Financial dashboard is simply a way to get the relevant numbers, the relevant data
in front of a business owner at all times. Most business owners that start
to work with me will typically look at their profit and laws statement on a
monthly basis, or maybe even their balance sheet, and with that information try
and run their business. You are listening to Carrie Lutz's Financial Survival Network,
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Network now more than ever. Welcome you are listening to when watching the Financial
Survival Network. I'm your host, Carrie Lutz. Well, if you run
a small business like me, you have a practice. Whatever you really want
to hear from the next person, name is Nature. It's a certified management
accountant. Not a term I'm familiar with. But what you do, Nate,
if correct me if I'm wrong, is you help businesses manage their finances
by creating a financial dashboard. So sounds interesting, sounds exotic. What exactly
is a financial dashboard? Well, I don't know. How exotic it is,
but a financial dashboard is simply a way to get the relevant numbers,
the relevant data in front of a business owner at all times. Most business
owners that start to work with me will typically look at their profit and laws
statement on a monthly basis, or maybe even their balance sheet, and with
that information try and run their business. But without doing some deep analysis,
there's not a lot of information that someone can just get from just looking at
the P and L. You know, just looking at that data, you
don't know you know which employees are your best employees, you don't know which
clients are your best clients. And so I create a dashboard that updates in
real time. But let's companies see, you know, these are my numbers
of thet matter, my targets for those numbers, and here's I'm performing.
And then when you see those gaps between your your actual performance and your targets,
it's very easy to identify where in your business needs to be short up,
where you need to focus to improve your profit he So oftentimes in a
small business, especially your best customer isn't necessarily your highest and volume customer,
right you could be losing money on a high volume big customer, and that
it's the smaller ones you're actually making the money on, right, absolutely.
And it's it's interesting because when most people think, ah, my business is
not profitable enough, I'm not making enough money. I need to I need,
you know, to do better. All they know how to do,
or like they're they're at least their reflex or gut instinct is I need to
I need to sell more. I need more clients, I need more business.
And so they go and they focus on how do I get more clients,
more clients, more clients. And yet if they have an inefficient process
or an inefficient let's say segments of their business, so maybe they have a
team or a department that isn't really performing that well, simply adding more fuel
to that it's going to sort of maximize that inefficiency, right bringing in the
new client fact, I've seen many times clients of mind bring in new customers
only need to find that there as owners working twice as hard and really not
making any more money. And so before you focus on growth, focus on
making things efficient and understanding your numbers internally. And then when you've got a
good system and you say, okay, I know that my employees are good,
my departments are good, my utilization rates or whatever the metrics are that
matter. When everything's in place, then growth maximizes your profitability. Growth without
that again, it just if you have inefficient processes. I think it was
I think it was Bill Gates that said that, you know, growth maximizes
an inefficient profit or inefficient processes, You've got to focus on that internal stuff
first. Gotcha, makes total sense. So tell us some companies. You
don't have to name names, but tell us about companies you've helped in the
past. So let's think of a good example. I've done work with a
lot of marketing companies. One of my biggest customers there, they were classic
of what I just just was talking about. You know, they had when
I started that they had roughly roughly twenty five employees, and over over five
or six years, I think they're now at about forty. And they've gone
through cycles where they've done really well and that growth actually did drive greater profits.
And there's other times where they focus just on the growth. But then
you know, if they have their their creative departments or their digital marketing departments
that weren't as efficient to sworn as good at at delivering consistently, we could
quickly see the profits fall off, and so for them, it's it was
a matter of saying, okay, what really matters well, Because they're in
the service industry, profit by client is a key factor, right, and
they have some huge clients and they have some very small clients. And by
putting things in a dashboard and when I say a dashboard, it's charts and
graphs, right, it's pictures, so you're not reading through tables of data,
you're just looking at graphs. Is it going up? Is it going
down? With them, we started with sort of the financial statement level,
right, we could see month over month, am I improving my profit or
my decreasing and profit if you're decreasing a profit between your revenue and your gross
profit line, so your costs of good soul is kind of that middle factor.
We realized we needed to go deeper to figure out not just profit as
a company or gross profit as a company, but gross profit by client.
And we could very quickly see that somewhere between ten and fifteen percent of their
clients, we're generating about ninety percent of their gross profit, which means if
you could see their graph, it goes up, you know, kind of
shar the beginning with those those relatively few clients. It goes flat for most
of the rest of the graph, and then it actually drops at the end.
Do is they have a few clients who are unprofitable Exactly? What about
like salespeople, You think your best salesperson is the one who sells the eye
as dollars, But in reality that's not always the case, is it.
No? In fact, I can give you another example that you just reminds
me of. I had a client who sold well, they were a dietary
supplement company, and they had they had different sales channels, but one of
them was their retail channel. They had I think ten or twelve different products
that did you know, depending on what supplement you wanted to take, itamins
and different things. And they did have a sales team, a small sales
team that were given commission based on the total revenue, the total amount that
they could sell. Well, what I went analyzed each of those those twelve
different products and figured out which ones were the most profitable products Actually, in
that case was the least the lowest cost product that was the highest profit because
it cost us so little to make that when I pointed that out, we
completely changed the commission structures, like, hey, everybody sell this product,
will make twice as much for every bottle of this product and for that product.
And so just understanding that again they didn't have to increase their total volume,
they could actually just shift what they were selling and double their income.
So insights like that are pretty pretty powerful. Let me give you one more
example real quick. A client of mine that's a restaurant. It was kind
of a newer restaurant, well older restaurant, but open a new location,
and the new location was not doing very well. They kind of broke even
every month some months, a little over, some months, a little under
we built his dashboard and one of the metrics that we included, well,
two of the metrics were how many tables he turned over every month and then
his average ticket size, right, so how much was each each check each
time he had people sit down for dinner. And we did a little figuring
between those two metrics and realized that if he would increase the average ticket size
by two dollars and fifty events, he would go from breaking even to making
about ten thousand dollars a month. And so with that information, He said,
well do I how do I do that? Like, well, it's
just training, right, that's like selling one more drink per meal or one
more deserved or whatever it is. And the very next month he actually did
that. You could see the spike in his sales from one month to the
next just by understanding that that tiny shifts and how he looked at the profitability
of his business. So stimmer for everybody. Again, restaurant's going to have
way different metrics that are important than a marketing company. But if you know
what those metrics are, and you know what your cars are, and all
it is is comparing how do we do compared to our target? If there's
a gap, fix it, figure out why. It just tells you where
to focus, all right, All right, Well, so so what the
information does? I always say, it's all about the story. No,
all numbers do is tell a story. But you know without words with numbers,
and the numbers tell all, don't they? Yeah? But see,
I would go one step further carry because when again, if you look at
your P and L, let's say you want to see how you did for
the year, and you look at a P and L month over month over
month, you're looking at, you know, possibly a couple dozen rows of
data, twelve columns, you know, one for each month. Just looking
at a sheet of numbers, it's very hard to understand that story. And
I think until you take that table of numbers and turn it into a picture,
you know, a chart, it's going to be very hard to figure
out what to do. And especially because a lot of things on your P
and L. You need to understand ratios. Right, what's my gross profit
as a percentage of sales? What's my net income as a percentage of gross
profit? Sure, so you've got to I don't want to say dumb it
down, but it's I want you simplify it. Right. If something simple,
you're going to do it. If it's complicated, I see business owners
have lots of data and I don't do anything with it because it's just too
much time to sit and analyze it. Well, you got to have the
right right, You got to have the right numbers, and they have to
be presented in a way where effectively tell that story. Right. It's not
enough just to get numbers, but you got to have them presented properly.
Absolutely, Yeah, And I think you could either need you need a CFO
or at least a fractional CFO in your business to do that for you,
or if you have a dashboard, that's very and I'll retailored to your business.
Most CEOs are smart enough they can you know, figure it out if
they have a picture and they can try to take the next steme. So
is that something you do too, fractional CFO, Yeah, sort of.
So my model is, my main product is putting together those dashboards, and
most of my clients, for the first couple of months, they'll need a
little you know, training teaching, so I'll show them how to read it,
how to interpret it, how to take action on it. But then
once they're up and running. In fact, the reason I built this business
the way that I have is because my last business, it was a fractional
CFO company, and people would hire me to come in and after depending on
the company bafter that three to six months, we kind of had things in
order. I would have a regular meeting with them and often felt like I
wasn't providing value because like you know, they knew how to read the dashboard
without me at that point. And so I realized if I could provide that
dashboard, give them a little training up front, and then they can you
know, people can still retain me back, you know, for like an
hourly fee later down the road if they need to. But again, if
I give people that picture that's in real clime, that's updated automatically, they
have what they need to make good decisions, and they the dashboard needs to
be updated periodically, right, yes, And so I use a couple of
different software tools to build these dashboards, and for the most part they get
updated automatically. They sync with somebody's you know, quick books or net Suite,
or know, many different kinds of whether it's counting softwares or project management
softwares or whatever. So as much as I can, I automate that process.
All right, cool, all right? So how do we find you?
How do we connect with you on the internet. Best way to get
a hold of me is just go to my website. It's zero to CFO
dot com. That's Z E R O T O CFO dot com and there's
a there's a contact form there you can reach out. I'm very happy to
talk with people in sort of an exploratory way. Right, Some people might
think, O, do I really need this? I don't know in my
opinion, maybe everybody needs it in some sense, but if they're not ready
for it, I'm happy to talk through someone's numbers with them and just tell
them what I see. Yeah, well, we ye, we used to
have the company who had a printing company. Nothing nearly as sophisticated as what
you have, because the technology just wasn't there before. But we had ten
key numbers that we tracked every single day, you know, how much how
much we build out, how much we collected, how much we paid out,
and how much we were built among other numbers. And then we tracked
new customers. We tracked you know, sales by individual. But that was
about the best we could do. So I can see this having way more,
way more applicability and way more utility than what we were doing way back
when. Well, if I give you your listeners some just some value here,
you know, if someone's not interested in a dashboard right now, I
would just make a recommendation is figure out what are the top three numbers that
matter right Maybe it's revenue, maybe it's again gross profit as a percentage of
sales, or whatever it is that moves your needle. Know, at least
the top three and know what those should be every single month, and if
you're only using three, you should be able at least, you know,
get in your books and measure them well once a month and see how you're
doing. Most of my dashboards are gonna have a lot more metrics than three,
But if you're not doing anything, start with three and see if it
doesn't provide you some insight in your business that you didn't have before. All
right, very cool, I like it. That's useful. And hey,
the link to Nate's website is in the show notes this interview on Financial Survival
Network dot com. Make sure you click it go there. While you're at
the site, sign up for your free newsletter Nate. It's a pleasure.
Appreciate your stopping by. We'll talk to you again soon. Thank you,
Katy, thanks for listening to Carrie Letz's Financial Survival Network, your solution to
today's trying times. For the latest, go to Financial Survivalnetwork dot com.
Financial Survival Network now more than ever,