Small Business Talk
The Podcast to Grow your Business Faster
How to Unfunk Your Business Finances with Scott Trevethan
Show Notes
Background
Scott Trevethan helps business owners in Australia who are struggling to get on top of their Financial Management as their business grows. He is the Founder and Managing Director of Financial Fanatics, an Australian based Financial Management firm helping free up the time and worry of business owners so they can focus on achieving their business dreams.
Scott used to run Scott Partners, a chartered accounting firm in Malvern, Melbourne, but his passion was not in tax, but in helping more business owners achieve financial success, whatever that looked like for them.
Are Your Business Numbers in a Funk?
Being in a ‘funk’ indicates that something is going wrong in your business.
If your finances are not serving you, it can cause a funk in your numbers. Changing the way you do your business finances can remove that block and make it easier for you to face instead of avoiding until the last minute. Fixing your numbers means that your business finances will serve you, rather than becoming an issue.
Accounting Terminology: What Do You Need?
What has the biggest impact on your business?
Business owners who are not familiar with accounting practices often have troubles deciphering what accountants are trying to say about your numbers. The most important information and knowledge related to your finances you will need to do more research on are:
- Your Balance Sheet
- Profit & Loss
- Revenue
- Gross Margin
- Fixed Overhead Expenses
- And Cash Flow
If you understand what is happening within the numbers for your business, you can begin to unfunk it.
Profit & Loss in Your Business
Profit is the full amount of money you get from selling things, once the amount of producing said thing is taken out – business owners selling a product may buy parts from suppliers, for example. Service providers may not have the latter, depending on how their business is set up.
Loss refers to all the overheads and costs it takes for you to run your business. This can include rent of a location, subscriptions for tools and applications to help your work, pay for your employees and suppliers, and other expenses related to the operation of your business.
If you take the loss away from the profit, do you get a positive number or a negative one? This will tell you whether you are operating at a profit or a loss.
Remember: numbers are objective, so you shouldn’t feel bad about your results.
Instead, use them as a tool to improve your business.
Watching Your Margins
The biggest contribution to your business finances is your gross margin – the direct costs of making your sales, minus what you are paying for supplies.
For example, a shoe salesman might be buying shoes for $20 and selling them for $100, so the gross margin would be 100 – 20 = $80. It is important to look at what is selling in your business, and what is not, so you can maximise your gross margin. This doesn’t always mean getting rid of the things with a smaller profit margin – sometimes minor products are a way to bring customers into your business.
Links
Unfunk Your Business Finances by Scott Trevethan
Profit First by Mike Michalowicz
The Barefoot Investor: The Only Money Guide You’ll Ever Need by Scott Pape
Extreme Ownership by Jocko Willink and Leif Babin
Dale Beaumont’s Business Blueprint Program
Rich Dad Poor Dad: What the Rich Teach Their Kids About Money That the Poor and Middle Class Do Not! by Robert T. Kiyosaki
Contact
How to Unfunk Your Business Finances with Scott Trevethan
Listen to Small Business Talk Episode 142 for the full details.
