If you’re like me, the term “profit” might conjure up an image of a douchey, corporate looking dude in a suit walking into a high rise for some cheesy stock photos. At least, that’s what I envisioned when I started my business. That is, until I understood WHAT profit is and WHY it’s so important.

In this episode, I’ve brought in a guest who’s sole passion it is to help business owners create a business that’s actually profitable – i.e. actually MAKING money, not LOOSING it. Danielle Hayden is the author of The Profit Planner book series and Co-owner of Kickstart Accounting, Inc. She shares some amazing, practical tips, methods and strategies on how we can make our businesses more profitable TODAY.

In this episode:

03:25 – Greeting to Danielle
04:16 – Promise to keep fun
07:30 – Why Profit is important
09:42 – Fulfill your goals
10:40 – Pricing
13:59 – Charging more
17:41 – Watch the numbers
21:44 – When to review
22:31 – Weekly review
25:29 – Monthly review
27:51 – Days to review
30:39 – Setting goals
35:05 – Time blocking
37:49 – P&L
41:12 – Getting help
44:31 – Saving three months
47:57 – Planning ahead
54:39 – Start now
57:22 – Don’t hide from it

You can also view the full transcription of this episode below.

Dannielle’s –> Financial Planning Tool


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Full Transcription

Josh 0:16
Hey, friends, welcome into the podcast, this is Episode 65. And in this one, we’re going to have some fun. Now, you might be a little surprised to hear me say that because we are going to be talking about business financials. But in this episode, we’re gonna be talking specifically about profit and how to make your business more profitable. And if you’re new to business, and you don’t really quite understand what profit is, or why it’s so important. That’s exactly what this episode is for, because we talk about why profit is so important. And more importantly, we’re going to give you some actionable plans and strategies that you can implement right now to become more profitable in your business as soon as this week. So for this talk, I wanted to bring somebody in who’s an expert in this field. This is Danielle Hayden, she’s the CO owner of a firm called Kickstart Accounting. And they help businesses in all sorts of industries with their financials to become more profitable. She’s also the author of a really cool profit planning book series, I actually have one of her books, and I’ve been going through it, and I wanted to have her on to share what I’ve learned so far in regards to profit with you. So you guys can again, start to become more profitable, because it really is the lifeblood of your business, you need to have profit. In short, we’ll talk about this in the episode, but let me just give you a quickie, you got to be profitable, because you need to have money to grow your business, to invest in yourself, to save for taxes, you need to be able to pay yourself, there’s all these areas, why profit is so important. And we’re going to empower you to do that. And Danielle is awesome, you’ll find out in this in this interview. She’s just a wealth of knowledge. And she’s really transparent with how you can be more profitable, and how you can grow your business. But she’s also I found that she has a big focus on the mentality of sustainability and business. So you’re going to find out a lot of practical ways to have some fun with this, and to do it consistently moving forward. So I can’t wait to hear how this helps you out. Now one area of business that can really hurt when it comes to being profitable is your process. And particularly for you as web designers. If your web design process is taking forever, and you feel like all of your projects are a scattered mess, you know, they’re taking twice or three times longer than they should, then I want to help you with that, because that’s a big key to becoming more profitable, and also help you escape having to keep on selling new projects, if you can just become more profitable with the ones that you’re doing. And again, if you struggle with the process, I want to encourage you to join my web design process course today, because in that course, I show you my five phase 50 step proven process for planning, building and launching websites, effectively, it’s going to help save you time, it’s going to give you a roadmap to follow, and it will help you become more profitable. So if you’re interested in that, put a link in the show notes. Join today. And I would love to help you get more profit in your business by just making one change, which is to increase the productivity for your processes and web design. So join today if you’re interested. Alright guys, well enjoy this interview, we do have some fun, we cover some amazing things that are going to help you become more profitable. Without further ado, here is Danielle.

Josh 3:25
Danielle, welcome to the podcast. Awesome to have you on.

Danielle 3:28
Thank you so much for having me.

Josh 3:30
So we’re gonna talk about a subject that most of my audience is probably not excited about, because we’re designers and web designers and entrepreneurs. But nonetheless, it’s very important. And I think we’re gonna have as much fun as we can with this subject of finances, because we’re going to talk about a really important in a word called profit. And I’m really excited to dive into this because I’ve learned in my career, the importance of profit and actually being able to move your business forward. And I know that’s where you come in, and you have a business where you help all kinds of businesses with this. So before we dive into and start having some fun, I’d love to start out just for you to let my audience know where you are and what you do. Exactly.

Danielle 4:15
Yeah, absolutely. And I promise we’ll, we’ll keep this as fun and light as possible. I know that most entrepreneurs when you hear finance or accounting, you run the other direction. I completely understand we work with lots of entrepreneurs who feel the same way. So my goal has always been to create a safe and enjoyable place for people to be able to come and talk about this important topic. So my background I actually am kind of a creative as well. So I actually started my career as a hairdresser and really understand that creative side of the brain. I then went back to school, became an accountant and worked in corporate accounting for several years. What I realized in corporate accounting is that I was using all this information and knowledge to arm the accounting or the management team and the investors and the board of directors. And I said, I want to use this information to empower entrepreneurs, right? You, as a small business owner, need that same information? Because how are you going to grow your business if you don’t have that same information. So we went on a mission started a company called Kickstart Accounting. in that company, entrepreneurs hire us to help them create profits in the business. We do this through your bookkeeping, budgeting, cash planning, most importantly, figuring out how to get you a profitable business that aligns with your goals, and get you the paycheck that you freaking deserve.

Josh 6:02
Beautiful, well said. And I actually, I have your profit planner book right here that I went through recently. And I’m sure we’ll talk about that, because it really helps kind of, it was a good reminder for me to focus on profit and to play in my business well, and the on the profit planner itself, I’m going to link to that in the show notes and actually have an offer for my audience to to get some access to it. But it is I like how it’s spread out weekly, because it just makes things much more manageable. Because I think all of this can be very overwhelming. When you think about profit, you think about finances, particularly as creatives, we tend to get overwhelmed, at least I do by this kind of stuff, because I’m not a bean counter. And I want to focus on content and what I do so like I said, we’re gonna have some fun, we’re gonna make this simple. We’re gonna break this out into some steps that are going to be actionable for my audience. And I don’t know if you said, well, you’re based in Cleveland, right?

Danielle 6:55
Yes, Yep.

Josh 6:57
Yep. So you’re not too far from me. So next time you’re in Columbus, let me know. And hopefully, this COVID stuff gets over at some point so we can take you out for coffee or something.

Danielle 7:05
Oh, we’re just so excited to have a football season. So Exactly.

Josh 7:09
Yeah, there you go. Nice. Yeah, well, I’m sorry for you that that’s your that’s your team. But if you ever get into hockey, let me know cuz I’ll get you into the gym.

Danielle 7:16
Sounds good.

Josh 7:17
So let’s let’s start out with, I think a good place to start would be why why is profit important?

Danielle 7:26
Yeah, that’s a good question. So profit is not only important for you to have a sustainable business, but it’s important for you to grow your business. Now, imagine if every month, you only brought in enough revenue to cover your operating expenses, or to just pay yourself the bare minimum to cover your personal expenses, you’re never able to reinvest in your business, which means you’re never able to really grow your business. So a lot of times when we start focusing on profit, understanding your numbers, understanding your financials listening to the story your numbers are trying to tell you, what we find is that entrepreneurs are able to feel like growth is really possible. And that is really what I want profit to do for you, is for you to feel like additional growth is possible by having that profit having that bandwidth to reinvest in yourself and reinvest in your business.

Josh 8:28
Oh, that’s, that’s great, because I, I feel like as somebody who never went to traditional college, right, and I never worked out in the corporate world, the term profit seems very just corporate to me, like I just imagined some dude in a suit walking into a high rise, but it is so important. I think you just hit the nail on the head there, it’s so that we can move our business forward and grow as an entrepreneur and a business owner, right? Because, like you said, if you’re just scraping by, you’re not going to be able to reinvest in yourself reinvest in your business and, and move forward.

Danielle 9:00
Yeah, yeah. And yeah, that you make a funny comment there, with kind of profit being that word of a bean counter and a tie. You know, part of our goal as a firm is to break down that corporate that that traditional view of an account that traditional view of, of what profit means to you. And the best way to do that is to start to help you as the entrepreneur, understand what profit can do for you, right? If you have profits, that means you can grow that means you can make more money to take home to your personal life. Really fulfill what your goals are.

Josh 9:43
Yeah, that’s great. And it is it’s it’s so much more like you can really utilize profit in whatever way you see fit, whatever the need is for your business. And I’ve seen that once I got serious about having some extra money as profit, I found myself being able to do much more. Not only My family and financially but with my business to be able to invest in courses and trainings and other software that I might need a more premium kind of products instead of scraping by. So that’s a great starting point, I think we understand what profit is, why it’s important. A big question right out of the gate here, how, what are some basic ways we can be profitable? Because I know that’s what basically all of your resources are, I mean, you’re helping people be profitable. So I’m sure it’s something that can be very complex. But in its simplest form, do you have any just practical basic ways that me and my fellow audience of web designers could just be a little more profitable?

Danielle 10:35
Yeah, I know that we talk a lot about pricing. But that’s going to be step one, right? We forget. And I’m saying we, we all forget, as entrepreneurs, that our time is not free. You heard me right, your time is not free. So the first way to figure out if you’re profitable is to make sure that you’re profitable by project. You know, just because you sign a $5,000 deal. If it takes you and or your contractors, a ton of time to fulfill that project. Maybe you’re trying to build it on a software that you’re not you’re used to. And so you had to do a ton of research, you had to really go above and beyond for that, that one client, which is great. However, it’s taking you a lot of time, and therefore you’re not as profitable brought by project. So the first way to start to think about this is by service line, by it, maybe you have a product with your service. So what is your profitability by project, by service line, and by product? That’s number one first step, the second step is to look at your expenses. Where are you really spending money, and I know that in this business, you don’t need a big, big office, right? You don’t need anything, anything crazy like that, like a brick and mortar shop. However, I think, again, we as entrepreneurs, or someone, I include myself in this, again, we can get really caught up in the fancy new software, or the fancy new Oh, I know this is going to help me in my business is going to help my clients. And we, we will sign up for things and maybe we’re not using them to their fullest. Maybe we’re not using them at all. And maybe we don’t actually need them to service our clients. So where are you spending your money? Does it align with your goals?

Josh 12:38
That’s great. So pricing and expenses, and that those are two great places to start. Because yes, to your point with the expenses, that is absolutely where most web designers struggle. It’s the shiny new tool syndrome, it’s like an app that comes out or, you know, I try to encourage all my web design students in my audience to find the tools that work best for you and stick with them. Like every once in a while, you might need to incorporate something new. But I pretty much use the same tools that I’ve used for five or six years to this point. And it’s really helped in this regard. Because I don’t have to sign up for new stuff unless I think it’s absolutely crucial. But that is a big problem. There’s a new email app that comes out or a new project management system. And people often jump ship, not only are you adding a subscription to your bottom line, but I find that that it also takes a lot of time, you’re pulled away from what you know, you’re creating new systems, you’re learning this, and it can actually be very costly. And a lot of other ways too. So that’s it What a great reminder just to to be aware of that, like shiny new app or shiny new tool syndrome. And, you know, on the on the note of pricing. I wholeheartedly agree. And once I realized that I needed to focus on charging more, quite frankly, it is I mean, it’s easier said than done. But it is crucial. And I guess for people who are maybe new to their business, the idea of charging more and raising your rates can be a little scary. Do you have any recommendations for how to charge more? Do you recommend just upping it just a little bit just to add a little bit of cushion more profit? Because I have my own thoughts on that. But I’d love to hear what you think about that.

Danielle 14:11
Yeah, I think the first step is to learn, right? So learn how long is it taking you? Right? So maybe you do design on several different website platforms? How long does it take you per platform, and then maybe you start to specialize, right? So maybe you only build websites on you know, WordPress, because you can be really quite quick within WordPress, WordPress and so you start to specialize within that. So not only are you able to charge more because you are specialized, but then you are able to spend less time per design. So I think of pricing in two ways. You’re efficiency and how you deliver services. And then pricing and how you price out your, your products and services. So yeah, start small. I mean, look, we’ve all done it at the beginning of our business, we might, we might take the smaller projects, we might take the project that doesn’t really fit, we might take the project that’s outside of our brand, or Hey, look, I don’t have anything on the books this month, I need some money, right? We, it’s okay to take those projects in the beginning. But what I want you to do with those is really learn from them, right? So take on that project, track your time, track your process, and really at the end of each of those projects, determine what went well, right? What didn’t go well? Did I like working with this type of client? Do I want to accept other clients like this one? Did I charge enough to make enough money off my time. So by being able to take on those jobs that might not be at the pricing, you want at least take them as a learning experience. And then over time, you can start to increase your pricing as you get as you get better at what you’re doing?

Josh 16:09
Yeah, well, that’s a great reminder to just to actually sit back and reflect and learn from a project whether it’s good or bad, because I found that and this, I think every entrepreneur and business owner struggles with this. We’re just busy doing our stuff Next, you know, whatever our tasks are. And it’s very easy to overlook, thinking and reflecting about what we just did. So in the web design, you’re totally right now that is crucial. Look back at the project. I’m terrible at tracking my time. But I have learned to to try to at least to get a ballpark range. Because you do have to think about that. It’s, it sounds awesome. Like when people find out when I had family and friends that found out you know, I was doing a few grand or five grand for a website for like, holy crap, five grand new must be rolling? Well, yeah, well, I don’t have a brick and mortar store, like you pointed out, that’s a great, it’s a big benefit as being a web designer. However, we’re often paying subcontractors and subscription fees. And the other big aspect is our time. And if you’ve you know, charge five grand, but you had to pay two grand to get some subcontractor help you have maybe another grand and expenses for extra tools, taxes, whatever, well, then you’re only left with two grand. And if you had 100 hours doing that project, I don’t, I’m not gonna do the math in my head right now. But two grand for 100 hours is not what not ideal. So that’s just a practical example of how if you’re not focused on profit serious about this, you can actually make way less than you would flipping burgers at like McDonald’s.

Danielle 17:37
Yeah. And, and, you know, it’s unfortunate, but if you’re not watching the numbers, and you’re not reviewing your projects, in interest, your numbers in general on an ongoing basis, you could not only lose money, but you can actually end up in debt. So we had a client who was about a year and a half ago, she came to us and she said, I’m really ready to grow this side of my business. In order for that, for me to do that, I have to take on a few contractors. So those contractors were giving her an estimate of time, she was billing out her customers, she was billing them at the beginning of the month, she was giving them some terms, so they had 15 or 30 days to pay her. In the meantime, her contractors were working. They were working over the amount of hours they originally quoted her. And then she had to pay those contractors. And so before her clients even paid her sometimes. So what she was finding was that each month, her cash balance was going down, she owed these contractors more money, and her credit card balance was going up. And thank God she was reviewing this information month over month. She started this in January. And by August, she said, No, I’m not doing this. I am canceling the service line, this is no longer something that I offer. I cannot bring on all these contractors, and be responsible for paying them, especially if they go over on their hours. So imagine if you’re somebody who’s not looking at those numbers on a regular basis. I mean, you could go a year, maybe even two years, and then all of a sudden end up in debt and in big trouble. So there’s just one way to be able one example of why and how it could be beneficial to review and get in touch with these things. And analyzing these projects so that you can say, Okay, this is not working.

Josh 19:34
Well, that’s a fascinating example in a case study, because on the books, at least from a revenue perspective, she probably was making money that the line was going up. So it’s like, wow, this service is growing. But to your point, if she didn’t review those numbers and look at the most important word here profit, like what is staying in the business? Yeah, she was losing money. And I’ve seen that left and right with people who do secondary services. And they end up being more costly and not worth it. And I’ve experienced this myself I, I used to do print design, and some SEO, white labeling kind of services. And I, I’m really glad I did print design for the first half of my web design career because it opened up a lot of doors. And I think this could be a valuable lesson for people who do secondary services, sometimes something out of your, you know, maybe out of your immediate big services can help. But as soon as they stop opening doors, you don’t need them. That’s where we’re reviewing these numbers is key, because what I found was that the print design, I was spending just as much time working on a business card, as I was working on like a $5,000 website, and Well, maybe not that long. But there, you know, my time was basically equal with print design and web design. And the majority of my money was coming from web design. So I realized right then doing what you said, reviewing the numbers looking at, okay, I didn’t, I didn’t track my time, by the minute or anything I just looked at, you know, weekly, or every couple weeks, I was thinking about the projects and realizing I’ve got to cut the print design out. It’s just it’s literally not worth it. And my numbers literally went like this, when I cut off the print design, it was great for opening doors in the beginning. But as soon as I focused on what I do, that’s what really worked out for me, I did the same thing with some SEO, I had a white label partner. And I realized that, you know, I was selling the SEO plans, he was doing a lot of work, I was sending him the majority of the money. And it just, it wasn’t something I was super passionate about. And I was pushing very well. So it just ended up being a little more costly, which is where reviewing those numbers is huge. I’m actually curious, do you have any thoughts as to when we should review and how often I mean, I’m sure as a financial person, that’s probably as much as you can. But like, practically, we’re busy, like, what’s a realistic way we can review our numbers? And when when can we do that.

I always say, listen to the story, your financials are trying to tell you and change from it. – Danielle

Danielle 21:48
I’m going to give you ideal, ideal premium to lowest right. And this is this is how we guide our clients as well. So you know, if you are really gung ho, right, if this is something, you’re hearing the story and you’re thinking, Oh shoot, I have a gut feeling that maybe my credit card balance is inching up, and oh, maybe I am spending too much money on those contractors, or Oh, gosh, my time I am spending a lot of time, maybe you go for spending a little bit more time right now, in looking at these numbers. So kind of the premium way to go about this would be a weekly dashboard. And the weekly dashboard can be so freaking powerful. It’s part of our strategic framework in the in the planner, but I’m going to give you some just key key ways you could do this and an Excel document, audit adequate books, if you laughing, you don’t have an accounting software, that’s perfectly fine. You can you log into your bank account, you log in and manually compile this information, either pen and paper or an Excel document, I want you to on a weekly basis, get your cash balances, your credit card balances and your credit card availability. I want you to look at your sales, where you are month today compared to the previous month. And compared to your goal. That’s really important. Because if it’s the third week of the month, and last month, you did $10,000. And this month, you’re doing one, maybe two and your goal was 15. You got to spend that last week in revenue generating activities, right? So you know where to focus your time, then I want you to look at who owes you money. If anybody owes you money, this time that you put together this dashboard is your reminder, go collect that money, right? send them an email, remind them you do not work for free, you’re allowed to collect on that money. So and then looking at Okay, what do I have coming in next week? Right? So who is who do I expect to pay me in the next week? And then lastly, who do you owe money to? Right? So maybe it’s those contractors. And he’s like the payroll a big subscription. I know for us, we use a file sharing system. And I was quite surprised when all of a sudden $2,000 hit my credit card. You know, those types of things, right, what big subscriptions are coming. And what’s really powerful about this weekly dashboard is if you don’t have a lot of cash in your checking account, your credit cards are starting to increase and you don’t have a lot of availability, and nobody owes you money next week. But you have a big subscription coming next week. We’ve got we’ve got a tornado coming right. We need to hunker down. There’s no spending next week, we need to pay attention to what what we’re doing. Now, if we got the other direction, right, a more positive direction. We have cash in the bank. We have consistent inflow of money coming we know that there’s people who are going to be paying us over the next four weeks. We don’t have a lot of contractors payments coming up. Maybe now it’s time to invest some money right. So maybe now I want to go ahead and sign up for those courses, I want to take that training, one day we are going to travel again, maybe I want to go to that conference and or travel. So you can decide strategically how to invest your money over the next week. So that’s kind of like premium, do this, this exercise on a weekly basis. And it really can guide your decision making every single week. Some of you’re saying, Yeah, not gonna do that. Good luck. The next tier down is monthly, right? So I would love for you to look at it on a monthly basis. If you’re in an accounting software, you could do that through QuickBooks, Wave, fresh books, whatever it might be. Run your profit and loss statement. Look at where your revenue is coming from. Look at where you’re spending money. I always say, listen to the story, your financials are trying to tell you and change from it. So if it’s telling you that, gosh, the last two years, I was really slow, around November, December, right? My holidays are awful. Either. What can you do differently this year to get revenue in the door that year? We have some clients who say, yeah, I’m just gonna take off during that time, right. So that’s the time I spend with my family. And I just know, it’s a slow season, I’m gonna, I’m gonna own my slow season. But but by looking at these numbers, you can start to recognize patterns and learn from your business. So monthly is next. You might still be laughing at me.

Josh 26:34
No, that’s great. Yeah, cuz I was always more of a monthly type of guy. Although in the past couple years, I haven’t done it to the detail you would be proud of yet. But I still because I don’t run a full profit loss every week or anything. But I’d get one monthly, which I do, I want to ask you about the p&l Profit and Loss next. But that is crucial, it’s key to to be able to love what you said there, look at the story that your numbers are telling you. Because to my example, earlier, that’s exactly what I did. My numbers, were basically showing me that the amount of services I had something wasn’t adding up, I was working more and more, but I still was just not, you know, able to get my numbers to the next level. And it was reducing the secondary services that weren’t as profitable for me. And that’s what really helped. So what a great point. Now, as far as like, when we review these numbers, I’m sure this depends on the person. Do you personally do you have a certain day that you see works Well, for clients to review numbers? Is that like, beginning of the week, or is it the end of the week? What are your thoughts on that? Um, that might also might also depend on what kind of situation because if the numbers are bad, not want to do it on Friday and get some drinks afterwards or something?

Danielle 27:42
Right. Well, I don’t want to ruin your weekend, though.

Josh 27:46
Okay, or would that set up for a really good weekend? If you’re like, Alright,

Danielle 27:51
Yeah. Well, I don’t want to ruin your weekend. go spend the whole weekend at the bar. Yeah. No, so I I personally like Mondays. So there’s a lot of our clients who get dashboards on every Monday, right. So our team is very busy on Monday sending out weekly dashboards for a monthly report, I would say by the 10th of the month. So when we send out financials, we send them out. So for, let’s just say for December, right, so your December financials, you’ll want to get, you’ll want to review them by January 10. So just by the 10th 10th day of the month after. And the reason for that as it you don’t want the entire month to go by, right. So if it’s the 20th, I still haven’t done my bookkeeping, right, I still haven’t looked at my numbers. By the time you do that, you you don’t have enough time to react the month, the next month is done. So maybe you’re like, oh, that was a really bad month. But now, you know, the next month is over and you still don’t have time to do anything with it. And then, you know, you could do it on a quarterly basis, too, right. So some people who don’t want to do it monthly, you could do it at the end of the quarter. And again, I’d like you to do that by the 10th day of the month, ending that quarter. That way you have time to react in the next quarter.

Josh 29:16
Oh, that’s great. And I think I imagine there’s a lot of ways to do kind of a mix of everything you’re talking about, like do a weekly even if it’s a simple weekly review, just look at what came in and look at what went out and look at what your balances are. And and obviously in web design projects generally take weeks, often months. So it’s hard to judge a full project off of a one week segment. But there are still ways you can look at it because a lot can happen in a week. What’s coming in what’s coming out even if you’re just working with a few clients. Like maybe you don’t have that much coming in a week. You can do it every couple weeks are doing more advanced review during the month. And absolutely I totally agree with doing like a quarterly actually, when it comes to goal setting and stuff. We could talk about this too, but I personally have learned that looking at things in more like a three month segment is just much more doable. Because when you look at things in a year out, I think it’s good to have an idea of what you want to hit. But that can be tricky. Actually, before we dive into what a p&l is, and why that’s important. Do you have any quick thoughts on the goals, like financial goals for yearly versus quarterly? Because I, I found yearly sometimes can be too vague, because, you know, you might not know exactly what kind of projects you’re going to get or, or you want to do during the year, but I feel like three months is a pretty good like, fairly, you know, quick, immediate goal that you can hit, and you can pivot from there to hit that yearly goal,

Danielle 30:39
I want you to do both. Perfect. I want it all. I want it all. So at the beginning of the year, or anytime you’re listening to this, right, so if you’re looking at listening to this in March, I still would like you to set an annual goal and annual budget. Right. So what do I want to do each month? Right? How many projects do I want to have each month? And and what that allows you to do is say how many contractors Do I need to have available during each of those months? And it really allows you to step back? I call it a CEO day. But yeah, that term can be overused these days. But stick a step back out of your business and just say, what are my goals? Where do I want to go this year, right? We don’t all always have to be in high growth mode. Maybe this is a year that you are actually just improving processes. And you’re you’re going to stay consistent with what you did last year, taking that step back and deciding what this year means for you is really, really important. And then at the end of every quarter, I want you to reevaluate, because let’s face it, this world that we live in right now changes really, really, really quick.

Josh 31:51
Yeah, and I know specially especially in web design with potential Yes. within any industry. Yeah,

Danielle 31:57
yeah, yeah, absolutely. So then we reset back at the end of each quarter. And you might even laugh, like, okay, six months ago, I only thought I was gonna do this. killing it, I, I gotta, I gotta have these goals. Right. So then I want you when you review your quarterly financials, that’s a really good time to reset those, those goals and where you’re going in the next three months.

I’d love to add to that is you need to plan to plan. – Josh

Josh 32:20
That’s perfect. And I’m so glad that you mentioned the the CEO day, or I think I called mine the head honcho day at some point. And I will say too, one thing I’d love to add to that is you need to plan to plan. So you can’t just hope that you have a day free to think about your business and work on the business, not just in it, but you actually need to plan it, you need to put it in your calendar, go to a coffee shop or clear some time out of home, even if it’s just a couple hour block just to, to think and to plan and to look at your business. I’ve started doing that. And it’s been a game changer for me. So hopefully that is an encouragement to people. But that’s that’s a really good point. Because you need to do that if you are focused on growth, man growth is important. But I feel like growth can be very dangerous too, just because the example you talked about earlier, like if somebody is just focused on getting the numbers up in the revenue, they may be burning themself out focusing on things that are not profitable. And there’s no harm and I mean, has actually a lot more good and focusing on systems and processes. That will may not be super profitable right away. But when you make those little changes in your business, they become more profitable pretty quickly. And over time, because you’re spending less time on projects. Instead of having to sell sell, sell, sell, sell, you could sell slowly but and improve your systems and your efficiency. And it’s that’s what I did, I focused on my systems and processes. And it was way more manageable instead of just being in this constant mode of growth, hiring, you know, all this kind of stuff.

Danielle 33:48
Yeah, I read the book Built to Sell several years ago.

Josh 33:52
Yeah, big proponent of that one. Love that book.

Danielle 33:55
Love it, if you haven’t read it, go get it. And it really changed the way I not only grew my own business, but the way I advise clients, honestly. Because don’t take every project, don’t sell everything. Put in the system so that you’re doing it efficiently and effectively. So I just, I try to talk about this a lot. Because I think that we live in a world on social media, where everything is high growth, do everything now. And I want us to step back and say, Hey, I actually need to take a moment and put this new process in place because it’s going to help me and my team service our clients better and that’s okay, too. And that’s why I say realign those goals because maybe if you know you have a slow season every November, December, you can in turn, take that time to say alright, I’m going to schedule my CEO day I’m going to schedule my annual CEO day. I’m going to work on my systems, I’m going to reevaluate how I’m doing everything and why I’m doing it that way. So once you can start to identify those things, you can plug them in with those important activities. I’m a huge proponent of time blocking, I have to, and this is as the numbers person, right? I have to tell myself, I need something to come up on my calendar and say, it is time to do your dashboard. And I haven’t

Josh 35:19
As a mom, who has kids at home now I’m sure that’s even more important. Right?

Danielle 35:23
Right. Yeah. So my kids know, my, my Operations Manager knows do not put anything on my calendar during that time. So I just I say that because I encourage you all to do that, right? Put that time on your calendar, and don’t stand up that meeting, right? Once you start to blow off your meeting with yourself. You’ll blow them all off, right? Because it’s not the most fun task. However, it can be really enlightening. So put those on the calendar and uphold the meetings you like you would with the CEO of a big company, right? Yeah, that’s great.

Josh 35:57
Yeah, that’s such good advice. And I would the idea what we’re talking about here with, like pivoting and just thinking about your year, but then also taking it one quarter at a time that I’ve really applied this over the past couple years. And I’m actually in this season right now where I had a really good summer. And contrary to when I did service work with clients as a web designer, now that I do my endeavor here with Josh Hall co full time with courses and training, my busiest time is actually coming up in November and December, just because of sale periods, and all that kind of stuff. So through like September, October, these are, this is like a good time for me to to really focus on other things in the business to prepare for some of the higher spikes. So right now I’m in that season, I’m actually really, I have courses, I can market more, and I’ve got all these ideas, but I’ve had to kind of look at my goals and realize, like, you know what, I need to take some courses on a few subjects that are going to help prepare me for this next phase. And I’m really applying everything that we just talked about that you just recommended, which is, you know, like, this is the season for me to do my learning and to really get my systems and processes in place, which are going to prepare me to save a lot more time and be more efficient here moving forward, which is going to make me even more profitable. So the same thing can be done with a web design business, because it actually really is. I mean, luckily, web design tends to be pretty consistent throughout the year. But in any industry, I feel like Christmas time is unless it’s a product type of business is generally always a little slower, because people are with their families, they’re not worrying about their business or projects as much. So yeah, you can plan accordingly for that. And it’s, it is not rocket science, it’s nothing that’s too complicated. It can just be a matter of looking at what came in last month preparing for the next month and pivoting accordingly. So that’s all great, what great advice, Danielle, I’d love to chat really quickly about profit loss statements. I love for people, particularly because a lot of my audience are just getting into web designer, a lot of they’re just getting into business. What is a p&l? And why is that important? Because I feel like that’s really kind of the actual document that’s going to help us with all this right?

Danielle 38:06
Yeah, yeah. So, um, this documents gonna do a few things. So at a fundamental level, it’s gonna help you file your tax return at the end of the year. Right. So by the end of the year, you need a p&l, because you need to be able to share with your tax accountant or your tax accountant will create one for you. So at a fundamental level you you need it for for your year end taxes. As a firm, we encourage everybody, not just to use this as a tax document before a learning document throughout the year. So a great example of well let’s let’s talk about what it is first, right so a profit loss statement takes your gross sales so all the money that came into the business and subtracted out all your contractor payments, your subscription payments, licensing fees, startup costs, your equipment costs, right, so deduct

Josh 39:01
Coffee, coffee, when you’re going to the coffee shop.

Danielle 39:03
Yes, coffee dinners, travel, conferences, training courses, yeah. and subtract all that out. And at the end, the bottom number is called your profit or your loss which gives it the name profit loss day but from there, you either need to save for your taxes if you have a profit, so take 25 to 30% of your profit and and set that aside for your taxes. If you have a loss, then we do not have profit to reinvest in our business right now. That usually means we need to change our spending habits or or our our sales strategy, right. The profit loss statement you’ll generally get from an accounting software, depending on how you’re invoicing clients a lot of our web design clients use Fresh Books. That’s it a invoicing system that has some accounting software Wave is a free version, and there’s always a good ol QuickBooks, Xero is another one. These are all accounting software that you can input your transactions and run a profit and loss report.

Josh 40:14
Yeah, and I was gonna say most platforms that do invoicing will have some version of that I use one called 17 hats, that has a p&l with it. And then I know my agency now uses dubsado. Same thing has a profit loss type of generator, I will say in full transparency, I hire a CPA to do all that for me now, because it is, my mind just does not work well, with like plugging into numbers, I’d rather just review them and plan accordingly with what we’re talking about. So it is something that is great, because there are a lot of ways to go about it. Most platforms have it. But if you work with a tax accountant or a CPA, they’re gonna do it as well. So yeah, and but it is, it’s a really important document, isn’t it? Because it literally, it takes things from like your mind and theory to like, here is exactly what came into the bank account. And here is what went out like that. I feel like, Is there any is? Is there any other document that’s more important than that month, a month?

Danielle 41:09
Well, there’s two other documents. So first of all, yes, if all this is feeling overwhelming, first of all, get help, right? There’s no shame in that. You can have your tax accountant, do it, hire a bookkeeping firm, whoever it might be, get, get the help that you need. Don’t just say, this feels overwhelming to me, I’m not going to do it. The other two reports that are in there, some of the point of sale systems like dubsado, and 17, hats and fresh books, they don’t have as much reporting as QuickBooks or or Zero. So usually, when we work with clients, when clients come to us, for bookkeeping, we’ll take their 17Hats, dubsado, all those types of software. And we will actually give them included in their services, a QuickBooks profile. So we take all those sales, and we pull them into QuickBooks. And here’s why those other two reports you asked me about, QuickBooks does a really, really good job at running them, and does it in a really clear way. So the other two reports would be the balance sheet. The balance sheet quickly tells you what your cash balances are, what your credit card balances are. And then there’s this little bottom section that people really ignore, and it’s called equity. What that tells you is how much money you’ve invested in the business and how much money you’ve taken out of the business as an owner. Really important, right? Some people are like, Danielle, I have no cash in my business. You are telling me that I profited $20,000 this year, but I don’t see $20,000 in my checking account, where the hell did it go? Right? That equity section of your balance sheet and that cash flow statement, that’s going to tell you where that cash went, right. So a lot of a lot of our freelance clients are LLCs, right. So when you take money out of the business, you’re to pay yourself personally, you don’t show up on your profit and loss statement. Because you’re just taking a cash withdrawal. It’s not a you’re not an employee of your business right now. So you’re taking the cash out of your business, but it’s not showing up on that profit loss statement. So it’s a very, very confusing, I know a lot of you are thinking what the hell she say, I just want you to know where to find if you’re, if you’re thinking, wow, I know I brought in all this money, but I don’t have that cash in my in my checking account. When you start to get those those systems in place, look at your balance sheet, look at your cash flow statement, because that’s going to help fill in that gap.

Josh 43:36
When I think you’re hitting on an important subject for particularly for freelancers who are solopreneurs, or like myself, who just have some subcontractors who I hire out occasionally, there’s kind of a fine line between the profit and the business and the owners pay. Because the beauty about being a business owner is you can funnel as much money into your personal stuff as you want, if you don’t have a salary or some type of W2, you know, set up with whether you’re an S corp or an LLC, or whatever. So I know for me when I thought about profit, I kind of realized that basically all the profit that I had in the business, I was just paying myself. So I had to kind of I had to kind of rethink about that, to think that you know what, just because I have a bunch of extra money in the business account, it doesn’t mean I need to just give it to myself if I don’t need it. I want to try to keep it in the business. I think it’s actually a great segue to a question I had for you, which is, and I know this probably maybe is a kind of a tough one to answer depending on the industry. But how much should we try to save in our business as profit? Is there an ideal number for expenses and growth? I mean, is there like an ideal percentage that we should shoot for for profit?

Danielle 44:47
There’s not an ideal percentage. What I would rather you take into consideration and I think 2020 is a good lesson for all of us. Think about how many expenses you have On an average basis, so if you if you have an accounting system, you can run your profit and loss by month, and you could do it over, maybe you’re just starting out. So do it from the date you started your business to now, or, you know, do it over the last year, and take an average of what your operating expenses are per month. And then I would love for you to have at least three months of your average operating expenses sitting in a savings account.

Josh 45:28
Okay? Don’t ask for business just for the business, right? This is anything personal?

Danielle 45:32
Yeah, nothing personal yet. Yep, this is just business. Because we have to be able to continue to pay our contractor, right, if if maybe you build somebody at the front of a project, right, and you had to spend that money. And new projects didn’t come in the door yet. But you still had you still hired contractors, you still have to pay this monthly subscriptions, you still have a subscription to an annual subscription do next month. So just because a new project didn’t come in, you still have those subscriptions. So it’s easy, when we get paid at the front of a project, we might spend that money elsewhere or take it as an owner’s draw. And then we don’t have that savings in there to pay the other operating expenses. So I would love for you to have three months. But start small, I don’t care if you start, you’ll figure out what that number is. So maybe on average, your operating expenses are $1,000 a month and just your subscriptions, paying a few contractors, I the goal is $3,000 in savings, maybe you just start saving $100 a project $200 a project, maybe it’s $500 a month, start small, but make the act of starting to save. That way you can start to operate your business from a place of confidence. We find when we can arm clients with that number. When we say all right, the goal is $3,000. Like, okay, I have a place to aim for right. I’m not just shooting for the moon because I have no idea. I know what number I’m aiming for. And I can start to make progress. And it really makes progress feel doable.

Josh 47:13
That’s great. So yeah, kind of a fallback plan for those because it does happen in web design to where you’ll have really good months and not so great months. I’m a big proponent of recurring income for web designers through hosting and maintenance, but the project into things and it only seemed like for me, it would always come in waves, I would always have like a couple week period where it seemed like all the invoices would come in. And it would just be i’d feel like I’m like banking. And then the next few weeks, it’d be like, for whatever reason we were just in the middle of projects are one payment would be delayed. It seemed like the next couple of weeks, it’d be hurting for payments to come in. So it is it’s a really important lesson, I think just a mentality shift of saving that and being smart with that money. And I think it’s also going back to when we talked about planning, we need to plan for this, right? Like, if you just start your business and start collecting money, if you don’t have a plan for what to do with that money, no matter how little or how much it is, that’s a problem. You have to think about. Maybe it maybe even if it’s not an exact number, but those percentages, like have the three months backed up taxes is another big, big thing. What do you have? What would you recommend like a separate account for just taxes? Or would that be kind of lumped in as far as just a business savings or..

Danielle 48:22
So I don’t know if any of you have heard of Profit First kind of an envelope system, which is kind of funny to me, because, you know, I worked as a kid and I had an envelope system for everything. I literally had envelopes of cash in it. So I am actually a huge proponent.

Josh 48:42
You are you are born you were born account, right from day one.

Danielle 48:45
I guess. I don’t even know it. Yeah, I just wanted to save for thing, you know, here here, don’t tell my 15 year old but really the goal was I wanted to buy my car because I didn’t want my mom to be able to take it from me. So I had a car envelope that I was determined to buy my own car. So all you need is will and there’ll be a way.

Josh 49:07
That’s awesome. I since a lot of you, I feel like your personality. I imagine you just love having some control over the money and stuff. So I feel like you’re just a perfect financial type. Yeah, well to have something feasible that you can really, you know, have some control over.

Danielle 49:22
Yeah, so so I so long way of saying Yes, go get a separate savings account, it helps to have it set and set aside in someplace else. And that way, you’re not able to quickly tap into it and that money is just really set aside in another envelope.

Josh 49:39
Yeah, yeah, I am a big proponent of profit first as well. Actually, two of the most popular books I consistently recommend are built to sell by john warrillow. And profit first by Mike Michalowicz. And that idea is really important because when you have a business account, I know early on I just always thought that was just my business account. Well, I didn’t really think about this, that they’re operating expenses, owners pay taxes. And these really like these mini segments that are within or should be within that business account. So it’s a, it’s a great mindset to have just to kind of segregate those into, to have those in different places. And I think when I think about like a web design project, I always I think we had talked previously at one point about like, an ideal, like maybe 30%, or something around that point of money that’s not going to be spent, you know, hiring subcontractors, owners pay, like you really want to have at least some sort of percentage to stay in the business, right, even though I’m sure it depends. But I just think that’s important for as a mindset to have for web designers. So when you get that $5,000 project, you don’t end up spending all the money, like you want to have some of that to reinvest in the business and stay in your bank.

Danielle 50:50
Yeah, I agree that that, that 30% margin for every for every business across industries, I want you to at least make 30% on every project. So when you’re building a proposal, if you know, you’re going to hire three contractors, and you need to use XYZ systems, I want you to at least bill above 30%, when you get even more sophisticated, I want you to create what’s called an overhead rate. And then build that and then have 30% over your overhead rate. But your overhead means all of your all of your systems, your pay as an owner, that’s considered a an overhead rate. And so then you can apply that and make 30%. On top of that. I know I’m asking a lot in that analysis, but at least step back and say, Alright, how many contractors Am I going to need for this project? What am I going to pay them? What subscriptions Am I going to need to purchase for this client, and then bill at least 30%. over that, that’s a great way to but I know sometimes we feel like we’re just literally shooting in the dark with pricing, that’s a really great way to start to be able to land somewhere.

Josh 52:05
That’s just it, I think you just hit the nail on the head right? There it is, this is important because it helps us determine our pricing. This is why when I was charging $1,000 for websites early on, I could not figure out why I wasn’t making more than about 20 grand or 30 grand in a year. And it was because I just got my pricing too low, the books were just not matching up. And I just kind of ran the numbers on that. So a $5,000 website project ideally, Danielle and I are saying try to save 1500 for profit to reinvest in your business to have in as your emergency fund for taxes and such. And then that 3500 would go to the actual development cost, your time or getting help owners pay and all that kind of stuff. Although I knew ideally, owner’s pay would be a separate, but as a solopreneur.

Danielle 52:48
Yeah, depending on what kind of business you’re running, if you’re if you’re, if you’re doing all the website design right now, you’re you’re starting off as a freelancer, your your time is going to be in that 3500.

Josh 53:00
Gotcha. Gotcha. Well, Danielle, this has been great. I feel like we’ve covered a lot of really good practical points here. I mean, we talked about what profit is why it’s important. We talked about some basic ways we could be more profitable, which are, you know, like you mentioned was really to reduce expenses. And to just increase your pricing, which I’ll just tell everybody right now, even no matter where you are, whatever level you are in web design, just increase them a little, you can just stay in that same what I call price bucket, and it’s amazing, you just add an extra hundred bucks or 200 bucks to a proposal. Well, there you go. That’s an extra couple hundred bucks you can utilize. And as you learn, I think one really important topic that he talked about that I loved in this was the idea of planning to plan like work on your business, review your numbers, take the time to invest in your systems and processes, because that will make you more money down the road. I also love that you talked about not not falling into the trap of that entrepreneurial growth mode. Like there are seasons for that. But there are seasons where you need to just literally just think about your business and maybe just develop more as a business owner and invest in yourself. We talked about the p&l, the profit loss statements is really huge, which can really factor into all this. I feel like that’s kind of the piece that really holds all this together, as well as reviewing our numbers weekly, monthly and quarterly, setting those goals. Do you have any? I guess my kind of my last question is for you. Do you have any just kind of final thought that could really just sum this up all together? Like I know we’ve gone over a lot of things that are practical that are going to take some time, but where would you recommend my audience start, you know, to take all this what would you recommend for them?

Danielle 54:39
Start taking action. So I want you to take one thing that resonated in this podcast and and start building momentum. I’m I’m a runner, and so I always I always reference back to your training for a marathon. We don’t decide we’re going to train for a marathon just go out and run 26 miles right We we start small and wait, maybe we walk the first time out, and then we start to jog for five minutes, and then all of a sudden we’re running a mile, I, the idea is that we can gain momentum. And then we can use that momentum to keep on building on on on it. So maybe you don’t have an accounting software today. You’re you’re using a billing system. But that dashboard kind of resonated with you. So this week, you take a piece of paper and a pen, I’m not asking you for anything fancy, maybe you’re like, I don’t even know how to use Excel, cool piece of paper and a pen, I know, you know how to write and go through that dashboard that we laid out, that’s gonna make you feel like you really accomplished something this week. And then you could do it again next week. And you’ll start to say, Wow, this isn’t so hard. Let me take on the next step, maybe let me get that get the help, I need to create an app to get an accounting software. Or maybe I’m feeling confident enough to go get an accounting software myself. And now I can dig into that p&l. So just the easiest place you can start is that dashboard I mentioned. But then don’t forget to keep on building on that momentum.

Josh 56:12
That’s great, what a good valuable point just to do something actionable and practical, just one step at a time, which I’m a big proponent of keep small steps, baby steps. And it really does build that momentum, which is huge, which I’m sure you’ve seen with your clients. One little pivot can really change the trajectory of somebody’s course in this, like, it could be the difference between whether they succeed or whether they fail.

Danielle 56:32
You know, yeah, absolutely. We have clients who come to us all the time, who say, Gosh, if I didn’t start, if I didn’t call you and write it, start looking at the numbers, I would have been stagnant in my business forever. Knowing what my numbers were made growth feel possible, because we had one girl come to us and said, I she was in branding, and she said, Gosh, you I have all these ups and downs in my projects. I thought I was losing money, you know, bleeding, I thought I was bleeding money. Here, the woman had profit that she had to seriously start tax planning for. So not only was she missing that planning activity, but then she was like, now I feel like I’m confident. I’m growing now I want to grow more. So don’t hide from it because you never know. Once you start doing these things and once you start looking at your numbers, what kind of transformation that’s going to bring on for you.

Josh 57:31
Yeah, well I’m a testament to that. Yeah, absolutely. Well, Dino this has been great. Thank you so much for your kind information and sharing some some really good practical things we could do hopefully, I don’t think this is boring at all. I found this fascinating as somebody who’s not a bean counter a numbers guy. Where can everyone find out more about you? Where would you like my audience to go to to to check Yeah.

Danielle 57:52
Please come check out the website profit planner, bookkeeping comm you can check out our our book series there. If you’re thinking I want a little bit more, but I still want to DIY style this you can check out the books, really a great way to start building momentum. If you listen to this, you’re like, man, I need help. Come book a strategy call there. I would love to connect with with you learn more about your business. See how we can help you really are our mission is just to help entrepreneurs. So come find us there. We’re on social media at Danielle Hayden underscore 08, looking at to answer some questions and always provide helpful tips and tricks for entrepreneurs.

Josh 58:36
Awesome. Well, I’ll have that all linked in the show notes. And for those watching, you see the the profit planner book here, which I’m kind of going through still at this point, but it’s been awesome to do again kind of helped me think of all this through, it’s a great refresher for me. And then I do have a special link that you guys set up for me that I’ll put in the show notes that people can go to to check out some profit planner resources. So Danielle, thank you so much for your time. Looking forward to chatting again sometime soon.

Danielle 59:08
Thank you. Thank you.