Knowing your numbers and being aware of your expenses and income is a must if you want to not only start a successful business but also keep it running smoothly – even during a pandemic.
That’s why this week on the #PrettyAwkward Entrepreneur Podcast, I’m chatting with Katie Ferro, my personal bookkeeper and tax and bookkeeper extraordinaire, all about knowing your numbers, how tracking your income and expenses can help increase your profits, and so much more.
But before we dive on in, let me introduce myself. My name is Megan Yelaney, and I have built two six-figure businesses and one multi-six-figure business by fully embracing my authentic self and not trying to hide the quirks that make me, ME. Meanwhile, Katie Ferro is a bookkeeper for business coaches and a business coach for bookkeepers. She plays so many roles and has so much wisdom, I just know her tips from this episode will help you take control of your bookkeeping and take your business to the next level.
So if you’re a female entrepreneur looking to learn, grow your business strategies and mindset, and scale your biz to multiple six figures while having fun doing it…you’re in the right place, girl! Because I made this podcast exactly for YOU!
And today, we’re talking ALL about the importance of knowing your numbers!
Before we get all the dirty details of Katie’s financial advice, I wanted Katie to share how she got to where she is today. She got her undergrad in accounting, started a corporate job right after, got her masters in taxes and her CPA license also while working. Katie then worked at a CPA firm for a couple of years, which is where she learned how to work with small businesses. Then she went back to corporate and was a tax manager of this really big corporation while being a mother.
In a strange twist of fate, Katie got into a car accident when she was halfway through her pregnancy with her son and on her way to work. And the next day, her company, gearing up for a sale, announced a voluntary separation program where she could choose to quit and get a bonus and a severance. It felt obvious that was what Katie needed to do, so she did.
That led Katie to just doing the mom thing for a little while until her business almost grew underneath her. The CPA firm that she had been with knew that Katie was home with her son and they had a couple of clients that were either too big or too small for them. So they reached out and asked if Katie would be interested. And by keeping saying, “Yes,” Katie grew her own business.
But a couple of years ago, Katie decided that she wanted to focus on educating entrepreneurs. And now, she has an inspiring mix of clients that are mostly small, solo, female, online-based entrepreneurs while also coaching bookkeepers on growing their own practices.
One of the biggest lessons Katie has learned in her own entrepreneurial journey has been understanding what really matters for clients or programs, and not overcomplicating things. For example, Katie launched her bookkeeping coaching program fully understanding the transformation that she could give clients and the value of that. And so when she found herself thinking, “Maybe in six months I could do this,” she slapped herself and decided she was going to launch it sooner. So she launched it the next week, and it was a great program.
And ever since the pandemic began, Katie has also seen the power of being online, giving a really high-value transformation and diversifying one’s offers. Her bookkeeping clients have stayed consistent except for a couple of traditional businesses who have paused their services for now, but she’s still treating them as clients and expecting them to start back up soon. But Katie’s online resources – like spreadsheets and stuff – have increased in popularity because people are now searching and starting businesses.
I think Katie’s business shows the true power of having a product suite, especially as you grow in the beginning, and that you don’t need all the bells and whistles. But you DO need to be super confident in the transformation you’re providing. That’s why I say all the time that the best way to get new clients is to just be a really great coach to your current ones.
This podcast was created with YOU in mind. The female entrepreneur looking to learn, and grow your business strategies and mindset, to get your business off the ground and scale to multiple six figures and have fun doing it. To inspire and empower you to take the required action you’ve been putting off to create products and make sales.
Each week we will be covering topics that will help you start, grow and scale your business. Some topics that you can expect to be covered include:
I can’t wait to hear about what you learn, what makes you laugh, and what tips allow you to grow your business and brand as your authentic self.
So before I worked with Katie, I was doing sort of my own bookkeeping with my dad’s help. And I built two multiple six-figure businesses doing it myself, but very haphazardly. What really helped me when Katie and I started working together was actually seeing where my money was going. I knew in general about how much I was spending each month, but I couldn’t clearly see everything. And that is so important because when you know your expenses, you can ask yourself hard questions like: Did you need that? Was that necessary for that month? Is that something that’s going to pay off in the long run?
In my opinion, if you are making more than five to eight thousand dollars a month, I personally suggest letting someone else handle your accounting for you. But if you’re not at that point yet, there are tools that Katie has that will help you do your own. And wherever you’re at, be aware of your numbers. It is so eye-opening and it makes us feel really good because we can celebrate our successful months, whether they’re “successful” in terms of profits or sales or even making a big investment without going into debt.
And I don’t think that there is ever a month where you should beat yourself up over your numbers. Because you have to take risks and you have to try things in your business to know what’s going to work and then you evaluate those attempts. So I always say to people that when you see your numbers, it should be an intuitive process of figuring out what things are working for your business.
Just know this: you need to be the decision-maker in your business, but you don’t need to do the number-crunching that allows you to make the next decision.
Another big thing to talk about is how everything is a learning lesson, so if you make an investment in something that doesn’t end up resulting in what you thought, you learn something from that. Katie really believes every single investment we make is for a reason, even if it doesn’t result in a return on your investment monetarily.
And on the note of monetary investment, it’s important to discuss what profit is. Profit needs to be at the forefront of your mind when you’re thinking about your business because even if you’re not a person who’s motivated by money or material things, you can not live out your purpose and your passion if you’re not profitable. Because without profits, you’re going to run out of time, energy and money.
Now what is profit, really? It’s sales minus costs. So when you know what your profit is, then you can decide if it’s enough. And if you’re looking to increase your profit, there are really three ways to do it:
If you’re looking for additional ways to increase your profit, I also suggest making sure that you’re actually using whatever resources you ARE paying for! And if you try to do so and don’t…that’s when you know you definitely should stop paying for that service or product.
Connect, grow, and scale your business to 6-Figures. Awkwardly.
If you’re just starting out with your business, this section is for you. So why is knowing your numbers important if you’re not paying for someone to do your accounting yet or are barely making any money?
Here’s Katie’s answer: even if you’re not making sales, knowing your numbers is important because when you see how much money you’re spending, you can make smart business decisions instead of avoiding numbers out of fear. Know that it’s OK to lose money at the beginning of your business. You just need to keep trying, keep testing until you have that breakthrough that gets you there. You can’t quit, but you do need to know what you’re spending. And when you look at what you’ve spent, it’ll motivate you to look at what progress that money has made or to prove to yourself that your business is going to work.
And if you’re looking to do it yourself and you are a solo entrepreneur, Katie created this spreadsheet that it’s in her Small Biz Starter Kit. It’s in Google sheets, and it’s so easy to use. All by itself, it’s going to show you your streams of income, what your highest income earner is, your expenses by category and where most of your money is going. And then it’ll give you your total sales, minus your total expenses to calculate your profit, as well as your profit percentage, which tells you how many cents per dollar of sales you’ve got to make to keep this profit.
And again, I just want to emphasize how powerful tracking these metrics are. Personally, I tracked every penny of my income at the beginning of the year, and because I was so hyper-focused on it, it grew every single month. What you focus on is what you bring more of. So if you want to have more profit, you’re going to have to start seeing the numbers. And don’t do what I did and wait a long time before starting. I probably could’ve been profiting way more way sooner if I actually knew my numbers better.
After all, real businesses know their numbers. And let me just tell you, with everything that’s going on in the world, I feel like we entrepreneurs ARE the real business owners with the most limitless opportunities. So take control of your finances from the beginning and keep growing your business – and your profits – forever.
Finances and knowing your numbers often feel like the non-sexy, non-fun things to talk about in business, but they’re really important. And if you ignore them, especially as you grow, it’s just going to get harder to start. Plus, you’ll miss out on just how empowering and fun knowing your numbers can actually be, especially when you know someone like Katie who explains this often very complex topic so well.
So I hope this episode helps change your view of bookkeeping from a mundane, required task to an intuitive process of continuously improving your business, and I can’t wait to hear how Katie’s wisdom and tips transform your business!
And as always, stay safe, stay healthy and stay #PrettyAwkward!
Thank you so much for taking the time to check out the #PrettyAwkward Entrepreneur Podcast. I would LOVE to have the opportunity to connect with you, check out my #prettyawkward Female Entrepreneurs Create Impactful Passive Income free group on Facebook!
I have helped HUNDREDS of women get their unique coaching voice and find their soulmate (clients that is!)
Because I’ve been there too. I went from wanting to be a health and fitness coach...trying to take awkward booty pooping selfies, to embracing my #prettyawkward style and scaling my coaching business past six figures.