Last week was all about the announcement we made the Inc 5000 list for the second year in a row. On the same day we were celebrating year two as one of America’s fastest growing companies, we were also participating in a super informative podcast for startups and small businesses, called The Startup Life, hosted by the charismatic, Ande Lyons. On this episode, Accountfully’s co-founder, Brad Ebenhoeh discussed cash flow forecasting live with Ande. We put the word out through social media and through email, but if it got lost between our epic Inc. 5000 blooper reel, or custom Accountfully champagne label pics, that's OK, because you’ve got the recap and recording right here.
The Startup Life Series - For Startups and Business Owners Alike
A quick background on the Startup Life and Ande Lyons: Ande is an experienced entrepreneur who has been where many fellow entrepreneurs and startup founders are (as she says) - starting out, unsure of the next move, and navigating the highs and lows of business. She has a great formula she uses to help coach and mentor fellow entrepreneurs with her very own dash of positivity and charm that is unforgettable. You can learn more about Ande and and check out her “Andelicious Advice” here: www.andelyons.com.
The Startup Life Podcast is one that discusses relevant business subjects with industry professionals. Each Wednesday, she goes live with Wise Up Wednesday - enlightening viewers on big business topics. Ours was all about cash flow.
Episode Overview
The podcast intro said it best: “Are you in the beginning stages of a new business and trying to understand how to project when you’ll reach profitability? An income statement nor a balance sheet can predict how money flows into or out of your new business. That’s why every first-time founder must master cash flow forecasting! It’s the most important business tool for your startup.”
While it is hard to put the entire episode in a nutshell, the biggest takeaway from the discussion was to start acting like a business owner, and to rely on the proper tools to manage and plan for your business. This includes all aspects of the finances and taxes, especially for the inventory based business.
Ande and Brad agreed that a major benefit to a startup’s success is to outsource the bookkeeping and accounting piece from the start. Understanding where your business revenue goes, needs to go, and having the professional insight from a team that can help guide your business, while allowing the business owner to focus on business development is key. As a business owner, you no longer have the luxury of running your finances from a bank ledger. You are now a CEO - act like one. Brad shared many examples of how business owners can get into trouble trying to manage the taxes, payroll, and day to day improperly. Turns out, it costs business owners a whole lot more to run a shoddy DIY accounting operation, than to engage the pros.
Some Show Notes and Further Reading
Below are a few of the items discussed during the episode, that may come in handy while viewing:
Breakeven Formula:
Profit = Revenue - Expenses (fixed expenses and variable expenses)
Ask yourself: How many units/packages/hours/etc. do you have to sell in order to meet breakeven for a 12 month period?
Cost of Goods Sold:
The expense required to produce the goods sold by a company. Oftentimes, this means the cost of raw materials plus the cost of labor.
Gross Profit Margin:
Subtract Cost of Goods Sold (COGS) from total revenue and divide that number by total revenue (Gross Margin = (Total Revenue – Cost of Goods Sold)/Total Revenue). The formula to calculate gross margin as a percentage is Gross Margin = (Total Revenue – Cost of Goods Sold)/Total Revenue x 100.
A Must Watch For Any Business - Especially Those in Startup Mode
A lot of helpful insight was shared, so it is the kind of episode that warrants a notepad, beverage of choice and an hour’s worth of focus. There were a lot of (as Ande put it) cash flow nuggets that Brad was able to share from both his experience as a business owner and founder, as well as examples from the numerous clients he has helped.
This is a great opportunity to learn from the many years of business and finance success that both Ande and Brad shared. To watch the episode, you can head over to the Accountfully resources page, or go to Ande’s YouTube channel here.
Ready to leave the cash flow management to us? We'd be happy to hop on a call and talk more about your unique situation.
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