Getting Your Books Right to Scale Your Biz
Bookkeeping is an information system you need to have to be able to operate your business and be able to SCALE (kind of a buzzword in the online business space). I talked about this topic with Lindsey Badillo on her podcast, Aligned & Wealthy.
If you're a new business owner, I have a lot of tips on the blog for you to make your finances easier. Definitely separate out your business & personal finances (and keep a detailed record). Read this post for more on that and other tips for better finances. I also recommend having at least 3 different bank accounts. If you need some general bookkeeping tips, start here.
If you're ready for more, let's dive in to getting your finances and books ready to scale your biz.
Profit First Management System
This is a system of managing your money. Essentially, you have your sales, pay yourself what you need to pay yourself, then operate your business with what's left. With that, you need to TRACK IT ALL. Having a solid bookkeeping system (Quickbooks, Xero, my DIY Bookkeeping Template or some other software) to make sure that you know what your numbers are. That way you know, after you pay yourself, what you have available to operate your business and/or invest.
The more money you have, the more responsibility (and potential problems) you have. You NEED to have systems in place so you know what's going on in your business. Whether you manage your bookkeeping on your own or hire it out, staying up to date on your books is essential to scale your business.
To learn more about the Profit First system, you can find the book here.
Keeping Track of your Money
If you're in the online business space, you've seen people talking about hitting their first 10k or 15k months. And if that's your goal, amazing. I love it. AND. You need to look at what you spent to get there. For example, if you hired a business coach and sales coach, that probably took up a big chunk you made. But you won't know what your actual profit is if you're not keeping track of your profit AND expenses. Only looking at your profit does not give you the whole picture of your business finances. I can't stress this enough! You need to look at the sale, expenses and profit as whole month over month.
Maybe you've invested in Facebook or Instagram ads, or you've got a bunch of subscriptions. Those are all things coming out of your profits. It's important to look at your investments and make sure that you're getting the ROI that you want.
It's also a good idea to look at WHERE your money is coming in from. I work with a lot of service providers. Let's say you're a branding expert and you offer 1:1 services (full website, brand design, etc), an online course to DIY your branding, and a 2-hour Brand Intensive. You had a 10k month but where did the 10k come from (which income streams)? Maybe you're investing a ton of time and money into your course, but it only brought in 1k. With knowing your numbers, you'll be able to decide if that investment on your time is worth it, or maybe you want to spend more time on your other services.
Next Steps for Scaling
You have your bookkeeping (and other) systems in place to where your business is running really well. So what next, now that you're wanting to scale? First thing is to make sure you have the TIME required to scale. Are you doing your bookkeeping on your own, or is it something you can outsource?
Take a look at your projections - what's coming in, what do I need to save for taxes (no one wants a 50k bill at the end of the year from the IRS), what investments or expenses will I have coming up in order to launch? As you bring on more and more in your business, it's going to cost. Save for that and plan for that.
Another thing to look at, going back to Profit First, is what do you want YOUR life to look like? What are your goals? Do you want to pay down debt? Do you want to travel? Answer those questions and then consider how your business can support you in those goals.
With scaling comes changes and transitions in your business. Sometimes it can create a gap where your profit will drop for a time as you switch over your services. Plan for that. You don't want to have a 20k month followed by a 5k month, then 10k, back to 5k. And if that's going to be the case as you switch your services to scale, then make sure you're tracking everything and can plan for that. As you track your profits and expenses, you'll be able to see and follow those trends. The goal is to minimize the gap.
I hope this info was helpful! For more, you can always find us over on Instagram (feel free to say "hi!"). You can DM us there with questions or reach out to hello@profitpriority.co. And again, whether you're doing your numbers yourself or you hire it out, you need to do it. I'm always here to help!
