Build to Enough

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Keila Hill-Trawick: Hello. You're listening to Build to Enough, a podcast for entrepreneurs who want to scale at their own pace. I'm your host, Keila Hill-Trawick, and I'll be your chief storyteller and cheerleader in a world that glorifies endless expansion, we're tuning out the noise and discussing the beauty of enough. Each episode will dive into inspiring stories, practical insights, and strategies to cultivate sustainable success on your [00:00:30] own terms. So whether you're a solopreneur or small business owner or aspiring entrepreneur, get ready for a refreshing take on the entrepreneurial journey. This is build to enough.

Keila Hill-Trawick: Hello and welcome back. So today we're going to talk about how to use your financial data so that you can create a roadmap that scales your firm to your version of enough. It's really important as you're building out your firm, as you're figuring out what your company is going to be, that you balance growth with operational [00:01:00] efficiency. And then in the midst of all that, you also need to obviously make sure that your clients are satisfied. Now this is a big deal, especially for small and growing businesses, because those that rely on data have a better culture of continuous improvement. And when you have continuous improvement, you have transparency. So you can see what's going on and you have a better chance of success. Also, you can grow and pivot more sustainably and predictably. It's not a surprise [00:01:30] when you have to make changes. You kind of know when it's time for you to make a shift, because you have enough information to see what's working and what's not.

Keila Hill-Trawick: Now there's all kinds of tools, whether there's analytic dashboards, AI automation, and all of those tools make data collection and interpretation more accessible than ever. You no longer have to, like, manually figure out how you're going to compile information, how you're going to analyze trends. A lot of tools will do that for you. [00:02:00] But there are some issues when you choose not to use your data to scale. Let's talk about those. The first is a lack of visibility into key metrics. So you are trying to figure out how my business is doing what I should be doing differently. What matters in my company and what doesn't. And when you don't have any data, you can't see any of that. The next thing is, it's hard to pinpoint whether the firm's resources can actually support scaling. So I've seen a lot of businesses who say, I'm ready to grow, I want new [00:02:30] clients, I want to make more money, but don't necessarily have the team capacity or cash flow to actually support that growth. And then you don't want to overstretch your team. For many of us who started these companies by ourselves and then added on team members, kind of one by one, you can get to a point where what the team is able to do is actually less than the number of clients who want you.

Keila Hill-Trawick: This is especially important in industries where there seems like there's a there's a lack of good service providers. [00:03:00] And so you'll have a ton of clients who are coming to you who really want to use your services, but you don't really have enough people to deliver on the promises that you want. The bottom line is your intuition isn't enough. And that is a message to me as well, because I tend to lean on my gut. I want to use my feelings, but they are not necessarily facts. A lot of times when you don't have data, you can underestimate your cost or overinvest in a service that has low demand, and [00:03:30] you want to know what's going to make me the money that I need to make to support me and my team. What do I need to do in order to support my clients at the level that I have promised, and is this sustainable over time? Anybody can do like really fast sprints to do a lot of work at one time, but you want to make sure that you're building a business that month over month, year over year, you can continue to pour the right amount of effort into so that it's giving you the you the results that you hope for, for a business that you actually [00:04:00] want to run. All right. So let's talk about how tracking that data helps you to identify what enough looks like.

Keila Hill-Trawick: So there are a couple of ways that you can look at data and goals. You've got financial. You want to look at how much you're making, how much you're spending, how much is left over, what percentages are being allocated to different kinds of expenses. That information helps to tell you are you on par with your peers or others in your industry or other small businesses? Are there areas where you could stand to ramp up? Maybe [00:04:30] you are way lower in terms of how much you spend on a team, and you've got some leftover cash to hire on team members or third party service providers that can support you so you don't have to do the work by yourself. So another example of data is looking at revenue versus your profitability, because there are going to be different levers that you pull. If you're looking to increase your top line income versus increasing how much you keep in your in your pocket. So a great example is if you're looking to increase revenue, this [00:05:00] might be a marketing change. Maybe you're investing in ads or other paid services in order to increase visibility so more people can find you. It might also be a pricing change. You might be looking at, hey, what I'm delivering now really should cost more, or I should do less for the price that I'm currently charging.

Keila Hill-Trawick: On the other hand, if your goal is higher profitability, your top line revenue might be fine, but this may be time to start thinking about whether your team is the right size, whether you should cut down on expenses like software [00:05:30] or travel, or whether you need to look at what you're paying partners. So subcontractors, other outside parties that you are paying to help you deliver service. Figuring out whether you should continue to pay them versus bringing it internal, or using software to be able to support those needs. You can also use data to spot inefficiencies. So some of those same things that you're looking at when you're looking at what levers to pull, We'll also tell you where the business is over or under investing resources. For example, [00:06:00] are you getting a return on your investment in marketing? Are you spending all of this money on advertising or other marketing channels, and you're not seeing a difference in your revenue? Are you investing in software that's supposed to make your processes more seamless and more straightforward, and you're finding that you're still doing the same amount of work? So seeing that data will allow you to make adjustments that save you both time and money. Finally, you really want to make intentional choices, and that's really the name of the game in all of this build [00:06:30] to enough stuff, right? You want to make data driven decisions so that you can use those to align with your everyday actions, so that they lead to your long term goals, because you want growth to be purposeful, not reactive.

Keila Hill-Trawick: You know where you're trying to get to and why you may need to make pivots or changes along the way. You have a line of sight of where you're going, and you want to make sure that you're making decisions that really go forth towards that and not towards a business that has a lot of shoulds, right? [00:07:00] That makes you feel like you should be investing here or should be paying for these things. When those are not in alignment with what you want in a business and in your personal life as a result of running that business. So how do we do this for clients? I figured that this is a really good section to include, so that accounting firm owners have some ideas of how they can move this within their practice, and other service providers can see the type of support that you could be getting from your finance team to help you make these decisions. So the first thing that [00:07:30] we do is a tailored budget and strategy, and we focus on the metrics that help them meet their goals. So yes, we're looking at historical data to be able to say, what did you do last year? What changes do you see already on the horizon this year? Do you know that you're going to be growing your team or backing off of a certain service line? But also we want to talk about your strategic goals.

Keila Hill-Trawick: Maybe one of them is efficiency. Maybe one of them is to grow a really specific service line, and you know that you're going to need additional help hired to be able to do that. So [00:08:00] looking at historical data, but also looking at the upcoming periods so that we can stay on top of whether the numbers are actually lining up with the strategic goals. We also provide detailed financial reporting. So in addition to your financial statements, your balance sheet, your income statement, or your profit and loss, we also want to make sure that we're walking through on a monthly basis. What did you do last year versus budget? Where are you forecasted to be in the upcoming quarter? And also where are you month to date? [00:08:30] So I may have mentioned this before, but when we have our monthly calls in the middle of the month specifically for our fractional CFO clients, we're looking not just at last month, but where are you so far this month? How much up to the minute data can we give you so that if you need to make any changes, you can do them quickly? A great example is in the middle of the month. Are you already over budget in certain areas? If that's the case, we already know that more money has to come out for the rest of the period, and we want to make sure that you're prepared for that.

Keila Hill-Trawick: For other clients, we're making sure that they can see how [00:09:00] much cash is on hand, how much is their operating profit margin, what are these key metrics that they can use to say, hey, based on this information, I'm either on the right track and don't need to do anything differently, or this is a time for me to start thinking about making short term or long term changes. Another way that we use that information is for scenario planning. So we have had clients come in and want to do new things like hire new team members and want to know what burden is associated with that or [00:09:30] increase prices. A great example is that we recently had a client who knew that they wanted to take their team from all part time employees to full time, and had a lot of questions around, what does that look like in terms of salary for my budget? What are the additional costs that I should be aware of, and what does this do for the money that's available to pay for other operating expenses. So we were able not only to talk about salaries, but what software goes up when you hire somebody. Are there any onboarding costs like [00:10:00] HR that are increased every time a person comes on, or IT and equipment, because somebody has got to get a new computer.

Keila Hill-Trawick: We were able to incorporate that into the scenario plan to say, hey, one additional person actually has a 25 to 30% burden. So we want to account for those two when we're making the budget. So based on all this information, what should you do next? The first thing is start small. Pick 1 to 2 metrics that are easy to track and most impactful. It can be really [00:10:30] overwhelming to say, I want to do everything. I want to change everything in the business in order to make it closer to what I want. But generally that's not realistic or sustainable. So pick some things that matter most to you maybe profit margin, client acquisition costs, or revenue per employee. Something that with that data you can make a make a different choice. Be sure that you're choosing a metric that actually informs your decision making, and not just a vanity metric that gives you information, but you can't do anything with [00:11:00] it. Second, leverage tools. You have simple tools like spreadsheets, more advanced tools like maybe an air table or an accounting system. You want to make sure that those tools integrate with your accounting system, so that you can streamline data collection and see how they affect your finances. But for those that don't. Again, make sure that they're giving you information that you can use. Maybe it's time tracking systems or invoicing systems that are allowing you to see what is outstanding and how fast you're collecting [00:11:30] on cash, as well as what's overdue and who you might need to nudge to get your money.

Keila Hill-Trawick: The last thing that I'll say is establish a routine. Make sure that you're doing this on a regular, recurring basis, maybe monthly or quarterly, so that you can set specific time aside not just to look at the data, but to reflect on it and set up what your adjustments are going to be for the next period. If you can't do that by yourself, get support. There are always professionals to be able to help you. Accountants, financial advisors, even [00:12:00] business coaches that can help you interpret the data. And those people acting as thought partners and in our case, growth partners to help you to see what is next with this information is really going to go a long way toward supporting your goal of building to enough. That is all I have for today. We'll see you in a couple of weeks.

Keila Hill-Trawick: Thank you for tuning in to another episode of Build to Enough. If you enjoy today's episode, don't forget to subscribe, rate, and share the love with your fellow entrepreneur friends. And make [00:12:30] sure to sign up for the Build to Enough newsletter. The link is in the show notes. Stay tuned for more episodes as we continue to redefine success. One intentional step at a time.