that you put in to build a company from scratch. Well, that makes so much sense, I should only get paid for the fact that I sit here 40 hours a week and work my phone. So now my payroll is an expense. So that’s coming out. So basically, my cash flow at the end has already taken to account now what I pay my employees on payroll, my contractors, and what I pay myself, now I have this this cashflow number left, and I could hypothetically take that bottom line and put it into my personal bank account. However, why is that a bad idea? Because

Iyanna Vaughn 31:07
we want to be able to holistically keep your business afloat, whether it be making sure we have taxes saved, because you still want to own taxes, whether it be you want to pay the taxes on your personal taxes, you still want to your business incur the taxes however, you the person, you’re going to be taxed. So you want to make sure you have now that you have a team, you want to have some emergency savings, you want to make sure you have taxes saved, you will and this is also i’m going to also want to suggest reading the book profit first because it makes cashflow management, really understandable and tangible. You can’t take all the profits because you know, again, say if this wasn’t your business, either way, your profit isn’t going to be within cash on hand. And also you don’t want to have one bank account for your business because it just leaves you with Hey, what do I have? What is this? What’s the context of this? Right? Yeah. So say, if you were to say, let me actually pay myself a distribution, right? Let me pay myself in equity. That can be a specific account that you kind of put for yourself of like, Okay, this is the owners compensation, some equity or profit account so that you understand, this is exactly the number that I can take out from my business to pay myself an extra distribution.

Monica Froese 32:26
Yeah, so profit first, one of the things that really stood out to me about profit first, which is a great book, and I don’t follow it totally, I can like every time we talk, you need a big count for this net, and I’m not against it, I’m changing my LLC name right now. So I’m kind of like in this holding pattern. So I don’t have to go back to a million banks and be like, hey, change this and then Right, right, I do have what I would call my operating account, the checking account that all the money flows into all the straight money, PayPal money, any direct deposits from like, when I recommend an affiliate, if they pay me directly to the bank account. So that’s my operating account, and I have a savings account. And to me, I view my savings, the business savings account as my cash flow account, that’s, you know, our backup, if we have a bad month, if you know, we always want to make sure to hit payroll out of my operating account what happens here, and I think people do this in their personal finances. And I’ve definitely been guilty of this many times in my life on both sides of the house, personal and business. Let’s just say I had a big launch, like we just had a big launch. And so we get this huge influx of cash and you go in and all came into this top line account, and I’m like, we’re rich, we got all this money. And it’s like, oh, I also have a crap ton of responsibilities with that money. I have to pay taxes on this, and the IRS is gonna want their fair share. And does that change my tax bracket that I took in all of this money, you know, and so if you’re not preparing for those things, so it’s like this psychological thing, when you log in and see this big number in your bank account, that’s when people make bad decisions, like, Oh, I’m going to enroll that $5,000 program, because look at how much money I have, or I’m going to invest in the software over here, because look at how much money I have. And it’s not a holistic picture of what it changes in your business when you do take in more money. And so and I see it all the time, like my operating account can be like, Oh, look at us, look at how great we’re doing. Two weeks later, it’s like, Whoa, and all that money go. And then you look and it’s like, oh, yeah, payroll taxes, payroll taxes, like you know, it just for you know it, it’s gone. And so you can’t operate your business by looking at any moment in time by just logging in and being like, I got money, let’s make decisions. Hmm. Right. Do you see a lot of people doing that?

Iyanna Vaughn 34:37
100% and that’s where, and some could go either way. So say for instance, someone sees that much cash in their business, they’re just leaving it there because they don’t know what to do. Because they’re like, Oh, I don’t want to I don’t know what this is going to be allocated for but this is a lump sum of money here. Help me

Monica Froese 35:00
Yes, I can I can imagine

Iyanna Vaughn 35:02
that, right versus the first is like, yeah, let me just kind of swipe like, like takeout takeout. And it’s like, no, sir ma’am. We have a plan. And that’s where forecasting comes into place. Because let’s say, we’d know this launch is going to happen in the year maybe surprisingly, it does exceedingly well. However, there should be a plan so that we can know where to divvy up the cash, right? Yeah, yeah. Because

Monica Froese 35:29
what happens a lot with we committed this year to a four live launch model, because we pivoted our business, new programs. For me the best way to find out how to sell the new programs, how to position it, is to do live launches, where you get to interact with people who are interested, figure out why they like found you all that stuff. But what happens with live launches is that cash influx happens. And I will tell you, and this is funny, I’ve listened to their podcast where people obsess about, I was negative one month, and that means I’m a bad business owner. I’m like, not if you plan for it. So if I’m taking 100k, one month, on a launch, chances are especially because of how money comes in and out like I might have some of the expenses that should have been paid in launch month, actually. Yes, yes, yes. So we go negative, almost 100% of the time, we go negative the month after a launch. It’s planned for, which is why if I had logged in, on the 30th of that month, and said, All were rich, and then all my expenses start coming in, like regular operating expenses start coming out for the next month and our income because you know, it’s hard after a live launch, you have to recoup you’re out, you probably burned out your warm audience at this point. And you’re probably not gonna go into another major sales promotion because you’re tired, and so is your team. Right? So we’re gonna have lower revenue, but our fixed expenses are the same. So exactly like so if I had taken if I had taken everything out on the live launch months, we would be in a world of hurt that negative that’s into what I it’s funny now that I’ve done this long enough I can pick up on when people start obsessing about a negative month my questions like Oh, you don’t know how to manage your cash flow, because this wouldn’t be an issue if you’re planning for it.

Iyanna Vaughn 37:08
And just to clarify, when Monica says negative motion means like negative profit in that month, but cash flow is still really healthy. Correct? Cash Flow is not profit.

Monica Froese 37:19
Thank you, that is. So like, holistically like, the thing is, if I have a negative month, my business is not negative, we still have money in the bank. It means in that all to me, all it means is in that container, the amount of money that came into my bank account and went out of my bank account was negative and for operating expenses, like revenue in that month and expenses that month, but because I have a cashflow in my business, it’s not that the business is negative, or that our counts are negative. Mm hmm. Right? Is that like an accurate way? Okay. See, this is a very, and these are just things. So here’s, here’s what it comes down to? Would you say the fair statement that a lot of entrepreneurs, I mean, aside, apparently, a lot of entrepreneurs, especially in online space, kind of accidentally fell into being a business owner. Yeah, and they just don’t have exposure to these concepts. So it’s like, like, even understanding cash flow and expense, all this stuff is pretty foreign, right? Mm hmm. And so now it’s like your job to educate on making this easy to understand. For us and and even though I’m pretty good at this, there’s still lots of stuff that you give me a report every month that tells me numbers I never would have thought to look at and then once I understand the numbers, because you give me context behind it, like what it means I’m like, Oh, yeah, that is pretty helpful to know, you know, you need someone to do that for you.

Iyanna Vaughn 38:49
Right? Right. Because what I see is, a lot of times we come into our business with our own mindset blocks about money, period. So we’ve been growing to say, hey, how can we first attack your mindset blocks and kind of help you shift them at the core, because whether or not you’re accidentally making this money, or you’re spending it, for whatever happens, the ebbs and flow of your company, you’re still that person that’s going to treat your financials based on your own values. So helping you switch that mindset, right, to then saying, How can we educate you without being condescending? Because I’m not going to assume you know this? Just because it comes easy to someone like me, or someone like you, I’m not going to judge the next person because something else is easy to you. That’s why you have this business, right? Yeah. So helping you actually understand the numbers. I’ll teach the same way every single month, because you may not remember and that’s okay. Yeah. So once we help you change the mindset and help you understand what they mean, now it’s time to actually map out your future and I love how you were talking about finance, right? accounting is working backwards, right? Looking at the past, whereas finance is looking at the future. So how can we marry the two together so that we can leverage what your future will look like. So,

Monica Froese 40:10
which is why big companies cuz I came from a fortune 100 company, we had accountants that manage the book and make sure that all the money was being reported. And then we had financial analysts that were like, we had a big deal coming in, and then we do models on that big deal to make sure that possible, or thinking like that, it when you really think about your business, if you look at, like, how big company operates, well, essentially, you’re gonna operate the same way, you’re just gonna have yes, no, it doesn’t change. Pretty much don’t change, you know, right,

Unknown Speaker 40:40
right, and people try to fight it, I’m not gonna be but then you end up doing the same thing. And that’s totally fine. And that’s how we’ve positioned our company too, because we have an accounting department, which handles the past financials, the bookkeeping, we had the finance department, which is where we help you forecast the future and do the different models and things of that nature, then we have a tax department, we redo preparation and strategy. So it’s like, there’s different, I would blow my I would pull off my eyelashes, pull them out, if I had to reconcile transactions. And then the same day, I write exactly what client a report. I’ve done that before. And I hated it there. So I wanted to separate those different things. So that whoever on my team is an expert in this arena, they can shine in their specific department, right?

Monica Froese 40:47
So, just like why and as a business owner, so I’ve had people ask me, why do you have a bookkeeper and a tax accountant, and now we’re talking about, you know, the tax strategies and things like that, because they serve different purposes. Like if I came to you and said, can you tell me about New York State’s corporate laws? And can you make sure that, like, I’m taking full advantage of it, like, I mean, right, operate in New York State, and that’s not my area of expertise. But I live in New York State, and I pay New York state taxes, so I need someone who knows that. And so that’s, well, I think that’s kind of like the beauty of running your own business is that you get to basically go out and find the people who are going to create, like a stellar team around you, you know, and, and leverage them together, like you are on emails with my CPA, you know, and it’s, it’s cool if there’s like a synergy there that you create, you know, and Okay, so this is my, my final question, because this is the, this is the million dollar question I get. Yeah. Which I’m sure you get. Hmm. When should an online business owner, hire a bookkeeper?

Iyanna Vaughn 42:37
Hmm, okay. So when it really depends, right, because even starting out the gate with even if that person isn’t doing your monthly bookkeeping, at least getting educated on actually, on how to do it, right, when you’re within your first six figures, I think, if it’s not in your wheelhouse, just outsource it, you can go to an affordable platform like benchtop, CO, they can get your numbers straight to you. Because if you’re spending time learning it, and actually doing it, and wondering if it’s right, that’s not the best use of your time as an entrepreneur. So I think even if I were to start over again, and if I wasn’t in this industry, I would just get a bookkeeper off gate, because I know that my numbers are going to help me understand and expand my financial future.

Monica Froese 43:27
Yes, I am in complete agreement, honestly, like you said, like go to a platform like bench.co, that’s essentially I used a bookkeeper that cost at the time, a lot less than what I pay you. But it was not the same strategy, and understanding the ins and outs of online business, but it was enough that I had, you know, I knew that, at the end of the day, everything was accounted for. And you know, my taxes could be get filed, and I wasn’t sitting in a spreadsheet logging, you know, I can replay value transactions. It was insane, right? That my cheat was like 2000 lines one month, and I was like, I don’t have time for this. It’s not that I can’t do it, because I actually understand it. But that’s not a good use of my time. So I actually am a big proponent as well, to have a bookkeeper as like one of your first expenses, because you just can’t grow if you don’t have a handle on your numbers,

Unknown Speaker 44:21
right? And then once you in my opinion, get to a quarter million sales like 250,000 plus, that’s when you kind of need a more robust type of support. Because then I did and then and then once you hit 500k and above, that’s when you need someone who’s more of a CFO where that person can help you strategize even more for the future.

Monica Froese 44:43
We are in complete agreement. I think I waited till I hit 400 to get you I would have done it sooner. Yeah. And then now like I’m, I’m pretty solid on our forecasting now, but I could see I could see it quickly getting away from me as things because just it’s like, the bigger you Grow, the more things you have to take into account. And like there’s just things that I’m sure I don’t know that I’m going to have to take into account later on. And that’s why it’s good when there’s people like you around me who can be like, ah, you’ve kind of forgot that this is a thing now I’m like, No, I just didn’t know it was gonna be a thing, because I’ve never had this much money before, you know? Right, right. Um, okay, so how do people like work with you? Where do we find them?

Iyanna Vaughn 45:24
Yes, yes. So our site is at lovely financials.com. So we have a service where this is something new six week boot camp, I think it is really extremely important to have someone really help you understand your numbers, not only the numbers, but where your goals are, where your pain points are, your mindset shifts, right. And understanding where your operational needs go. And understanding what your team is going to look like. So we have a boot camp there. And then we have our monthly services. And that’s, of course, you know, some what you receive. But more specifically, for entrepreneurs who are just at the class where they’re like, okay, let’s graduate from our regular bookkeeping solution to a more advanced solution, we have that monthly services as well as CFO services. And then let’s say you’re just beginning and you’re like, Hey, I’m dealing and they’ll have this one question. One hour stretching sessions, where I help you really conceptualize and understand, hey, you have this question, let’s actually map it out, right, so that you can completely understand what’s going on. So that’s how we work with our clients so that we can help them write good profit margins understand their cash flow.

Monica Froese 46:37
Yeah, those strategy calls are like, I remember, in the early days, I would book an hour strategy call with a lawyer because just like, you know, I can’t afford to put you on retainer. But I have, I want to make sure I’m, you know, I have all these, get your ducks in a row, get through all your questions. That’s brilliant way to get started. I love that you offer that because that’s just you know, it can ease someone’s mind to take that next step in their business, just, you know, making sure that they have what they need, or they’re at least tracking what they need in the interim, until they’re ready to hire that service out. So that’s awesome. So we’ll link to that in show notes, of course. So thank you so much for joining me and talking all about numbers. One of my favorite topics, and you’re one of my favorite people to work with.

Iyanna Vaughn 47:22
Monica, yeah, this it’s funny how we geek out so much.

Monica Froese 47:26
We could go on and on. Because you’re it’s like, I never get upset when I would call Iyanna. So people probably get a call with their financial people are like, Oh, I really have to do this today. And I’m like, Well, I get to talk about number. But it’s fun.

Unknown Speaker 47:45
It’s fun working with you as well.

Monica Froese 47:48
So thank you so much. It was a great episode.

Iyanna Vaughn 47:51
Thank you. This was so much fun.

Monica Froese 47:54
Thanks for tuning in to another episode of The empowered business podcast. If you want to get started creating your own digital products and don’t know where to start, we have a brand new training that can help. It’s called a passion to profit. How to discover your unique million dollar digital product formula, head on over to empowered business.co forward slash profit to join the training for free. Plus, we’ve added on a private podcast feed to make consuming the content even easier, you can choose to consume it via video or a private podcast feed. I can’t wait to see you back here next week.

 

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