Ever felt in over your head when it comes to financial management in your business, especially as you invest in a team? In this episode of the Joy to Lead Podcast, CFO and financial strategist Andrea Jensen teaches us how to proactively control our finances, structure our financial management to nurture company growth, and set up and manage financial systems to best serve our companies and growing teams.
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The Four Buckets of Expenses in Your Business
- Cost of goods sold – this is the labor that goes into your business, your staff, cost to deliver products
- General administrative – this is indirect labor like rent, utilities, cellphone, internet
- Marketing – this dictates your revenue coming in by generates leads
- Profit – paying taxes, reinvesting back into the business, paying off debt, redistribution center if that is part of your business
When you put these buckets together and start examining where your money is going, you can begin to see where the holes are in your business and then determine where and how you need to fix the problem.
The Different Stages of Business Finances
When you begin to understand the different stages that business finances go through, you then can begin to proactively prepare for and support your team for the next stage of growth.
- New business – focused on getting a client base and gaining traction, the majority of revenue is allocated towards marketing to generate new leads
- Established business – invest more revenue in cost of goods and administrative tasks whether indirect or direct labor
- Established Business in a Mature Cycle – profit goes up because you are established and have fixed all the holes in your buckets
Andrea Jensen Believes These are the Top Financial Business Mistakes to Avoid
- Not creating firm boundaries around your finances – when people pay your invoices, paying your team, creating documented procedures for your team for when a credit card fails, invoices are not paid on time, etc.
- Not hiring a bookkeeper – managing your finances plays a huge impact on the growth of your business. Having someone to handle your taxes, revenue and monitor where your money is going will help set your business up for success
- Wrong people doing the wrong thing – Your team members can’t thrive when they are doing work that is not in their zone of genius. Make sure everyone is working their strong suit.
Steps to Start Leading Your Finances Today
- Have your team members manage one part of your business and be clear on what their contribution is and they are responsible for
- Create a budget and share it with who on your team needs to see it
- Be clear with your financial goals for the year
- Create a strategy to hit your revenue goals
Connect with Andrea Jensen
Facebook Group: https://www.facebook.com/groups/moneysecretsforceos/
Free Resource: www.thecashflowcfo.com/joytolead
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