 Excellent. I have a podcast and the microphone is on a stand the whole time so I don't have to worry about doing this kind of thing so forgive me if if you can't hear me. So like Michael said my name is Ben. I'm a virtual CFO and I'll tell you what that means a little bit later but my talk is know your numbers increase your profits and stress less. So here's what we're going to go through. We're going to talk about the knowing your numbers bit and that's important because you can see the main problems and opportunities that are coming up in your business. Some of the things that go wrong in a business or going wrong you can't actually see any other way or as easily as you can by looking at the numbers. So in the presentation I'm going to go over the five key ones. Thank you for showing up to a numbers talk straight after the after party you're all hung over so well done. I'm going to talk about the earn more profit part. More profit is good because it means you have more cash. It also usually means you have more time because you can pay other people for their time or you don't have to work as hard to make as much money and that generally leads to less stress. So I'm going to talk about five quick ways that you can earn profit in the next week. Important housekeeping item don't write down everything I'm going to say I will probably talk fast and I'll start talking faster as my time starts to run out. So make sure that you're focusing on the aha moments. So anything that I say and go I want you to write that down because you may not remember that if you go later look at your notes or if you look at the recording later so any aha moments you have any thing that you need to do after hearing this talk write that down as well and then you can go rewatch the recording later once you've done those things and you process those aha moments rewatch the recording and there might be some different ones because some of the things that I'm saying they won't be relevant until later so you'll need to do some things first. You can also get a copy of the slides on my website. Very easy to remember it's my name just don't put an S on the end of my last name. Thank you Rachel McAdams for all those spelling errors people do of my name. BenMcadam.me slash WCBNE which I'm really happy rhymes so thank you for the acronym of this conference. This link will be on the last slide as well when we do the Q&A so if you haven't written that down don't worry. So I'm going to ask you to participate and I have a poll how long have you been in business? So put your hand up if you haven't been in business yet or you're thinking about it. Brave souls putting their hands up first very good. Hands up if you've been in business for less than a year. All right very good. Anyone two to three years? Anyone that's three years plus? Excellent most of the room all right. Another impromptu question how many of you are freelancers or are going to be freelancers and how many of you have a team whether that's contractors or employees? All right okay that helps me give you some more relevant examples in the talk. Sorry to everyone watching at home you don't get to say. So who am I? My god that's big. So I'm Ben I am a virtual CFO. So CFO is like a corporate term for a chief financial officer it's like a strategic level accountant so they're the people that look at your numbers they don't use them to fill out a tax form or something they look at them and they say here's how we're going to make things better in the business so that's what I do. I've sold two businesses in the last two years both of them agencies one of them was an online international bookkeeping business that grew pretty fast before I sold it to my co-founder and I've been doing this for over a decade for a lot of my clients so plenty of results but moving on from me talking about myself what's the goal in this presentation I want you to keep in mind that this isn't just a general information session where we all enjoy talking about numbers and hearing numbers I want you to keep in mind your goals what's the goal for your business like do you want to maybe exit the business do you want to hold the business and just earn some money from it are you following a calling whatever your goal is for your business you're going to need some healthy profits and business numbers even if you're following a calling or doing something not profit you need some profits and I'll tell you why a little bit later but even though not from are there any not profit people in there in the room never mind them the other thing I want you to do is keep your goals in mind use them as to help you focus on the important stuff and to filter out the things that aren't so important as I go through this presentation okay so the first part is about the five key numbers these you can find on your financial statements so the profit and loss the balance sheet that your bookkeeper or maybe tax accountant prepares for you or maybe do yourself and you can download them from your accounting software anybody's still putting the numbers together by sending a shoebox to their tax accountant no one brave enough no one okay well that's good anyway if you're telling the truth so the first most important one is sales I call it sales but you might see this revenue or income it's really important because if you don't have any sales there is no business they're just you spending a lot of money on expenses because it's fun maybe important thing with sales we want it going up even adjusting for seasonal factors like it may get quiet over Christmas for some people and then you know all your clients shut down and go on holidays or if you're in e-commerce and retail Christmas could be super busy period if you're selling some products that are more for summer then you know either maybe some quiet periods during spring and autumn if you can talk to your bookkeeper or tax accountant or do it yourself keep the different types of sales that you do so the different products the different services have them on separate lines so that you can have a look at the trend for each of them if you're just looking at one sales line on your report you might be looking at and thinking oh yeah everything's basically going up but it could be that you haven't noticed one particular service is is going down so having separate lines is important there to find your sales it's the top row of your profit and loss statement but you can also find it in a whole bunch of other areas if you sell online then whatever system you use to take payment will often have some sort of report that you can follow there number two is margins you may not know what this means technically if you're talking to an accountant and I may recovering accountants that you would call this gross profit margins or if you're looking at your financial statements that someone's prepared for you it might might say gross profit margin or GP margin and it's basically a percentage the profit you earn the gross profit you earn divided by sales and I'll talk a little bit more detail later about how to calculate it but why I say margins or gross profit margins with a plural on the end is because just like in the last slide when I was talking about sales keeping that separate each of your services each of your products keeping on their separate you should have a look at the margin separately as well so you can make sure that your costs aren't creeping up for a particular product or service line without you noticing because you're just looking at the totals margins are pretty important that's why they're number two without sales there are no margins but they're number two because this is like the 8020 of profitability if you only take away one thing from this talk it's this slide and everything on it because if you get this right you can screw up so many other things in your business and just like throw your excess money at the problem sorted out if you get it wrong your business is going to be stressful so I promised you the title of this talk less stress don't get this wrong and and you'll have less stress because your margins are wrong you will have no cash you'll have no time because you have to work super hard to earn money and you have to work really long hours to earn the minimum amount you need you'll not you won't have any money left over to hire anyone to help you with all that work and you won't have any money to hire advisors like I have no idea who that might be maybe if you get it right you'll have plenty of cash for marketing so you can get increasing amounts of sales you have plenty of cash for growth projects that will grow your business you'll be able to hire people ahead of your growth so you don't get the horrible crunch where you have to work really long hours and train someone new to try and save you from all that effort you'll have plenty of money from managers so your business can actually get bigger than just you running everybody because you've got enough money to afford managers you have plenty money for all your other expenses which I'm calling overheads and most importantly you you'll have money to pay you a decent amount for all of your time and effort that you're putting in so here's the magic number the price that you charge your customers for your service where your product has to be at least three times the cost to deliver that product or service so we're not we're not including rent or your accountant fees or anything like this we're just purely it's the cost to deliver so if you sell products it's all the raw materials all the shipping from the beginning of time to when you get it to your customer it's all the labor that's involved in this product or service if you have an agency say you're doing web design and it's the cost of your developers that do the work on the sites that you're selling so keep this in mind three times the cost to deliver this is really important I'm gonna say it again the price is greater than three times the cost to deliver the service if you're not in business yet do this from the beginning and it will save you so many headaches if you're relatively new in business it might be a little challenging to to raise your prices or cut your costs or we might not know what your costs are I'm gonna talk a little bit about that later in the presentation if you can get four times well done it can be a bit hard neat you need a bit of bravery and confidence to to be able to have that and you know this money mindset issues that come in but it's very important if you can get this right as your business grows bigger you won't be able to keep the margins so high unless you say you're a purely online business and you don't have to worry about rent and paying for big factories and things like that you might be able to do it but don't feel bad if you know you're sitting in here and you're a million plus annual revenue business and you don't have these three three X margins that's probably okay but maybe come talk to me later the number three key number is marketing spend marketing's really really important and it's very tempting not to spend any money on this but if you don't you're spending too little you won't know anything about your market you won't be able to speak to them in a way that really works for them you won't have any leads no one putting their hand up and saying hey can we jump on a call and have a chat about how you can help us or you won't have anyone visiting your website and signing up to your email list if you do get someone do get a lead if your marketing spend isn't high enough then you won't be able to convert them as easily you'll be having hard conversations and you know it'll feel like you suck at sales but it's just because you suck at warming up them up with your marketing don't worry about that and then the other thing you might not realize is if you're not spending enough on your marketing your customers will be unhappy and leave because the promise you're making in your marketing or the promise you make in your sales to convert these hard leads you may not be living up to when you're actually delivering the product or service so marketing is important very important if you spend too much on marketing it is a bit of a Goldilocks thing if you spend too much on it then you're just wasting money basically you can't it's for the same thing I talked about with the margins in the last slide you won't have as much money for you and managers and all that sort of stuff so the magic number for this is five to fifteen percent of your sales that's the magic number and if you feel like you have to spend more it's possible that you're in a competitive market but it's also possible you're getting a terrible return on your marketing spend this range does depend on your size in the beginning you may be spending 15% just because you can't spend any less like the minimum spend on a particular advertising method might be non-negotiable does depend on your industry if it's more competitive you may need to spend more or maybe you're one of the lucky ones that doesn't actually have to spend that much you can just put up a few blog posts and maybe do some speaking opportunities don't know who would do that and it does depend on your business model as well if anybody is there anybody here that's selling e-books and training courses and things yes generally you guys will spend quite a bit more on marketing because you've got less team and things to pay for this guideline can also be used in the reverse instead of starting with your sales and working on what percentage your marketing is you can do it the other way around you can start with five to fifteen dollars a marketing spend should get you at least a hundred dollars in sales and so if you're currently spending a lot more than that on your marketing maybe we can have a chat a little bit afterwards or there's probably other any marketers in here alright and keep your hand up if I've like offended you with this percentage oh thank goodness all right key number number four is profit I've been talking about profits and having more profits but it's only number four because the other three there will affect the profit and I want you looking at those first as you're growing and beginning stages of a business or going through a growth phase you might be spending a lot of money and turning yourself into a loss position or if you're like a funded startup most of them are just losses for days but if you've had a look at the other top three key numbers and you've worked out what the effect on profit is all those the last piece that affects profit is all your other expenses so if you're spending too much on rent if you're spending too much on your admin team if you're spending too much on your accounting fees or advisors never can spend too much on that a key thing I want to leave you with here I'll talk more about expenses later but don't go nuts chopping them I know as a former accountant this is what we generally like to focus on is just keeping your profit a year expenses down but don't cut the important ones for profit I usually say aim for 20% of sales as your profit figure and the reason why I say that is because it gives you plenty of money for a few things that I will not skip ahead and tell you yet but make sure that 20% is after you've been paid for your work so consider that there's you the worker and you the person who owns the business asset your business needs to be able to pay you a market rate for the work you're doing so if you have a web design firm and you're telling me that you've got this 20% of sales as profit but you're not paying yourself as you would another web developer then it's deluding yourself a little bit so it can be very tempting to say yes I've done this and not do the hard work maybe working on your margins so that there's plenty of money left over and you the business owner deserves to be paid as well so you're holding a very risky asset it's not like real estate definitely not like stocks it's this asset could go up in smoke at any time almost it can feel like it has to me a couple of times so you the business owner you need to return on that investment otherwise you should just sell it and move on to a different asset so profit is important because here are all the things the profit does it pays down debt if you've got debts like credit card or a loan the interest portion comes off your profits but the principal portion the bit that actually lowers how much you owe that comes out of your profits so if you're really focused on keeping your profits low so you're not paying the tax office then you're also not going to be able to pay your creditors savings also comes from profit I mean if you think about it it's fairly obvious profit is the amount of income you haven't spent so the amount of money you haven't spent turns into savings you can also use it to reinvest in growth and it's a return like I said for you the owner so profit is important and try not to get too crazy about keeping your profit low to avoid paying tax and then key number number five is cash or cash flow I'm not going to tell you to go look at a fancy statement of cash flows for this but it's super important because if you don't have any cash you don't have business a business you can actually go to jail if you can't pay your debts as they fall due for anybody here operating through a company should know about that so keeping cash and having more cash coming in than goes out on average very important and the key here is timing so cash flow is different to profit because it's a timing thing the dates on your invoices and the dates on your supplier bills may show that you've got tons of profit but if your customers aren't paying you or if you're paying your supplies a little bit too early that can mean that your cash flow is a totally different number so if you've ever said to your accountant or bookkeeper there's tons of profit on here but I feel like there's no money in my bank account well here's a few reasons why you want to look at the balance sheet the balance sheet the problem loss has got your income less your expenses than a profit the balance sheet has your assets and liabilities the amount other people owe you all the assets you hold and the liabilities is the amount you are other people like your suppliers your employees the government have a look at the cash from customers so the amount they owe you so accounts receivable or debtors and the other names for it get money from them as soon as you possibly can get it all paid up front before you start work if you can otherwise some sort of deposit and instalment system or recurring revenue is even better so you know the money is coming in if you have an inventory business where you're selling products don't order too much inventory because it's just like dollar bills sitting on the shelf they're not really helpful to you be careful of over investing in assets like desks computers cars make sure that you've got enough cash to continue running your business cash to supplies is another thing pay them on time but make that on-time point as late as you can which means you're holding on to the cash for as long as possible in case something terrible comes up definitely try to get into a situation where your customers pay you first and then you pay your suppliers and your team afterwards life it's just so much easier if you do it that way if you pay your suppliers and team first and then hopefully sometime your corporate client might pay you in the next six months life sucks you end up being an unofficial lender without any of the skills or training or large reserves of capital debt repayments if you find you don't have cash but you got plenty of profit then it's probably debt repayments like high purchases and loans for cars and things and tax and compliance they're the other ways that your cash can run away so the five key numbers sales margins marketing profit and cash or cash flow so the next section I'm going to ask you to participate at the end of this one so sorry this is about five quick ways to increase profit in the next week so I'm gonna there's five ways five categories and I want you to think about which of the categories you know don't have to think about which specific way you're gonna do that but I want you to think about which of the five categories you're actually going to implement for those of you that have businesses already I'm gonna ask for a show of hands at the end and we'll see here's the brave ones that do number two number one review costs I know an accountant telling you to keep your costs down how surprising but it's really important because every dollar you don't spend is an extra dollar of profit so don't waste money and you'll have more profit go through and do a review and there's a couple of questions you should ask the first one is is this expense necessary do we even need it if not you can cancel it or reduce it the big the big problem here is usually software subscriptions software subscriptions you've signed up for and you don't use or you don't use the number of users anymore so every two or three months just go through the list on all your credit card statement and cancel just be careful that you haven't committed to a year and they're gonna charge you the rest of the year up front when you cancel that's something I did a couple of years ago the next question is am I getting enough value out of this am I getting a good return on my investment I'm spending money am I actually getting enough money back usually the solution is just for search for someone cheaper but keep in mind the cost of switching it might take you a little while to switch between systems like email marketing automation software sometimes there's a bit of an effort to switch over and make sure all your opt-in forms and things have properly gone across so keep in mind that time maybe this is the counterintuitive thing is that anybody expect me to say this one maybe you might want to actually spend more on a particular expense usually marketing is the culprit here but here's a phrase I want to leave you with off this slide don't throw money to problem throw it at a solution and this is marketing usually the big culprit here I'm sorry for picking on marketing or the marketing people out there so usually if someone has a sales problem or they don't have enough sales coming in they want more money they want more customers they'll they'll just throw a ton of money on marketing but that's throwing it at the problem of sales throwing it at a solution would be spending a little bit of money to test a marketing channel to see if it works for you and then throw money at it when you've worked out it is actually a solution so spend more yes but don't throw money at a problem quick way number two this is the one you got to be brave to do is to raise your prices I know that there is an objection that's floating around your head and I'm going to address that one but first there every dollar that you increase your prices and that is an extra dollar of profit you haven't had to do anything extra to get that you don't have to raise your prices you could just decrease your discount like a client of mine did a monthly blog writing service and on her pricing page she had $800 a month and then a big red X and it was actually 497 so I suggested to her instead of changing the 800 just move 497 up to 527 still looks like a big discount you can test your price increase on new customers who don't know what you normally charge and won't be as disgruntled so you could test it and you could see on a sales call or in person you could see how they react to that price here's the bit where I'm going to challenge you why you hate raising prices I wrote an article on my site there's a link if you go through the slides but basically the concept is you can lose customers and still be more profitable I'm going to do a little math I'm so sorry to do it first thing in the morning after the art after party but we're talking about numbers you're not going to get away with imagine that your double your prices so let's make a nice year round numbers thousand dollars in sales maybe a week or a month or a year whatever it is thousand dollars you double it so your sales turn into two thousand dollars but then you lose half of your customers because they hate your new price and off they go so your sales are back down to a thousand again right where we started and and so most people at this point go well that's great Ben why did you put me through all that stress I kind of like some of those people the reason why is because even though your sales are the same your cost of delivery is a lot lower like you have half the number of customers to fulfill so you don't need quite so many staff which means you might need not need so many managers might mean you don't need quite so big an office or so many software subscriptions so all of your costs will drop down for the people who are selling physical products and have suddenly seen their quantity sold drop by half that means less inventory inventory you need to pre-order which means less cash that's just sitting on the shelves doing nothing so it can still work and the reason why I put the link to my blog post in there is because maybe you don't want to double your prices maybe you want to put up 10 or 20 percent instead there is a table on that article that will show you how many customers you can afford to lose if you raise your prices a certain amount if you're still worried if I still haven't convinced you and I probably haven't for a lot of you I'm seeing worried faces I've got a couple of nods though that was good you can offer increased value with a price rise you can say to people you know we love that you've been a customer we're going to add this new extra service or throw in this new extra product and we're going to put our prices up that's one way to make yourself feel better and potentially lose less customers but I would suggest you should be increasing your prices at least every year for inflation most people are used to regular small increases and they're quite happy for that if you don't increase your prices for many years and then you need to jump them up 20 25 percent after a few years yeah you're probably going to lose some customers quick way number three to increase profits is to increase the order size so you have spent time and money acquiring a customer if they buy more from you then you don't have to spend more money to acquire another customer there's two main ways that you can increase the order size one is called cross-selling or add-ons so they bought one thing from you and you sell them something else that's kind of related you don't have to have that separate related product or service you can have a partner or an affiliate or even white label somebody else's service or product so you don't have to go through the whole product or service development process you can also do upselling so this is where you upgrade somebody who's bought something and you get them to buy a more premium something from you or more of the something there's the couple of ways go daddy is really really good at this if you try and buy a domain from go daddy how many things do they try and cross sell and upsells like all the other dot something versions of the domains they want your hosting they want some emails this to print is also ridiculously good at this like 10 pages of the checkout before you can pay for your business cards you don't have to be them you can just like maybe one extra thing can can give you a bit of extra profit quick way number four is to sell again like I said before you spent time and money to acquire a customer and they bought from you and they're probably happy yeah so they're more likely to buy from you than a completely new customer is and it's also a cheaper to sell to them so that sale is more profitable you could sell a recurring service then you don't need to market every month or every quarter or every year you could sell a consumable product to them maybe it's not your main product is consumable but there's maybe there's an accessory or something that goes with it if you think about printers I don't really use a printer very often but this is the classic example is that the printer is ridiculously cheap and the ink is where the companies make all their money and that seems to run out faster and faster somehow and now the printers can tell us your ink has run out even though I can clearly see there's some ink in there not that I'm cheap or anything you can also sell an updated version of your something for people who do training courses where you can sell them the new brand new updated for today version of your training course or your book or your product maybe there's one you have that's more efficient in some way or maybe you've got for those who are doing web design you can update somebody's website it can be cheaper than building the thing from scratch just put a new WordPress theme on you can also sell something new to the people who bought from you before maybe you send them an email survey and see how there are going with your product and what more you could do for them or what gaps they have and then you could sell something new that survey I mentioned is there's a popular version of it called the ask method so if you want to Google that if you want to do that and then number five kind of has nothing to do with numbers and money quick way number five productivity and the reason why this is in here is because it's about getting more done with less time time is money you're either paying yourself for your time or you're paying your team for your time so the more you can get out of anybody's time without being nasty about it then that's more profits for your business a couple of key things I want to talk about here being efficient is doing a task really really fast and quickly effectiveness is doing the right task so I can sometimes be extremely efficient at social media I'm doing that really really fast and liking my friends and commenting on my friends and things like that but that's not really going to do anything for my business well maybe a little bit so it's not the most effective use of my time like point number one about the expenses I had a review process you can do the same thing with your tasks this is the framework I got from the four-hour work week book by Tim Ferriss it's a little over 10 years old now but I love this framework first one is you look at the task doesn't need to be done at all if not get rid of it if you can't get rid of it can you automate it it's often faster cheaper and more accurate to automate things they may have all heard of Zappia Z A P I E R dot com that can connect all sorts of web services together and save you a bunch of time if you can't automate it delegate it get somebody cheaper or with a low hourly rate to do it for you for you or maybe there's some talented staff you have and you delegate the boring work that's very mundane and doesn't require their skills to someone a bit cheaper if you can't do any of these and do it yourself and this is where the efficiency bit comes in as well as to the delegating bit make sure a team's efficient so you excuse me you can go through this framework for your tasks and also for the tasks that your team does so here's the participation part which of these you're going to do in the next one to two weeks so we've got review costs raise prices increase order size sell again or productivity can I get raised hands for anyone who's going to review their costs good that's always the popular one yeah any brave souls going to raise their prices oh wow well done guys I love this crowd anyone going to increase their order size very good yeah always a few there anyone going to sell again to their customers you've happily bought from them yeah very good anyone going to do the counter intuitive productivity exercise wow people put their hand up more than once good on you that's very good I like it all right so that's the end of my talk thank you for listening