 Andrew Kosal from Valor Accounting Services. Andrew, how are you today? I am very well. How are you doing, Leo? Very well, Andrew, very well. How is the UK? How's London treating you? Yeah, not bad. I'd love to say it's sunny right now, but that would be a lie. Why is it whenever we mention London, the weather has to play a part in the conversation? I know, I know, I know. How about over there? Is this funny? Over there, it's beautiful. As you can see in my background, fantastic. Andrew, well, thanks for jumping on. Looking forward to our chat today. So today we're going to be talking about financial stability with your coaching business. I'm going to let you introduce what we're going to be talking about, but definitely looking forward to this conversation because this is something that we work with coaches on a regular basis, how to make their business more financially stable. So over to you, Andrew. Nice one. All right, thanks, Leo. Yeah, so I guess a lot of these concepts we've touched over the previous podcast, but we're now bringing it all together. So we're going to just start talking about the basics of it and then moving over to a bit more of the taking a bit of an outside perspective, looking into the business. So the first one is kind of fundamentals of having a financially stable sports business. And that is having a good record keeping system. What do I mean by that? So I mean ensuring that you in capture all your business transactions, whether it be on the bank cash transactions, you want to have a place where you have all of that and you can categorize them correctly as well. What do I mean by categorize them correctly? So when we look further on in terms of how the business is performing, we want to know that if you buy sports equipment and you incorrectly categorize that as advertising marketing, for example, then when you actually look at your numbers, you're going to see that there might be an overinflated advertising marketing spend. And you're going to be basing your business on that saying, oh, let's lower advertising. Where actually nothing to do with that. You've just incorrectly categorized that as advertising, whereas it should have actually been in the sports equipment category. So that's one really important point is and in the accounting world, what we say is you put rubbish in, you get rubbish out. And that goes with transactions categorizing correctly. So you know that the information you're looking at is correct. It's accurate and can actually give you a good insight into how your business is doing. Does that make sense? That makes perfect sense. So question is, does this come down to good having a good accountant or does it come down to being organized with your business as a coach? Yeah, I think I think it's both really. If you're organized as a, you know, owner of your business, then you're going to have to have a good record keeping system, regardless. Now, it's not to say that you can do it, especially at the start, do it yourself and ensure that it's correct. You may not have any bookkeeping experience. So, you know, there is a slight risk there. But definitely having someone that actually knows what the correct categorization is definitely helps later on when you start looking at your figures. So I think it's a bit of both really. OK, perfect. OK, next one is turnover and profit. So what is the difference? So you may have a sports business where it's turnover just means all the income coming in, whatever the business is generating the money, and you may have a high turnover business. But that doesn't really give you the whole picture because what do your expenses look like? You know, do you have large expenses in terms of hiring staff, travel expenses? You know, as you spoke before, advertising, what is it? That then gives you a profit figure when you take into account what expenses you have. So that's something that business owners have to understand is having a high turnover business doesn't mean that you're a financially stable business, right? You've got to look at the profit and even then the profit doesn't tell you the whole story. And that's where we come on to cash flow to stop you there. I really like what you just said, because I had a conversation with a coach last week and he has a lot of turnover in his business because the way he operates his business is pretty much he doesn't his model is not getting clients committed long term. It's more just eight weeks of training and then if they want to continue, they continue. And if not, it just brings in new new clients. And you made a really good point because something he struggles with is not just turnover of clients, but also turnover of coaches as well, right? He's losing coaches constantly and you made a really good point because turnover doesn't necessarily mean you are a stable, stably financial business. So something we do in our company, we teach coaches how to make clients more committed. So essentially, you're getting what we're going to talk about now, cash flow every month so that that makes you a little bit more financially stable rather than clients coming in, clients coming out. Yeah, yeah, that's a great point as well. And it does really flow into what we're talking about now is the cash flow. It's essentially money coming in, money coming out, but there's a bit more to it. So, for example, if you have a large number of clients and there may be, as you know, there's different ways that it can be done. It could be a block book as you said, as you said, it could be a monthly recurring income. It could be one offs as well. On the profit statement, it actually says that that money has been received because you've invoiced the client. Now, depending on your payment terms, it might be up front payment. It might be at the end of the month. It might be at the end of the season. But from a profit point of view, you've received that money, but have you received it? No, you haven't. And this is where cash flow comes in because it does take into account money coming in, money coming out. Another thing as well is if you purchase equipment, it's not going to appear on the profit and loss statement. So if you buy, let's say, a company van where you're going to put your sports equipment in, if you're traveling to different sports facilities, then that purchase that you made of the company van is not actually going to appear on the profit and loss because it's actually an investment. It's going to appear on the balance sheet now without going too technical. But if someone looking at their profit, they're going to be like, oh, I've had a good month, but they've purchased a van. It's not going to appear in the profit and loss. Another thing as well is what sort of purchases does the business have? If it's sports facility rental, for example, or if you're hiring out a hall or a pitch, for example, when do you actually pay for that? And that depends on the agreed terms with the owner of the facility. So it could be at the start of the term, at the end of the term, or during. From a profit point of view, profit and loss point of view, once they've invoiced you, they can invoice you straight away, but you don't have to pay that until one month, two months down the line. So what cash flow does, it really does show what the money coming in and money coming out is. And another thing as well is, and we could obviously, there could be a separate podcast on this. But actually, I want to go into a revenue model because that's something that you touched on as well is, what sort of revenue model does your business look like? Do you have a mixture of a one-off, do you have block bookings? Is it, and we're going to touch on that as well, is it seasonal? Are you going to have certain periods in the year where there's going to be an influx of clients and then quiet time, quiet periods? How does that look like in your business finances? And then we're going to look at emergency funds. So emergency fund is essentially having enough cash for like a rainy day, you know? That's obviously very important. I thought I'd just include that to be a bit more comprehensive. But yeah, that's pretty much cash flow in a nutshell. Essentially like a kind of saving, say business savings. Correct. That's the one. Yeah. So yeah. And then, you know, we're looking into expenses. You know, that's another side of cash flow really. And it's very, very important as well for your financial stability, because if you've got a high turnover business, but it's it's it's leaking profits because you're having expenses where maybe when you started out in your business, you incurred those expenses and you kept them and you've not actually had a look and seen, oh, do I actually need this type of expense? You know, do I need this monthly subscription? Right. Or can I, if I have a subscription that I do need, for example, can I pay a yearly subscription and save? Now, that depends on whether you've got enough cash reserves to do that. Yeah. You know, are there any alternatives? Is there something that an expensive alternative where, for example, if you're renting out a hall, can you rent a hall which is cheaper, maybe closer to you and you could save on that as well? So it's really identifying these opportunities where you can lower your expenses because that ultimately means more cash for the business. Yeah, like that. Also, another example with coaches that we work with or I talk to as well is a lot of them go to their clients. Now, what they don't realise is that they lose money when they do go to them through not just time, but also, you know, petrol, gas, wear and tear of the vehicle. So all of those things that you've got to take into account as well. So that's why what we like to do is we like to have coaches have a base where clients are coming to them. So they save time, ever money rather than go in different places to go and train train players. Yeah, that's a really, really good point, because essentially, as you mentioned, that time saved could mean extra extra revenue where you could be coaching at your base. You know, if you if you if you total up all that travel time in that day or in that week, how much of that could have been, you know, used actually doing productive work? Yeah, 100 percent. And yeah, and and another thing as well is, you know, diversifying your incomes. We have mentioned this before, but I just thought I'd touch on it again is, you know, what are the ways you can provide products and services? You know, can you do online coaching? You know, can you is there a way can you sell merchandise? Is that something that might be helpful to to your clients as well? And, you know, that that's definitely something that can be and that obviously could be a separate podcast in itself. But that is definitely something that is an untapped opportunity for sports coaches. And also, it allows and we spoke to this before, but in the seasonality podcast is your business becomes more resilient as well, because as we spoke, if you if you're relying on certain income streams, you know, if you're going to a sports hall and for whatever reason, there is something that happens where it's not operational. You've got to let not only got to let down your your clients, but your business is taking a hit now. You know, I mean, so they could be other ways where you could deliver services and it doesn't impact your business as much. And lastly, just just as a little bonus here is, you know, identifying trends. And we mentioned seasonality as well, identifying because seasonality doesn't mean it's a bad thing. But if you can plan for it, that's great. For example, during the on seasons. Mention that any marketing has been maximised before that time. Yeah. To ensure that you get maximum results from that. You get a return on your investment from your marketing and and, you know, and also understanding the business stage of your sports business because the startup stage is going to be looking very different to the growth stage. So, for example, during the startup stage, you're going to probably have minimal income coming in and you've got quite a lot of expenses. You've got startup costs, equipment costs, things like that. So it's really good to understand that there is a different difference between a business in there, you know, year one, year two stage compared to a three, four, five and and then prioritising them and and then setting goals as well, you know, setting goals according to that particular stage of the business. Fantastic. And also, I'd like to add one last thing is that it comes down as well to what you talked about having savings. So that's also important planning so that you're actually saving for those those times of the year or those months where business starts to drop, which there is in this type of industry, there is is going to be because it's times of the year where your clients are going to be on holiday. They're going to be away. It might be during Christmas. It might be during summer and business starts to drop or you start to work with less clients during that time of the year. And I know in working with coaches that spring and summer is when most businesses go up because that's when business starts to. It's just that time of the year where parents start to get their kids outside, training, practising and then when once winter hits, business starts to drop a little bit and coaches don't prepare for it. So they don't have those savings in place and and they don't diversify their streams of income, as you mentioned here. So, yeah, just being organised and planning. Yeah, yeah, I think that's that's a great, great point to end up is is understanding those those trends, preparing for that and and also benefiting or taking advantage of those trends for the quieter seasons, but also opportunities that could arise during those quite quieter seasons as well. Yeah, perfect. All right, Andrew, I'm going to put you on the spot right now. So if you were to summarise everything we talked about today in a short sentence, what would it be? So to summarise, I would say, ensure that you prepare your business. You organise its finances to ensure that you can understand the numbers, make sense of the numbers and then plan from those numbers, any opportunities or trends or your business for the future. Fantastic. I think that was more than a sentence, but but it was a good. I'll work on it. I'll work on it. It was a good summary to be fair. All right, Andrew, well, thanks again for jumping on and sharing your knowledge and expertise with with the coaches and audience that watch the podcast. Yeah, brilliant. Thanks for having me, Leo. Yeah, I'll see you on the next one. Cheers.