Let’s talk about money.

In the past several episodes, we have been talking about financial topics and this one will be following the same theme. With all of the economic uncertainty right now, it is always a good idea to learn as much as possible about setting your business up financially for as much success as possible.

In today’s episode of Art of Online Business, I sat down with Emily Sandberg, my bookkeeper, to talk about what you can do to make sure that your business is in a healthy position when it comes to cash flow.

Emily Sandberg is a fractional CFO specializing in cash flow and forecasting for online coaches and course creators. While most accounting looks to the past for guidance, Emily works with her clients to know the future of money in their business, so they can make strategic decisions with their cash.

Her work has helped dozens of clients go from running a money-hungry business to a predictably profitable enterprise, by simply following her profit-centered framework. When she’s not coaching clients through the ups (and downs!) of their business cash, she can be found hiking in the gorgeous red rocks of southern Utah with her family.

In this episode, you’ll learn:

• Why a little bit of fear can be a good thing for your business
• How fear affects different business owners
• What you need to know about having an emergency fund
• Why the people in your business are your biggest assets, not the money
• The importance of reviewing your P&L every month
• How to evaluate and forecast your expenses
• Financial red flags that Emily sees in her work

Links & Resources:

• Check out Kleq
• Check out Huddled
• The Art of Online Business website
• DM me on Instagram
• Visit my YouTube channel
• The Art of Online Business clips on YouTube
• Full episodes of The Art of Online Business Podcast on YouTube
• The Art of Online Business Podcast website
• Check out my Accelerator coaching program

*Disclosure: I only recommend products I use and love and all opinions expressed here are my own. This post may contain affiliate links that at no additional cost to you, I may earn a small commission.=

Emily Sandberg Links:

• Check out Emily’s website

Got A Question You Want Answered On the Podcast?

Ask your questions or let me know if there is a topic or guest you’d like to hear from in the comments below or click here to visit my contact page and submit your question there for a chance to be featured on one of my upcoming Q&A episodes.

Please support the podcast by giving an honest Rating/Review for the show on iTunes!

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Hey my friend, welcome to the Art of Online Business Podcast. My name is Rick Mullaney and I’m an online business coach. I’m an ad’s expert, and most importantly, I’m a dad. And this show is where we help establish online course creators and coaches create more profit, more impact with less hustle. All right, let’s get into it. All right. It’s up, my friend. Welcome back to the podcast. Thank you, as always for tuning in. So quick little life update here on my end. So Maya, my daughter, she turns four in December. I can’t even believe I’m saying that out loud. Not because I don’t want to share that just because it’s hard to believe. She just started her new year in preschool and she’s like the mom of the because there’s so many new kids in her particular class that she’s like the veteran because she spent this like her third session, if you will, in there. And it’s been so fun to watch her growth and like she says stuff right now. I’m like, what? Like, where did that come from? And it’s absolutely amazing. And she corrects me when I call her, I call her Boo a lot. I say, Hey, Boo or whatever. She’s like, No, I’m to feed. 

And for those of you parents out there, you might know to feed us from the movie Moana. And she will correct me. She like she and she won’t listen until I til I address her that way. So that’s always fun. So anyway, so I’ll share a little update for you there. Welcome back to the show. And we’re going to be talking about money. And over the past several episodes here, we have been having conversations and I’ve been interviewing people and sharing with you around how to make sure that your business is set up financially for as much success as possible. You know, let’s face it, we’re in economically uncertain times. It’s the middle of August 2022, and who knows where things are going. But it’s always a good idea to be looking at your business and kind of shoring up the finances and making sure that you’re in a healthy position when it comes to cash flow. That’s exactly what we’ll be talking about here today with my bookkeeper. She’s also my de facto CFO, Emily Sandberg. Emily’s been on the podcast before. She’s from cash flow coaches and she’s just, you know, she just has changed my business dramatically when I started working with her a couple of years ago, in terms of the information that I get from the numbers, from forecasting, from just how I look at the business financially, and I asked her to come on here and share her expertise with all of you and also share some sort of things that she sees in her clients accounts. 

Not nothing specific by any means, but just sort of like what are some of her clients doing that is really, really smart? What are some red flags that she might be seeing in other areas later in this in this interview, we talk about team. We talk about percentage of overall monthly expenses that she recommends be put towards team. That’s a question I get all of the time. We talk about profit margin. We 

talk about just how to keep your business financially healthy during these times and also in really strong economic times. So without further ado, let’s go hang out with Emily Sandberg. Emily, welcome back to Part to be of the podcast. I say that because this is the second time you’ve been on the show, but this is the second time, I should say. And this is the second time we’ve tried to record this interview. 

Yes. 

And I told you right before I hit record here that my listeners love to hear when things mess up for me because they’re like, oh, it happens to everybody. So just for everyone listening right now. Hello. Thank you for tuning in. Today, I’m joined by Emily Sandberg, who is my bookkeeper, has been my bookkeeper for a few years now. And I look at her as my de facto CFO and I’ll have her introduce herself here, reintroduce herself here in a second. But today’s the Thursday and we recorded this interview on Tuesday. And then my team went to get the audio yesterday and they were like, oh, the audio. The audio for Emily cuts out 20 minutes in and we can’t we have no idea what happened. So here we are. Here it happens. Yeah. 700 episodes into podcasting, these things still happen. So I love your podcasting, my friends, and you are running into technical problems. It happens to everybody. So with that, we’ll come back to the show.

Emily, Thanks, Rick. I’m so happy. 

I just gave you a little intro. Let’s have you introduce yourself and sort of fill in the gaps there. 

So I yeah, I serve as a bookkeeper and de facto CFO for online business owners or course creators, coaches, people who sell information online, basically, and expertise. What that means is we keep your books and then we meet with you. And when I say we have a team, we have a team of bookkeepers, I have a team of coaches. Coaches are all certified life coaches. And so we talk about money, we talk about the numbers, and we also get to talk about your feelings, the thoughts and how those are affecting what’s going on in your business. 

That’s a unique combination that you know, and I think we mentioned this in the very first episode that I had you on where in eight and a half years now of being in in business have my online business. You are, I believe, the fifth bookkeeper, I believe. And I’ve gone through many CPA just because I haven’t found the right fit. And one thing I love about you is that in working with you is that the get to have that combination of like money coaching and the actual numbers. When we’re not just looking at the pal and breaking it apart, but we’re also talking about, you know, I would say 45 minutes of a one hour session is like at least for me, like the business excuse me, the money coaching and then we dive into the numbers. So totally, I don’t know any other bookkeepers and the fact of CFOs and CFOs and stuff like that who are doing that type of coaching. So and I wanted to have you back on here because we’ve been talking a lot over the past several episodes here on the show about this economic uncertainty that we find ourselves in here in August of 2022. And how online businesses can sort of set themselves up for success. And we were talking just briefly before I hit record here, and I really want to kind of start there is that there’s all this talk about. Recession proofing your business. I’m seeing more and more podcast episodes and so on. Yesterday, I think that was the exact title. It was like eight recession proof, whatever things that you can do. And that’s I have been talking about that as well. But there’s a lot of fear. I think there’s a lot of fear mongering and stuff going on like that. And I think that it’s important to realize that what we’re going be talking about here today is. Actually like normal stuff that we should be doing as business owners, but especially it’s, you know, it’s sort of amplified here in the current economic environment. 

Yeah, really. I had thought was there a question in there? 

The question the question is so like, let’s just start. So we as online business owners, again, there’s all this talk around and there’s fear like, oh yeah, oh, you know, oh, what if my, what if my business dries up here? What happens if my cash flow starts to take a big dive here? What are the types of things that I can be doing or maybe quote unquote, should be doing to maybe mitigate some of those things that could happen? 

Yeah. You know, something that I find fascinating is that so much of our economy is determined by the actions and behavior of the people participating. Right. All of us, the citizens of the country, the citizens of the world were. And when we feel fear, the actions that are driven by that fear are what determines our economy’s doing and what’s happening to the economy. We don’t even know that we’re having a recession until, you know, we’re not sure if it’s actually a recession until, what is it, six months into the recession or something. And so we can be operating under this fear without actually knowing that if it even is a recession or not, that doesn’t really matter to me. What matters to me is a what does fear do when I feel fear and as a business owner? And B, how can I use that for good? So typically, I don’t encourage my clients to to live in fear. I don’t think that’s a great place to live. I don’t think it’s a great place to make decisions from. But if you have if you experience a little bit of fear every once in a while that comes in, it can really like jumpstart to decision making, you know, can make you be decisive if you make you all of a sudden prioritize differently than you were before, before when you were a little lax about, Oh, yeah, I’m spending this much over here and I don’t really know if I’m getting an ROI on that or not, but. Now. Now I’m going to be because I’m afraid of what’s happening. I’m going to be a little bit more decisive and a little bit more demanding when my expenses to you, are they producing results that I want them to? 

Do you find. Do you find that. Sorry to interrupt here. I want to just do you find that because you work with seven figure business owners, you work with multiple six six figure. I think you’re you’re you start at like working with businesses that are like 250 K up, right? 

Yeah. 

So let’s just say the difference between or is there a difference from a fear perspective or having fear in these types of environments for the business owner who’s doing seven figures versus say, quarter of a million.

It’s a great question. I think the difference between the two is typically the person doing seven figures just simply has more experience. So the fear doesn’t necessarily rock them as much. They have more experience, so they have greater resilience, probably, and more ideas of how to respond, how to react. They have more experience with what worked in the past or what didn’t. 

Yeah. 

So is the fear different? I think I think newer business owners, the younger the younger ones are the ones that haven’t made as much money yet. The fear tends to affect them more. And so they have more of a roller coaster. The highs are higher, the lows are lower. Just because it’s all newer. 

Yeah. You mentioned something in our in our earlier interview this week that I took a note of. And I’m kind of glad that we have to get to talk about this again. We talked about having an emergency fund and having money. And I want to dive into that. You mentioned, though, that. Having money in the bank does not. Remove the fear. That’s what I mean by that. 

That’s what I said consistently. I’ll see people who they start out with me and they have. I don’t know, $10,000 in the bank that we’re earmarking as a reserve. Or they might have 20,000. They might have 50,000. They always want more. And I typically I’m encouraging them to get more because as the business grows, we want to have more in reserve because we typically have more incentive. So your monthly outlay is more and you need more to protect you. I think a reserve is kind of a padding. So when we talk about those highs and lows, it protects you from when you fall down into that low, it kind of protects you and gives you some time and space to figure things out. But. You’re asking me about fear with reserve. It doesn’t matter how. If. If my client is relying on the reserve to feel safe, we can keep putting more in there and more in there and more in there. And the fear stays. There’s never enough money. If they want to be afraid, if they feel like fear is the important emotion or that they’re supposed to feel fear, or it just comes naturally because that’s the way their emotional system is set up. Those are not the words. I mean, but I think you know what I mean. 

I hear you. I hear. 

You. The money is not going to take away the fear. Yeah. What takes away the fear is, is that experience and building that resilience to I can take care of problems when they come up. I can figure this out. And the real asset in the business is you is the people inside the business. At first it’s just you. And as you, aditi, it’s your team. So I want to rely on the team, the experience of the team, the abilities of the team, the creativity of the team, not the money to ultimately save the business if there’s problems. 

Sure. And you mentioned to you earlier that again, before we started recording. But like. Whether in winter, whether we are in a recession right now. Or not? Depends on who you ask or where we’re going. Whatever. Right. What we’re talking about here today, again, is basic financial principles as a business owner that we really should be practicing regardless. Now, whether we’re in a recession, quote unquote, or not. You made a really cool point about we as business owners go through sort of mini recessions, if you will. All the time. 

All the. 

Time. What do you mean by that? 

Well, to me, the danger and I put danger in quotes of being in a recession is that people are going to stop buying. Right. They’re not going to have enough cash or they’re going to be afraid to buy. And so as a business owner, as a producer of services or goods, my fear is that people are going to stop buying, which then means I have less money and then I can’t buy the things I need. So any time you have a launch that didn’t go as well or you you have a new product or let’s say you put it on Evergreen and it’s not selling as well 

as it was when you were launching. Or you you change the product, you increase the price, you decrease the price, whatever the changes you make in your business. And all of a sudden it feels like people aren’t buying anymore. We have the same conditions as a recession. It doesn’t doesn’t necessarily matter why they aren’t buying. You’re still experiencing those same effects. 

Yeah. 

And so and. 

So.

There are things you want to do any time in a business. 

So let’s go through those. Let’s go through those things. So as we’re sort of shoring up the foundation, like the foundational financial health of business, like what are some things that you mentioned, an emergency fund. So why don’t why don’t we start there? Everybody always wants to know how much should I have? So I want to pose that question to you. 

You should have. Well, I mean, some clients are more comfortable writing the edge, you know, and they don’t they like the adrenaline of the highs and the lows. And so they don’t want to carry as much cash or they just don’t like having cash in the bank. I don’t recommend that. Let’s keep some cash in the bank. Let’s start. If you have none, if you have no extra capital right now, let’s start with one payroll or one months of of expenses. How much do I send out every month? And I would include owner draw with that. So that’s a little bit more than just expenses. If you’re taking another job beyond a salary or beyond payroll, then let’s include that in in monthly expenses and let’s start there. Let’s get that in the bank. It might take you three or six months to get that in the bank. Depending on your profitability, higher profit means you can stack up cash quicker once you get to a payroll and then a month’s worth of expenses. Let’s do two months eventually. I like to get at least six months. Six months is where my business is and that feels comfortable to me. 

Why is that? 

Because that gives me I figure that’s going to give me like three months to figure out there really is a problem that wasn’t just a fluke month, that if I have a down month, I might just be like, Oh, okay, I’m not really sure what’s happening, but it’s probably fine, right? Because it always has been fine in the past. This happens two or three months in a row. I’m going to be like, Oh, there’s a problem here and I’m going to sit up and take notice and what do I need to change, right? And then that gives me another three months to kind of figure out the solution. So for me personally, for my business, for the amount of time it takes me to make a sale or to get a new customer and then make the sale, I just like that. I have a lot of people relying on me. I am the provider of their payroll, so that’s important to me that I have that payroll can keep running regardless of what’s happening in the business. That’s super important to me. 

I really like how you break that down like six months and but there’s a reason for the six months, like three months to try to figure out, okay, this isn’t a fluke. What’s going on here? Three months to kind of make some changes or make some moves, try to improve circumstances. Is that different? Do you look at that differently or is that money set aside differently than, say, your personal emergency fund? 

Yes, I keep those separate. 

Okay. So six months we just described, why as far as an emergency fund and if in the bank or in the business runway and if it’s not there, if you’re just getting to one month, whatever it might be, you’re just sort of building on it. The fact is, it’s okay where you are right now. You’re just building on it from there now. When we. So, number one, everybody should be seeing a pal of their business. I talked to so many, quote, very successful business owners who aren’t even seeing a pal of their business. So you need to be seeing your numbers each and every month. What’s coming in, what’s going out? One of the things that has really been a huge we’ll use the word I hate it, but love it. Game changer for the business since we started working together was forecasting being able to forecast revenue out for a couple to a few months and also forecast expenses. So when we’re doing or when we’re starting to get to that point, what types of things are we looking at within the PAL that might be red flags as we’re going through line by line. 

I like to look at? Well, obviously, we’re going to look at the bottom line. We’re going to look at profitability, and we want that number to be for an online business. Very general recommendation is 40 to 60% profit. And so that’s number one right there. If you’re not profitable, if you’re not at least 20% profitable, your business is at risk. And that’s something that needs to be fixed because without without that little extra bit of cash, you can’t take care of problems like I launched and people didn’t buy or somebody asked for a refund of a big ticket item or something like that that just really cripples you. You can’t spend ad on cash on ads, you can’t hire someone you can’t. It just really handicaps your business to not have profit. So that’s number one. If we see not enough profit or just going through line by line. And my panels are very detailed, probably much more detailed than you would get if your CPA is producing this or you’re a typical bookkeeper, because I’m not going to go into why, but mine are very detailed. And so we’re looking at then at individual expenses and we can look at them. I like to look at them as a percentage because that sometimes that makes it easier for your brain to go. If we talk about percentages 100% total. So you can think about it in terms of $100. If I had $100 and I see I’m spending 30% of my gross on people, then I say, okay, is $30 if you have $100 and I’m spending 30 of it on people, does that sound right to you? And then I’m also spending $10 on software and I’m spending that’s probably a little low, typically. Don’t don’t I’m not pulling up real numbers here. 

So weight really is is 10% of your monthly expenses, is that. No, I think that’s high.

Out of 100. Let’s see. I don’t know, Rick. I don’t actually know what the average percentage of the software is. 

I get that question. I actually got that. That question came up in our accelerator group recently where somebody was asking like, what percentage of your monthly expenses is quote unquote right for like tools and software? 

So here’s how I would look at that instead of percentage, because one business paying for lead pages and another business paying for lead pages, their revenue is going to be vastly different. So there is a there’s a that’s the word I’m looking for. You can’t really compare percentage to percentage because at some point we’re all paying $10 a month for loom and we’re all paying what’s another one, $12 a month for each email address on G suite, right? Yeah. Google workspace now so that the percentage is going to depend on my revenue. How efficient am I using that software? I will tell you for software, my clients are typically between 612 hundred a month. 

Yeah, that sounds about right. 

Anything above that, I raised my eyebrows and it could be just because they’re Infusionsoft is they have need a lot of bandwidth because they have a really big list for those kind of softwares. Right. Right. 

Well we should be using formerly known as ten x pro. 

We should be using that. 

Now called click k, l e Q to combine so many of those services. Yes, I’m a proud affiliate. I’ve been using them for a year and a half and I truly do love them. I was able to I think we cut probably like. What? Like, I don’t even know. 

Somewhere between two and $500 in other expenses. In other software, I think. 

Like a month. 

Right? Yeah. 

Yeah. Something like cut a lot. Yeah. And so you want to check it out, my friends, if you’re listening, you want to check it out, it’s Rick already forward slash click click cue it’s they rebranded from ten x pro I talked about a lot here in the podcast and that is an affiliate link. So if you do decide to go with it, I do get a small commission. I honestly don’t even know what it is, but I do firmly believe in it. So anyway, percentage makes sense because it’s going to be different for everybody. Yeah. You mentioned the 30 ish percent for team. That’s another question I get all the time is what quote should. You know what? What should the percentage be of my overall monthly expenses for B, my B, for my team? And you mentioned. 

30%. I like it between 25 and 33. Really? 33 is as high as I like it to go. 

And the important thing as we’re going through the panel is. What kind of. Am I getting a return on paying for this role, this role? This role? Can you talk a little bit more about that? 

Yeah, absolutely. Every expense, every expense you want to know, is this a profit? Is this a revenue generating expense? And if so, is it working? There are a few expenses that will not be revenue generating. A couple of your people may not be an assistant, might not be. I don’t generate revenue for you. However, your assistants going to free up time that you can go and spend on revenue generating activities. And that’s a question that I often ask my clients What are you doing with that time? What will you do with that time as we consider? Are we going to add that expense or not? Someone like me, I’m not freeing up your time, but I am helping you regulate emotionally. I’m helping you look at the business from that 40,000 foot level and helping you make decisions forecast. Look ahead, see where cash flow gets tight. And so then you are motivated to make more money. But other things, software and roles in the business? No, people, we want to talk about them as roles, so we expect results from roles. 

Yep.

We should be looking at that consistently to see is is this profitable or not? Yeah. If not, why not? 

And that’s every single month, my friends, like. When you’re looking at your pal going through line by line and looking at am I getting some form of return on this expense? Right. Whether it’s a financial return, whether it is a time you’re getting time back, just like Emily was just saying. Am I getting by having less stress? You know, am I getting energy back? You know, to be completely honest, like knowing that Emily is on my financial team in the business. I don’t worry. I mean, I’m looking at it all the time, but I don’t worry about anything because I know Emily is taking care of it. No pressure, Emily. Emily’s taking care of it. I know we’re forecasted. Well, I know we’re putting money in for the runway and all that stuff. Like, I don’t. I don’t stress about that at all. And that is huge. So there’s a return there, just like you’re just like you just mentioning. And as far as tools go, you know, I like to review them every quarter. Just to make sure that because, you know, their monthly expenses and those $37, $47 whatever they add up and so every quarter be looking at, oh, am I even using this tool. Oh, I haven’t used it in seven months time to get rid of it. And I don’t know if I told you about this, but there’s a tool called and there’s no affiliation whatsoever huddled dot com. I tell you about that. 

I don’t think. 

So. It’s H Udall e d and it connects with like your what is it, Xero or QuickBooks or whatever it might be. And it tracks all of your monthly SAS tools and it will make recommendations for you based on what you’re paying. It’ll say, Hey, there’s a better deal that you can get and it just automates all that. So that’s pretty cool. Somebody else told me about that. So anyway, so we’re looking at our pal. What are some other things that we should be doing to again, we’re talking about economic uncertainty, but again, these are just normal, basic foundational principles from a finance perspective that we should be looking at. Yeah. Anything else? 

Well, two things I want to say. One was you mentioned going through your software once a quarter. I think that’s a great once a quarter. Once every six months is a great amount of time to that. Saving the $37 in canceling whatever you cancel is not huge. It doesn’t make a huge difference in your bottom line. What it does, though, is it trains your brain to be consistently thinking about profit and ROI on this particular item. So I love that that practice other things to look for. So going through the panel and making sure you’re profitable is one thing. The next thing I want you to make sure is that your cash flow is that, you know, if your cash flow is positive or negative because that’s not something that’s talked about nearly as much as the panel. And yet it’s hugely important. When I have clients first come to me and we set them up and we start going through everything together, that’s one of the things that that we look at. We look at how many months in a row are you profitable or not profitable? What’s the pattern of that? Do we see a pattern? Do you know the pattern of your business and why it’s profitable some months and not others? And that is usually because you’re selling. You have a big launch one month and then you may not have that launch again for another 3 to 6 months. 

And so you may be using that money from the launch for the rest of that time period. So you’re not going to be profitable because you’re not bringing in money those other months, but then cash flow. We also want to know, are you positive or negative there? And we want to know that pattern and why it’s happening. When it’s happening, everyone is relieved. When they see negative cash flow numbers, they kind of seize up a little bit and they’re all when I say no, all of my clients have negative cash flow months. Yeah, typically a tax when we pay estimated queries that will cause you to go negative cash flow. Large owner draw super fun and I love to have those. Those will take your cash flow negative. So that’s totally fine. We just want to make sure that that at the end of the year we’re positive. We want to make sure we’re positive for 12 rolling months all the time. I’m checking that. But knowing that it’s okay to be negative sometimes as long as you’re positive the rest of the time. The rest of the time, as long as your overall positive and, you know, pattern, you understand why that’s happening in your business. 

I think that’s really important. So a few different things there. So number one, like when you do a launch, if somebody is launching and they have a big influx of cash, come in. What a lot of people do is be like, all right, cool. I’m. I’m flush with cash, right? Yeah. And just reminds me of Jean-Ralphio from Parks and Rec. I don’t know if anybody listening right now is literally one of my favorite characters of all time on TV. And he says I’m flush with cash. But anyway, people are like, Oh, I have all this money come in and then they start spending it. Rather than understanding that long term, like you just mentioned, like rolling 12 months, hey, are you putting aside money for estimated taxes? Maybe the next two months aren’t going to be big revenue months because the revenues come in this month. What types of things should be should people be thinking about when they get that influx of cash, if that’s the type of model that they’re doing in their business?

Such a great point because so often what we’ve done is we’ve saved up expenses like, well, I’m going to buy this thing when after the launch and I’m going to hire this person and I’m going to do this and that after the launch. What we really need to do. That’s great. I love that you that you’ve waited to purchase it. What we need to do is look at what came into the launch. And if you took in payments, what’s expected to still come in. And then we need to make see how far we need to spread that money out. How far into the future does that money need to take care of business expenses? And so I love to look at a 12 month annual plan like what do we need? How far how far does this money need to spread and what does it need to go towards? So what revenue is coming in besides this launch money? Here’s the launch money is this big amount. Here’s the payments that are coming in the next few months and then what is going out? So I have my regular expenses that go out every month my software, my payroll, my maybe my insurance, something like that. And then I have a few of those that are different, like I’m going to pay my coach twice a year and that’s going to cost this much, or I’m going to travel to these conferences and that’s going to cost this much, or I’m going to finally buy that new house and I need this much for that down payment. Well, we want to forecast that out. We want to know what those expenses are, because when I have a couple hundred thousand dollars sitting in my account, that might feel like a ton of money because I haven’t ever had that before. And it’s super exciting. But if I don’t recognize the expenses that are also coming with the delivery of the program, the growth of the business, then I’m going to fall short on cash. And that feels terrible. 

If somebody is looking at their pal now. Maybe they are experiencing some form of downturn in their business. Maybe. What are the first areas that you. I mean, we mentioned like, you know, the the tools and that’s all very easy stuff to look at. What are some things that somebody might be might be able to do when they’re noticing, oh, you know what, my revenue is down for the past three months or what have you. My profit margin is down and my cash is dwindling. What are some recommendations? I mean, the obvious. Right. Produce more revenue. Is there more to it? 

Produce more revenue is a great plan. I love it. Another you know, another part of that plan is cut expenses. Cut the expenses first. And like I said, I like to give myself three months out of my six months. I have three months to to gradually cut. Right. 

Yeah. 

And then we want to look at we’re going to look at that profitability. We’re going to look at that return. The hardest thing to cut emotionally typically is people. Yeah, it’s hard for a host of reasons. A we like them be we love having their support. See, we recognize that they need this money. Probably. And so so I like to be here. I’m talking about again looking at things beforehand, being careful with how you what money you promise to the future, what future expenses you set up for yourself. Because salaries and benefits, those are big. 

Yeah. 

All right. But what can they do in that moment when they see there’s a downturn? They’re going to start looking at why? Why are people not buying? Is it? How’s my marketing? Falling off? Fallen off? Did I all of a sudden have this thought that I made it and that people are now just going to buy? I see this happening a lot. We have a successful launch. We have a really good year. We hit our income level, our income goal, and all of a sudden we’re like, Oh, I made it. I’m here. Hey, everybody, I got a business and it works. And then we we ease off on the gas of all of those activities that were driving that revenue. Yeah. So that’s such a good point we want to really look at closely. If you made a switch in business model, let’s say you were one on one and now you’re selling group coaching or you were selling group coaching and now you’ve added some kind of course or a program that people are now buying that’s more self directed. And so you put your energy into that and maybe you’ve neglected what’s the main source of revenue. You’re hoping that’s going to be the main source of revenue, but it’s going to take a while to ramp up. And so we just need to look at where can I cut? That makes sense. How can I make more money? How can how can I stretch this out? How can I stretch out what I have while the marketing efforts pick up? While people recognize that that I’m selling this or that now. Because typically we see a downturn when something new is happening in the business. 

Yeah. And it’s important not to make drastic, like, rash decisions. 

Yeah. And let me say what I just said one more time, because people miss this all the time. When you start selling something new in a new way, let’s say you go from launching to Evergreen or it’s a new program. You have to educate your people that you’re selling something new and in a new way, and it takes a while for that to pick up. So just because you’re really excited about it doesn’t mean they’re going to be really excited about it yet. So don’t make it mean that it’s it was a bad decision or was the wrong product or whatever. Stick with it and try to discover why. What’s what’s happening? Why aren’t they buying?

It’s such a good point and also goes back again to having that runway, giving yourself the the the ability to kind of slow down, assess, see what’s up, see what’s going on. Talking to your customers. Yeah, that’s a concept I know. But listening to what they need, right? Listening to your audience and getting that feedback and what are they going through right now and are those problems that you’re able to solve right now within the lens of your the vision of your business and your values, etc.? Now I want to start kind of wrap up here. One thing that we did in our previous interview this week, which we talked, you work with a lot of different online business owners, course creators, coaches, they’ve got memberships, etc.. What are some red flags that you see? Obviously, we’re not naming businesses or names or anything like that getting specific. But what are some red flags that you see? What types of things have you seen happen? Where that’s related to this, maybe good or bad. And then on the flip side, what are some things like really smart things that you see people doing on the financial side? 

Yeah, red flags is we just we talked about it adding expenses too quickly. Deciding that all of a sudden I’m flush with cash and it’s time to add all these expenses and believing that the revenue that I just created in the recent, the near recent past is now automatically going to continue. And it’s actually going to grow and it’s going to go in this nice straight upward track, right, to make more next month. And more than that, the next month and the next month is going to be even better. That’s not how it works ever. 

But before you go on to the next point, Emily, I’m sorry to cut you off. That is such a critical point to understand because. So many of us believe that. And then when it doesn’t happen, we go into a complete breakdown. 

Tailspin. 

Like, wait, why have why am I not doing better this August than August 20, 21? Well, maybe because the world was in a different place in August 2021 and it’s okay, right? It’s okay that like this, this month is different from last year. Whatever. I see that all the time. 

Yeah. And I said this before in our last interview, that our businesses are young, you know, we are Internet businesses where they’re very agile. We can change a lot very quickly. And so the business you have in August of 2022 is probably not the same business you had in August of 2021. Yeah, you’re not the same business owner. And also just knowing that this happens to everyone and no one talks about it, very few people talk about it. You haven’t done anything wrong. This is just part of growing business when when you have a revenue dip or you have other hard things happen, like employees leaving or people asking for refunds. It’s painful. It’s hard. Yeah, but it happens to everyone then. I see. I see it every day. 

So. Making Rasta decisions on the expense front. Adding expenses too quickly. 

Adding expenses too quickly. Big red flag. Yep. That’s a huge red flag. Another red flag that I see is spending. Spending the reserve thinking because you’re sure that the next launch is going to make up for it or the tax money that’s even scarier spending the tax money because it’s going to come in next month, we’ll be fine because sometimes it doesn’t come in next month. Yeah, and I don’t say that to be a downer at all. But what if you just got really creative and you constrained yourself and you figured out how to make it work on the money you have? 

Yeah. 

That’s a great exercise. 

Now what are on the flip side? What are some really smart things people are that you see people doing? They’re kind of boring. 

So yeah, but boring on this front is really good.

Watching profitability, consistently, consistently watching profitability. And of each thing that I offer, I want to make sure each one of them is profitable. I don’t want one part of my business, one product to offer to be supporting another product unless I have a really clear plan for the one that’s being supported to get profitable in the near future. So making sure that I’m watching profitability on everything, we we have a tendency also to start throwing things into our programs. We’re going to add one on one coaching here or you get this call here or you get access. We’re going to throw in this tool or whatever and it feels like a little thing in the moment. It always feels little insignificant moneywise, but it tends to add up. It tends to affect your profitability because you’re also choosing other expenses as well. Yeah. So oh, we’re back on the wrong thing. So watching profitability, putting money away consistently, being very intentional and engaging with their numbers. When we get scared or when we get, we start to feel like something’s wrong with us or this isn’t working. We tend to not want to look at the numbers. When there could be a host of good information in the numbers. Useful, actionable information. For example, this thing isn’t profitable. I need to cut this out or I need to make it profitable. That could be number one thing you discover when you’re looking at your numbers when things are going wrong. So putting money away, not increasing expenses too quickly, watching profitability, keeping tabs on your taxes, making sure you’re prepared for taxes. Those are really good things to do. And having that longer term picture of I’m looking at my cash flow for the next 12 months, not just this month. 

Much easier to do all these things with the help of a professional, because I’m thinking about that and I’m like, if, if I if we were together, I’d be like a. Och, I’m not doing all that stuff. Right. Yeah. So the very first time you were on the podcast, I remember I warned you beforehand, I said you were going to have a lot of people reach out to you to inquire about working with you. And you said, I think you said, I can’t. I can’t right now. Things are very different now. So share with us what types of businesses that as far as revenue levels and that sort of thing, who is your who’s the type of business or what is the type of business that you work with? And how can people connect with you to learn more to see if it might be a fit to work together? 

Yes, I will do that. I also want to mention before before I do that, I want to say if you’re not at the level yet, if you’re not there yet, it is so helpful to have someone else preparing the numbers for you. It’s overwhelming to do all of it on your own. But you may have a bookkeeper who can do this for you. You want to ask them for a panel. You want to ask them for your cash flow number, and you want to ask them for average monthly expenses and average monthly revenue as well. Because then you can you can take those numbers and plug them into a spreadsheet that says Jan averaged expenses, average revenue sat around average revenue, average expenses, and then you can forecast that out and see what’s happening. So there are things you can do. One of the most important things I do with my clients is give them that hour, or sometimes it’s 2 hours where we sit down and we look at those numbers because they don’t do that on their own. You just naturally would not if it wasn’t on your calendar and you didn’t know that somebody was showing up there with you, expecting you to be there. 

And here’s the numbers and here’s what I see. So having someone prepare those numbers for you is super helpful and then forcing yourself to sit down and look at them the way we do it is we we do your books for you and then we meet with you at least once a month. And we go over those books and we take time to look at what happened in the past, make sure you understand what happened. Where are your where is your cash flow right now? What’s your cash position? How much do I have? And then we tell you what we think we see going forward. And then you inform us as well saying, well, we’re going to make more money here or this is going to be a low amount and I want to pay for this in that month. So we start to massage the the forecast and see where is cash flow tight? Where is it not? What do we how how are we going to invest this money in the future? What is the business need? 

Yeah, that right there changes. I mean, at least for me, it changed everything because it just, you know, being an anxious person. I’ve talked about it a lot here. I’ve struggled with anxiety for since I was a kid, like especially when it comes to money. I mean, that’s a whole other episode. But this, this exercise right here change the game for me because it just put me at ease knowing because prior to working with Emily, I hadn’t even I did no forecasting whatsoever, I’m embarrassed to say. But all right. We started and it is a critical part of the business. Having a good idea of what’s coming in, what’s going out. Planning for all these different types of things. So, yeah. So what is the. Is there a revenue number that you work with? 

We find we have found that working with people making 250 and above annually, that’s where our fee fits in the best and we’re able to help them the most. Do we take some people at lower amounts? Yes, sometimes we do, but typically it’s that amount is where it fits nicely into your budget. And and you have enough money that we can really help you. That’s, that’s the amount we’re geared for and we’re good at that. 

Yeah. And where can people connect with you? You have a you have a brand new website. 

A brand new website. Cash flow coaches. 

Cash flow coach is the way that Emily says that it’s kind of she doesn’t sound excited but she is really it’s really good cash flow coaches dot com you can go on there you can schedule a time to to chat with is it with you or your team.

You chat with me to start with we’ll figure out what you need, where you are, what you need if we’re a good fit. Yeah. And then so we, we prescribe a plan of action and go from there. 

Nice. I will link that up on my website. Rick Mulwray in the podcast section and the show notes. Cash flow coaches dot com is where you can connect with Emily. Emily thank you. Hopefully our audio cut to this point. I’m pretty sure it did, but thank you for coming back on. I appreciate you. 

So good to be here. Thanks, Rick. 

All right. Hope you got a ton out of that conversation there with Emily. If you’d like my eyes on your business, if you want to see how I might be able to help coach you in your business, to scale your business and your impact while working a lot fewer hours. My whole thing is you can have a very, very successful business, whatever success means to you in working no more than a 25 hour work week. So if you’d like my help looking at your business, coaching you, coaching with me, then shoot me an email Rick at Rick Molloy Telecom and let me know a little bit about your business. Love to hear and start a conversation that way. Thank you, as always, my friend, for tuning in today. Appreciate you. Until next time, be well and I’ll talk to you soon.