1
00:00:00,040 --> 00:00:05,200
Financial dashboard is simply a way to
get the relevant numbers, the relevant data

2
00:00:05,280 --> 00:00:09,759
in front of a business owner at
all times. Most business owners that start

3
00:00:09,800 --> 00:00:14,119
to work with me will typically look
at their profit and laws statement on a

4
00:00:14,160 --> 00:00:17,480
monthly basis, or maybe even their
balance sheet, and with that information try

5
00:00:17,519 --> 00:00:22,039
and run their business. You are
listening to Carrie Lutz's Financial Survival Network,

6
00:00:22,239 --> 00:00:27,640
where you get valuable information you just
can't find anywhere else to thrive in today's

7
00:00:27,640 --> 00:00:33,399
trying times. You need the Financial
Survival Network now more than ever. Go

8
00:00:33,439 --> 00:00:39,840
to Financial Survivalnetwork dot com and get
your free newsletter and gift. Financial Survival

9
00:00:39,880 --> 00:00:49,039
Network now more than ever. Welcome
you are listening to when watching the Financial

10
00:00:49,079 --> 00:00:52,759
Survival Network. I'm your host,
Carrie Lutz. Well, if you run

11
00:00:52,799 --> 00:00:57,280
a small business like me, you
have a practice. Whatever you really want

12
00:00:57,280 --> 00:01:02,039
to hear from the next person,
name is Nature. It's a certified management

13
00:01:02,039 --> 00:01:06,000
accountant. Not a term I'm familiar
with. But what you do, Nate,

14
00:01:06,120 --> 00:01:11,760
if correct me if I'm wrong,
is you help businesses manage their finances

15
00:01:11,799 --> 00:01:18,799
by creating a financial dashboard. So
sounds interesting, sounds exotic. What exactly

16
00:01:18,959 --> 00:01:22,840
is a financial dashboard? Well,
I don't know. How exotic it is,

17
00:01:23,480 --> 00:01:27,319
but a financial dashboard is simply a
way to get the relevant numbers,

18
00:01:27,359 --> 00:01:32,640
the relevant data in front of a
business owner at all times. Most business

19
00:01:32,640 --> 00:01:37,280
owners that start to work with me
will typically look at their profit and laws

20
00:01:37,319 --> 00:01:40,560
statement on a monthly basis, or
maybe even their balance sheet, and with

21
00:01:40,640 --> 00:01:45,040
that information try and run their business. But without doing some deep analysis,

22
00:01:45,120 --> 00:01:48,560
there's not a lot of information that
someone can just get from just looking at

23
00:01:48,560 --> 00:01:49,680
the P and L. You know, just looking at that data, you

24
00:01:49,719 --> 00:01:53,120
don't know you know which employees are
your best employees, you don't know which

25
00:01:53,159 --> 00:01:57,760
clients are your best clients. And
so I create a dashboard that updates in

26
00:01:57,799 --> 00:02:04,280
real time. But let's companies see, you know, these are my numbers

27
00:02:04,319 --> 00:02:07,800
of thet matter, my targets for
those numbers, and here's I'm performing.

28
00:02:07,879 --> 00:02:12,120
And then when you see those gaps
between your your actual performance and your targets,

29
00:02:12,280 --> 00:02:15,479
it's very easy to identify where in
your business needs to be short up,

30
00:02:15,520 --> 00:02:19,479
where you need to focus to improve
your profit he So oftentimes in a

31
00:02:19,520 --> 00:02:25,759
small business, especially your best customer
isn't necessarily your highest and volume customer,

32
00:02:27,120 --> 00:02:31,960
right you could be losing money on
a high volume big customer, and that

33
00:02:32,039 --> 00:02:37,039
it's the smaller ones you're actually making
the money on, right, absolutely.

34
00:02:37,159 --> 00:02:40,159
And it's it's interesting because when most
people think, ah, my business is

35
00:02:40,159 --> 00:02:44,199
not profitable enough, I'm not making
enough money. I need to I need,

36
00:02:44,360 --> 00:02:46,360
you know, to do better.
All they know how to do,

37
00:02:46,479 --> 00:02:49,639
or like they're they're at least their
reflex or gut instinct is I need to

38
00:02:49,719 --> 00:02:52,159
I need to sell more. I
need more clients, I need more business.

39
00:02:52,800 --> 00:02:54,319
And so they go and they focus
on how do I get more clients,

40
00:02:54,360 --> 00:02:59,120
more clients, more clients. And
yet if they have an inefficient process

41
00:02:59,479 --> 00:03:02,599
or an inefficient let's say segments of
their business, so maybe they have a

42
00:03:02,599 --> 00:03:07,719
team or a department that isn't really
performing that well, simply adding more fuel

43
00:03:07,759 --> 00:03:14,120
to that it's going to sort of
maximize that inefficiency, right bringing in the

44
00:03:14,159 --> 00:03:17,639
new client fact, I've seen many
times clients of mind bring in new customers

45
00:03:19,360 --> 00:03:22,560
only need to find that there as
owners working twice as hard and really not

46
00:03:22,560 --> 00:03:27,240
making any more money. And so
before you focus on growth, focus on

47
00:03:27,319 --> 00:03:31,319
making things efficient and understanding your numbers
internally. And then when you've got a

48
00:03:31,360 --> 00:03:35,120
good system and you say, okay, I know that my employees are good,

49
00:03:35,159 --> 00:03:38,319
my departments are good, my utilization
rates or whatever the metrics are that

50
00:03:38,360 --> 00:03:46,280
matter. When everything's in place,
then growth maximizes your profitability. Growth without

51
00:03:46,319 --> 00:03:50,639
that again, it just if you
have inefficient processes. I think it was

52
00:03:50,879 --> 00:03:53,360
I think it was Bill Gates that
said that, you know, growth maximizes

53
00:03:53,360 --> 00:03:59,919
an inefficient profit or inefficient processes,
You've got to focus on that internal stuff

54
00:04:00,000 --> 00:04:05,000
first. Gotcha, makes total sense. So tell us some companies. You

55
00:04:05,000 --> 00:04:10,560
don't have to name names, but
tell us about companies you've helped in the

56
00:04:10,560 --> 00:04:15,360
past. So let's think of a
good example. I've done work with a

57
00:04:15,400 --> 00:04:20,439
lot of marketing companies. One of
my biggest customers there, they were classic

58
00:04:20,480 --> 00:04:25,399
of what I just just was talking
about. You know, they had when

59
00:04:25,399 --> 00:04:28,839
I started that they had roughly roughly
twenty five employees, and over over five

60
00:04:28,920 --> 00:04:33,759
or six years, I think they're
now at about forty. And they've gone

61
00:04:33,759 --> 00:04:41,439
through cycles where they've done really well
and that growth actually did drive greater profits.

62
00:04:41,959 --> 00:04:45,839
And there's other times where they focus
just on the growth. But then

63
00:04:46,120 --> 00:04:48,600
you know, if they have their
their creative departments or their digital marketing departments

64
00:04:49,199 --> 00:04:56,199
that weren't as efficient to sworn as
good at at delivering consistently, we could

65
00:04:56,240 --> 00:04:59,639
quickly see the profits fall off,
and so for them, it's it was

66
00:04:59,639 --> 00:05:02,120
a matter of saying, okay,
what really matters well, Because they're in

67
00:05:02,120 --> 00:05:05,959
the service industry, profit by client
is a key factor, right, and

68
00:05:06,040 --> 00:05:11,560
they have some huge clients and they
have some very small clients. And by

69
00:05:11,600 --> 00:05:15,879
putting things in a dashboard and when
I say a dashboard, it's charts and

70
00:05:15,879 --> 00:05:18,120
graphs, right, it's pictures,
so you're not reading through tables of data,

71
00:05:18,759 --> 00:05:20,959
you're just looking at graphs. Is
it going up? Is it going

72
00:05:21,040 --> 00:05:27,279
down? With them, we started
with sort of the financial statement level,

73
00:05:27,360 --> 00:05:30,279
right, we could see month over
month, am I improving my profit or

74
00:05:30,319 --> 00:05:34,879
my decreasing and profit if you're decreasing
a profit between your revenue and your gross

75
00:05:34,879 --> 00:05:38,879
profit line, so your costs of
good soul is kind of that middle factor.

76
00:05:40,079 --> 00:05:43,759
We realized we needed to go deeper
to figure out not just profit as

77
00:05:43,800 --> 00:05:46,639
a company or gross profit as a
company, but gross profit by client.

78
00:05:46,959 --> 00:05:50,519
And we could very quickly see that
somewhere between ten and fifteen percent of their

79
00:05:50,560 --> 00:05:57,040
clients, we're generating about ninety percent
of their gross profit, which means if

80
00:05:57,040 --> 00:05:59,680
you could see their graph, it
goes up, you know, kind of

81
00:05:59,759 --> 00:06:04,319
shar the beginning with those those relatively
few clients. It goes flat for most

82
00:06:04,360 --> 00:06:06,600
of the rest of the graph,
and then it actually drops at the end.

83
00:06:06,600 --> 00:06:12,519
Do is they have a few clients
who are unprofitable Exactly? What about

84
00:06:12,560 --> 00:06:17,160
like salespeople, You think your best
salesperson is the one who sells the eye

85
00:06:17,199 --> 00:06:21,879
as dollars, But in reality that's
not always the case, is it.

86
00:06:23,240 --> 00:06:25,519
No? In fact, I can
give you another example that you just reminds

87
00:06:25,600 --> 00:06:29,519
me of. I had a client
who sold well, they were a dietary

88
00:06:29,519 --> 00:06:32,560
supplement company, and they had they
had different sales channels, but one of

89
00:06:32,560 --> 00:06:36,360
them was their retail channel. They
had I think ten or twelve different products

90
00:06:36,360 --> 00:06:40,720
that did you know, depending on
what supplement you wanted to take, itamins

91
00:06:40,720 --> 00:06:44,639
and different things. And they did
have a sales team, a small sales

92
00:06:44,680 --> 00:06:48,800
team that were given commission based on
the total revenue, the total amount that

93
00:06:48,839 --> 00:06:53,279
they could sell. Well, what
I went analyzed each of those those twelve

94
00:06:53,279 --> 00:06:57,879
different products and figured out which ones
were the most profitable products Actually, in

95
00:06:57,879 --> 00:07:02,839
that case was the least the lowest
cost product that was the highest profit because

96
00:07:02,879 --> 00:07:05,639
it cost us so little to make
that when I pointed that out, we

97
00:07:05,759 --> 00:07:10,120
completely changed the commission structures, like, hey, everybody sell this product,

98
00:07:10,319 --> 00:07:13,600
will make twice as much for every
bottle of this product and for that product.

99
00:07:13,639 --> 00:07:16,600
And so just understanding that again they
didn't have to increase their total volume,

100
00:07:17,000 --> 00:07:21,079
they could actually just shift what they
were selling and double their income.

101
00:07:21,240 --> 00:07:26,680
So insights like that are pretty pretty
powerful. Let me give you one more

102
00:07:26,680 --> 00:07:30,480
example real quick. A client of
mine that's a restaurant. It was kind

103
00:07:30,519 --> 00:07:32,360
of a newer restaurant, well older
restaurant, but open a new location,

104
00:07:32,720 --> 00:07:35,839
and the new location was not doing
very well. They kind of broke even

105
00:07:35,879 --> 00:07:39,319
every month some months, a little
over, some months, a little under

106
00:07:39,360 --> 00:07:42,600
we built his dashboard and one of
the metrics that we included, well,

107
00:07:42,639 --> 00:07:46,279
two of the metrics were how many
tables he turned over every month and then

108
00:07:46,319 --> 00:07:49,360
his average ticket size, right,
so how much was each each check each

109
00:07:49,399 --> 00:07:55,120
time he had people sit down for
dinner. And we did a little figuring

110
00:07:55,160 --> 00:07:58,920
between those two metrics and realized that
if he would increase the average ticket size

111
00:07:58,920 --> 00:08:03,040
by two dollars and fifty events,
he would go from breaking even to making

112
00:08:03,079 --> 00:08:07,759
about ten thousand dollars a month.
And so with that information, He said,

113
00:08:07,759 --> 00:08:09,680
well do I how do I do
that? Like, well, it's

114
00:08:09,680 --> 00:08:13,279
just training, right, that's like
selling one more drink per meal or one

115
00:08:13,279 --> 00:08:18,079
more deserved or whatever it is.
And the very next month he actually did

116
00:08:18,079 --> 00:08:20,199
that. You could see the spike
in his sales from one month to the

117
00:08:20,199 --> 00:08:26,439
next just by understanding that that tiny
shifts and how he looked at the profitability

118
00:08:26,480 --> 00:08:30,079
of his business. So stimmer for
everybody. Again, restaurant's going to have

119
00:08:30,120 --> 00:08:33,720
way different metrics that are important than
a marketing company. But if you know

120
00:08:33,759 --> 00:08:37,240
what those metrics are, and you
know what your cars are, and all

121
00:08:37,240 --> 00:08:39,639
it is is comparing how do we
do compared to our target? If there's

122
00:08:39,639 --> 00:08:41,120
a gap, fix it, figure
out why. It just tells you where

123
00:08:41,120 --> 00:08:45,960
to focus, all right, All
right, Well, so so what the

124
00:08:46,000 --> 00:08:50,080
information does? I always say,
it's all about the story. No,

125
00:08:50,639 --> 00:08:54,600
all numbers do is tell a story. But you know without words with numbers,

126
00:08:56,120 --> 00:08:58,480
and the numbers tell all, don't
they? Yeah? But see,

127
00:08:58,840 --> 00:09:03,240
I would go one step further carry
because when again, if you look at

128
00:09:03,240 --> 00:09:05,080
your P and L, let's say
you want to see how you did for

129
00:09:05,120 --> 00:09:07,399
the year, and you look at
a P and L month over month over

130
00:09:07,440 --> 00:09:11,879
month, you're looking at, you
know, possibly a couple dozen rows of

131
00:09:11,960 --> 00:09:15,159
data, twelve columns, you know, one for each month. Just looking

132
00:09:15,200 --> 00:09:18,000
at a sheet of numbers, it's
very hard to understand that story. And

133
00:09:18,080 --> 00:09:22,039
I think until you take that table
of numbers and turn it into a picture,

134
00:09:22,399 --> 00:09:24,600
you know, a chart, it's
going to be very hard to figure

135
00:09:24,600 --> 00:09:28,799
out what to do. And especially
because a lot of things on your P

136
00:09:28,879 --> 00:09:31,120
and L. You need to understand
ratios. Right, what's my gross profit

137
00:09:31,159 --> 00:09:35,120
as a percentage of sales? What's
my net income as a percentage of gross

138
00:09:35,120 --> 00:09:39,519
profit? Sure, so you've got
to I don't want to say dumb it

139
00:09:39,559 --> 00:09:43,799
down, but it's I want you
simplify it. Right. If something simple,

140
00:09:43,840 --> 00:09:46,399
you're going to do it. If
it's complicated, I see business owners

141
00:09:46,480 --> 00:09:50,039
have lots of data and I don't
do anything with it because it's just too

142
00:09:50,080 --> 00:09:52,759
much time to sit and analyze it. Well, you got to have the

143
00:09:52,000 --> 00:09:58,240
right right, You got to have
the right numbers, and they have to

144
00:09:58,240 --> 00:10:01,480
be presented in a way where effectively
tell that story. Right. It's not

145
00:10:01,639 --> 00:10:07,360
enough just to get numbers, but
you got to have them presented properly.

146
00:10:07,840 --> 00:10:11,279
Absolutely, Yeah, And I think
you could either need you need a CFO

147
00:10:11,399 --> 00:10:15,440
or at least a fractional CFO in
your business to do that for you,

148
00:10:15,799 --> 00:10:18,720
or if you have a dashboard,
that's very and I'll retailored to your business.

149
00:10:20,080 --> 00:10:22,919
Most CEOs are smart enough they can
you know, figure it out if

150
00:10:22,919 --> 00:10:24,960
they have a picture and they can
try to take the next steme. So

151
00:10:26,799 --> 00:10:30,879
is that something you do too,
fractional CFO, Yeah, sort of.

152
00:10:30,879 --> 00:10:35,840
So my model is, my main
product is putting together those dashboards, and

153
00:10:37,039 --> 00:10:39,440
most of my clients, for the
first couple of months, they'll need a

154
00:10:39,440 --> 00:10:43,360
little you know, training teaching,
so I'll show them how to read it,

155
00:10:43,399 --> 00:10:46,960
how to interpret it, how to
take action on it. But then

156
00:10:46,000 --> 00:10:50,759
once they're up and running. In
fact, the reason I built this business

157
00:10:50,759 --> 00:10:54,519
the way that I have is because
my last business, it was a fractional

158
00:10:54,559 --> 00:10:58,120
CFO company, and people would hire
me to come in and after depending on

159
00:10:58,159 --> 00:11:01,720
the company bafter that three to six
months, we kind of had things in

160
00:11:01,799 --> 00:11:05,240
order. I would have a regular
meeting with them and often felt like I

161
00:11:05,360 --> 00:11:07,960
wasn't providing value because like you know, they knew how to read the dashboard

162
00:11:09,000 --> 00:11:11,440
without me at that point. And
so I realized if I could provide that

163
00:11:11,559 --> 00:11:16,159
dashboard, give them a little training
up front, and then they can you

164
00:11:16,200 --> 00:11:18,159
know, people can still retain me
back, you know, for like an

165
00:11:18,200 --> 00:11:22,720
hourly fee later down the road if
they need to. But again, if

166
00:11:22,720 --> 00:11:26,799
I give people that picture that's in
real clime, that's updated automatically, they

167
00:11:26,840 --> 00:11:31,639
have what they need to make good
decisions, and they the dashboard needs to

168
00:11:31,639 --> 00:11:35,600
be updated periodically, right, yes, And so I use a couple of

169
00:11:35,639 --> 00:11:43,759
different software tools to build these dashboards, and for the most part they get

170
00:11:43,799 --> 00:11:48,360
updated automatically. They sync with somebody's
you know, quick books or net Suite,

171
00:11:48,480 --> 00:11:54,120
or know, many different kinds of
whether it's counting softwares or project management

172
00:11:54,120 --> 00:11:58,759
softwares or whatever. So as much
as I can, I automate that process.

173
00:11:58,960 --> 00:12:01,960
All right, cool, all right? So how do we find you?

174
00:12:01,000 --> 00:12:05,320
How do we connect with you on
the internet. Best way to get

175
00:12:05,320 --> 00:12:07,919
a hold of me is just go
to my website. It's zero to CFO

176
00:12:07,000 --> 00:12:13,840
dot com. That's Z E R
O T O CFO dot com and there's

177
00:12:13,840 --> 00:12:16,120
a there's a contact form there you
can reach out. I'm very happy to

178
00:12:16,159 --> 00:12:22,159
talk with people in sort of an
exploratory way. Right, Some people might

179
00:12:22,200 --> 00:12:24,480
think, O, do I really
need this? I don't know in my

180
00:12:24,519 --> 00:12:28,000
opinion, maybe everybody needs it in
some sense, but if they're not ready

181
00:12:28,000 --> 00:12:31,559
for it, I'm happy to talk
through someone's numbers with them and just tell

182
00:12:31,600 --> 00:12:35,159
them what I see. Yeah,
well, we ye, we used to

183
00:12:35,200 --> 00:12:41,279
have the company who had a printing
company. Nothing nearly as sophisticated as what

184
00:12:41,440 --> 00:12:46,879
you have, because the technology just
wasn't there before. But we had ten

185
00:12:46,960 --> 00:12:50,799
key numbers that we tracked every single
day, you know, how much how

186
00:12:50,879 --> 00:12:56,440
much we build out, how much
we collected, how much we paid out,

187
00:12:56,559 --> 00:13:01,159
and how much we were built among
other numbers. And then we tracked

188
00:13:01,200 --> 00:13:07,720
new customers. We tracked you know, sales by individual. But that was

189
00:13:07,759 --> 00:13:11,360
about the best we could do.
So I can see this having way more,

190
00:13:13,120 --> 00:13:18,919
way more applicability and way more utility
than what we were doing way back

191
00:13:18,960 --> 00:13:22,639
when. Well, if I give
you your listeners some just some value here,

192
00:13:22,519 --> 00:13:26,159
you know, if someone's not interested
in a dashboard right now, I

193
00:13:26,159 --> 00:13:30,320
would just make a recommendation is figure
out what are the top three numbers that

194
00:13:30,399 --> 00:13:33,679
matter right Maybe it's revenue, maybe
it's again gross profit as a percentage of

195
00:13:33,679 --> 00:13:37,320
sales, or whatever it is that
moves your needle. Know, at least

196
00:13:37,360 --> 00:13:39,679
the top three and know what those
should be every single month, and if

197
00:13:39,720 --> 00:13:43,559
you're only using three, you should
be able at least, you know,

198
00:13:43,600 --> 00:13:46,200
get in your books and measure them
well once a month and see how you're

199
00:13:46,240 --> 00:13:50,759
doing. Most of my dashboards are
gonna have a lot more metrics than three,

200
00:13:52,200 --> 00:13:56,240
But if you're not doing anything,
start with three and see if it

201
00:13:56,240 --> 00:13:58,559
doesn't provide you some insight in your
business that you didn't have before. All

202
00:13:58,679 --> 00:14:03,960
right, very cool, I like
it. That's useful. And hey,

203
00:14:05,240 --> 00:14:09,759
the link to Nate's website is in
the show notes this interview on Financial Survival

204
00:14:09,879 --> 00:14:13,080
Network dot com. Make sure you
click it go there. While you're at

205
00:14:13,120 --> 00:14:16,240
the site, sign up for your
free newsletter Nate. It's a pleasure.

206
00:14:16,320 --> 00:14:20,879
Appreciate your stopping by. We'll talk
to you again soon. Thank you,

207
00:14:20,960 --> 00:14:26,840
Katy, thanks for listening to Carrie
Letz's Financial Survival Network, your solution to

208
00:14:26,840 --> 00:14:31,320
today's trying times. For the latest, go to Financial Survivalnetwork dot com.

209
00:14:31,360 --> 00:14:35,200
Financial Survival Network now more than ever,