Show notes:
In this week’s episode, I’m joined by Sally O’Gara, a wedding business financial coach and chartered accountant who’s on a mission to help wedding pros stop avoiding their numbers and start feeling confident about them.
Now, before you switch off because we’re talking about finances… stick with me.
This isn’t an episode full of complicated accounting jargon. It’s a practical, honest conversation about why so many wedding business owners feel like they’re working incredibly hard without seeing the financial rewards. And, more importantly, what you can actually do about it. Together we chat about why being fully booked doesn’t necessarily mean you’re profitable, how to work out which of your services are really making you money, and the simple financial habits that can completely change the way you run your business.
Free Guide – Where is the money going?
Time stamps:
00:09 – Managing Your Finances: The Importance of Professional Help
04:30 – The Journey to Financial Coaching in the Wedding Industry
09:49 – Understanding Profitability in Business
16:55 – Managing Business Finances: A Holistic Approach
20:02 – Understanding Your Business Numbers
26:42 – Understanding Profit Margins and Business Costs
32:56 – Planning for Financial Success
36:36 – Managing Cash Flow in Seasonal Businesses
46:21 – Building Financial Foundations: A Coaching Blueprint
48:23 – Gaining Clarity and Confidence in Business Finance
Transcript:
Sally
00:00:00.160 – 00:00:27.910
Get some sort of system to have all your figures in. There’s loads of free things out there. You don’t have to pay loads of money for software to kind of analyze all your figures.
And yeah, if you really don’t know what you’re doing, just get someone to kind of do your bookkeeping and accounts for you.
Don’t, don’t try and do it yourself to save a bit of money because at the end of the day, you’re probably going to end up with a bigger tax bill than the money you tried to save. Getting someone to help you with it.
Becca
00:00:28.060 – 00:01:28.840
I’m Becca Poutney, wedding business marketing expert, strategist, speaker and author.
Over the last decade, I’ve combined my love of marketing with my knowledge of the wedding industry to help thousands of wedding pros and venues just like you learn new skills, strategize, get re energized and grow their businesses. Because after all, that’s how you stay top of your game. Whether you’re brand new into this industry or been here forever. I want to help.
So grab a cup of tea or a cocktail, sit back and enjoy a brand new episode of my award winning podcast, Wedding Pros who Are Ready to to Grow. Let’s get going with today’s episode. Today I’m chatting with Sally O’, Gara, the wedding business financial coach.
Having spent 20 years as a chartered accountant, she’s now on a new mission to help wedding business owners actually look at their numbers and get the control back. If you’re someone that works incredibly hard but you don’t feel like your bank account matches the workload, this episode is definitely for you.
Sally, welcome to the podcast. Hi.
Sally
00:01:28.840 – 00:01:29.640
Thanks for having me.
Becca
00:01:29.640 – 00:02:15.920
It’s an absolute pleasure. I’m thrilled to have you. And it’s a topic that is incredibly important.
I’ve been talking a lot with my clients recently about the importance of looking at numbers, and I know that’s something you’re really passionate about. So if people are listening, don’t switch off because we’re talking about money and numbers.
Actually, this is one of the most important episodes you’re going to listen to right now. So do stay listening and I promise we’ll try and make it interesting for you.
It’s not going to be too complicated, but I want to change this narrative around everything just being fluffy and nice. And actually we need to look at the business side of things as well.
But before we get into that, Sally, it would be helpful for people to get to know you a bit better because they may or May not have ever met you before. So just take me back. How or why did you become an accountant in the first place?
Sally
00:02:16.000 – 00:02:48.160
Oh, gosh, yeah, so I became an accountant. I left straight from school when I was 18. And yeah, I just got.
I started working for a firm and I did my accountancy qualifications over four years while I was still working. I worked at a firm for nine years before I had my kids.
And then I went out on my own and started my own business doing a bit of accounts and tax, but really wanted to do the advisory stuff of helping businesses just have a better business, really.
Becca
00:02:48.240 – 00:03:21.220
Okay, so you straight out of school, you went down the accountancy route, you did that for a long time. And then what happens to a lot of us is when we have children or start a family, things shift. And that’s the point.
When you went self employed in the first place, just walk us through that because that is a scary step and quite often we just breeze past it. Yeah, I just went self employed. But there’ll be people listening that are on the brink of that.
Maybe I stay in a job, maybe I go fully into my business and it is a bit scary. So just talk me through that time. Did it feel scary? Was it an obvious move? How did you make that decision at the time?
Sally
00:03:21.220 – 00:03:47.689
I suppose it didn’t feel scary. I thought, I’m gonna have way more freedom, you know, I can work when I need to between the kids, like once they’re at school and stuff.
But actually probably a couple of years in, I thought, this is really hard. I would probably be better off going back working for someone. But I was like, no, I just want that.
I want that freedom to kind of work whenever I want. And yeah, I had to kind of make it work.
Becca
00:03:48.090 – 00:04:49.370
That’s an interesting perspective as well, that a couple of years in was when you had that realization. And actually I think that happens to the best of us.
I go through a phase like once a year where I say to my husband, I’m just going to quit my business and go and work at Tesco’s. It’ll be so much easier. And then he says, you would hate it.
You would hate to work for someone else because the longer you’re self employed, the less employable we become. Because if we want to take the afternoon off like I’m doing today, we can take the afternoon off and there’s no one to ask, we just do it.
But on the other side of things, there is all that pressure and stress and decision making, which is the reason sometimes why we want to quit. Now, obviously you went out on your own in the first instance as a pure accountancy business doing tax and things like that.
Whereas when I introduced you on the podcast, we talked about you working as a financial coach, doing more of the strategy side of things and specifically in the wedding industry. So I’d love to understand a bit more about that journey.
How did you go from having just a pure accountancy firm to suddenly deciding to work in this wonderful wedding industry?
Sally
00:04:50.730 – 00:05:34.270
Well, I knew when I started out I had to start just getting clients and the only clients I was going to get were the ones that wanted their accounts and tax done. So I had to start there. But I always wanted to do the advisory side and I think it was probably Covid.
When Covid hit really how businesses were, so many businesses were in trouble, especially hospitality and wedding industry got hit really hard. And I just thought they work so hard. I just really want to go and help them.
And so it kind of came from probably a year or two after Covid, I started kind of really focusing on wedding industry, talking to more people, finding out about their problems and what they needed. So, yeah, that’s how I got into it.
Becca
00:05:34.270 – 00:06:28.050
Amazing. And no regrets because it’s a wonderful industry to work in. I love the wedding industry. I’m a big advocate for it and I think there’s a huge need.
I often talk about how a small business owners, wedding business owners are having to do all of the things and quite often they’re very skilled at doing the thing that they’re good at, taking the photos, creating the flowers, and they can do that in a way that I could never do that.
But actually when it comes to, to the marketing side and the strategy side and the finance side, the things that we help them with, sometimes they do need a bit of help because we don’t necessarily learn that stuff at school. We don’t necessarily understand how to do it. And what we start as, this creative business suddenly becomes a monster.
So I’d love to know if you see any commonalities specifically in our industry, if a wedding business comes to you, if they come to you for advice or if you’re just chatting to them, maybe at a networking event, Are there some things that they have in common when it comes to their finances?
Sally
00:06:29.480 – 00:06:45.240
I’d say most of them hate. Hate doing their finances. I think they’re so creative dealing with numbers, I think they find quite difficult.
So, yeah, I’d say that is definitely something I see nearly everyone say to me.
Becca
00:06:45.640 – 00:07:59.240
Yeah, and I would have to agree with you There because a lot of businesses I speak to, if I’m doing one to one with them or working on their marketing, I’ll start off with the questions around, okay, what’s the business looking like financially? Have you got any budget for marketing?
And then all of a sudden the eyes glaze over and they think, no, I don’t know my numbers, I don’t want to look at my numbers.
And it’s interesting, years back, about probably four or five years ago, I ran a session, an in person session at a retreat that was called is it a business or a Hobby? Which looking back is probably a bit on the nose, but that was the name of the session.
And part of that session was just getting them to write down in a very basic way, not on an accountancy kind of way, because I’m not an accountant, but just a very basic way of getting them to write down what they were spending every and what they were making.
And people cried like it ended up in this really kind of what I thought was going to be a very practical session actually ended in a real kind of almost a therapy session actually. When we start talking about the numbers, it does go a lot deeper.
People, I think, yes, people don’t like looking at them and we might blame being busy and we might blame like not enjoying it, but I think sometimes it’s because we’re scared of what we’re going to see. Have you seen that?
Sally
00:07:59.550 – 00:08:08.270
Yeah, I think people are really scared of what they’re going to see and a lot of times it’s not actually as scary as it, as you think it is.
Becca
00:08:09.710 – 00:08:44.790
Yeah, it’s sometimes scarier to not, not do it. No, I think now when you don’t know, that’s absolutely terrifying. When you do know, at least you’ve got a marker to go off.
Now why do you think it is then? Because we see a lot of businesses in this industry who are fully booked or claim to be fully booked, and yet when you dig a bit deeper, they don’t.
They still don’t feel financially secure. They still don’t feel like they’ve got a control on their numbers, even though on the surface they’re incredibly busy. So why, why is that?
What, what causes that to happen?
Sally
00:08:44.950 – 00:09:39.690
I think probably a couple of things. People confuse being busy with being profitable. So they think, well, I’m fully booked, I must be making money.
But a lot of times if your services or your products are not actually profitable, it doesn’t matter how busy you are. So yeah, I think that’s one thing people confuse A lot. Another is people rely on a bank account to think, oh, I’m doing really well.
I’ve got money in my bank account, so my business must be doing really well. But a lot of times that money is not actually yours.
Some of it is like deposits for a wedding in a year’s time that you shouldn’t really be spending yet money for tax. That’s probably one of the worst people. If you are profitable, you’re going to be paying tax. And people just don’t put money aside for that.
Becca
00:09:42.170 – 00:10:09.590
So what we’re saying then is that they’re not managing their money correctly because they’re just looking at the surface level. It’s one problem. And then the other problem is that they’re busy. They assume they’re profitable. But being busy doesn’t necessarily mean profit.
So just let’s strip it back to basics then. What do you actually mean when you say, well, you might be busy, but you’re not profitable? Because they might be saying, well, yeah, I am.
I’m getting this much money for my business. So what does, what do you actually mean? Give it to us in, like, basic language.
Sally
00:10:09.830 – 00:10:57.880
Okay, so say we’re looking at a service here.
You want to know how much profit you’re getting from that service, so what money you’re getting in your sales, what all the costs are for that service. And people miss a lot of costs as well. So their time. People forget loads about how much time they spend. Travel.
People don’t include how much mileage they’re doing to and from venues or picking up products from suppliers, things like that. That is, that will show you how much money you’re actually making on a service. And a lot of people, you know, are not making enough money.
And if you’re busy, you’re times in that by how many. If you’re. If you’re making no money and you’re doing like 50 weddings a year, you’re not. You’re still not making enough money, are you?
Becca
00:10:57.960 – 00:11:17.630
Okay, so first question then, because this is something people ask me all the time. Okay, so you say that I need to account for my time. How do I put a value on my time? How do I decide how much my time is worth?
What am I, what am I putting against that? Am I going on minimum wage? Am I just plucking a number out the air? How do I decide how much my time is worth?
Sally
00:11:17.940 – 00:11:37.300
Yeah, that is quite difficult, isn’t it? I mean, definitely the minimum, I would say is minimum wage, but it should really be more than that.
It Depends what sort of industry you’re in, I suppose. But if you’re a photographer or a florist or a wedding planner, maybe. But yeah, definitely minimum would be minimum wage.
Becca
00:11:37.540 – 00:12:27.230
And shockingly, a lot of clients I speak to don’t even pay themselves minimum wage or don’t even set aside minimum wage.
And what’s really interesting, I’ll tell you, the biggest thing that’s shifted in my business to value my own time is having other team members and having to pay their time. Because I’m like, well, obviously I’m not going to send them to your event because I’ve got to pay for their time and you’re not giving me any money.
But for some reason, if I go, I forget that, well, why am I sending myself to this event? It’s still costing me in time. And so actually, if you.
You start to think, well, if I want to grow this business and I want to employ freelancers, I have to be able to pay someone for that time at that wedding, so that budget should be apportioned also if it’s me going instead of the freelancer.
So is that the way to look at it, to kind of think, right, well, if someone else is going, how much would I pay them to go and photograph that wedding on my behalf?
Sally
00:12:27.310 – 00:12:56.870
Yeah, yeah, you could look at it that way.
I mean, when I start working with people, I. I kind of look at their personal life and what kind of costs they have in their own life and kind of work backwards. So if you want to be paying off a mortgage or you want more holidays, pay for your kids to uni, like, what income do you need personally?
And so then I would say start with that figure and then you work backwards then to price it into your. Into each of your weddings that you do.
Becca
00:12:57.030 – 00:13:30.210
So looking at it holistically, not just the business cost, but the personal cost as well, what money do you actually want to earn? What do you need to earn in order to make.
I think the other thing I see people making a mistake with when it comes to this as well is forgetting about overheads, as in, you know, the money that it costs you to run your business without even doing a single wedding. So people say, well, to go to a wedding, okay, I need to pay this for my time and this for my petrol and this for my camera to take the photos.
But they forget about the website hosting and the email hosting and the training and the conferences and all of the other things that they’re going to do.
Sally
00:13:30.930 – 00:13:50.930
Yeah, yep. Yeah, definitely. All those sort of costs come down to your net.
I think people probably confuse maybe like gross profit is the profit on the actual wedding.
So the money you’re getting in for the wedding and the cost of the wedding, then your net profit is after all your other sort of administrative costs. Yeah.
Becca
00:13:51.010 – 00:14:30.290
Okay, so some of the mistakes then are around organizing your money. So some people are just looking at their bank account.
And I’ve definitely been guilty of this in the past and thinking, yeah, I’m all right, I’ve got loads of money.
But actually when I start thinking, okay, well this is for my tax and this is for my VAT return and this is for my freelancers and this is for this, you think, oh, actually I haven’t really, I don’t really have as much money as I thought I did. But if I operate on that just on what’s in my bank account, I probably book more holidays than I can afford.
So do you have any recommendations to your clients about how they organize their money or is it that they don’t actually look at their bank account and instead they look on it? A different system.
Sally
00:14:31.170 – 00:15:06.650
I would, I mean, don’t ignore your bank account because that is still something you should look at. But I definitely would say get some sort of system to have all your figures in. There’s loads of free things out there.
You don’t have to pay loads of money for software to kind of analyze all your figures. And yeah, if you really don’t know what you’re doing, just get someone to kind of do your bookkeeping and accounts for you.
Don’t, don’t try and do it yourself to save a bit of money because at the end of the day you’re probably going to end up with a bigger tax bill than the money you tried to save. Getting someone to help you with it.
Becca
00:15:06.650 – 00:16:23.300
Yeah, absolutely. And what’s it been game changing for me in my business when it comes to managing my money?
Yes, I have an accountant and a bookkeeper and those, those great things. But day to day, I obviously don’t hear, necessarily hear from them all of the time. And I want to know what’s going on and feel in control of it.
And the big thing that shifted for me was using my Starling business accounts and setting up spaces, setting up pots that were not showing physically in the main account, where I have direct debits going out all of the time.
And it’s probably not a perfect system, but I have direct debits always going out into my tax pot and into my Disney holiday pot and to my VAT pot and now, every time, incomes in 20% goes straight into the VAT pot.
And so actually, if I do look at my current account, it’s actually a lot lower than what’s actually in there because everything has already been apportioned into all of these places.
And that’s been game changing for me because instead of just hoping in my head that there’s money when it comes to tax return, I know that there’s this pot and it’s growing all the time and actually more often than not, and this is the better way for it to be, the tax bills are lower than the potential lot, which is good, because then I feel like, oh, I’ve got some bonus money that I can. I can bring back into my business.
And yeah, so I don’t know whether any of your clients use those spaces or whether you use them personally, but that’s been really helpful for me.
Sally
00:16:23.300 – 00:16:26.980
Yeah, yeah, there’s a couple of people that use them and, yeah, they’re really useful. Yeah.
Becca
00:16:26.980 – 00:16:49.200
Now, one of the things that you say is that confidence comes with evidence, which I love this idea because what you’re basically saying is you don’t need to be afraid of looking at your money, because actually, once you look at your money, once you’ve got the evidence in front of you, you can be more confident. So just talk me through that. Explain to me what that looks like in practice.
Sally
00:16:49.200 – 00:17:14.770
Yeah, I think a lot of wedding businesses probably wing it when it comes to making decisions. And if you’ve got those numbers in front of you, you can make so many more decisions, you’re more in control.
And that just builds your confidence, doesn’t it, that you know they’ve got a viable business, that you can spend the money that you wanted on upgrading something. Yeah, that’s. That’s kind of what I mean by that.
Becca
00:17:14.770 – 00:17:45.390
Now, what about the people that go the other way?
Because I think there’s some people that are out of control of their money, but there’s also other people that are so scared to not have the money that they actually just save all of the money and never pay themselves anything because they’re afraid that if they pay themselves something, they might need that money for something later on. So I don’t know if that’s a phenomena you’ve seen.
I’ve definitely seen in businesses I’ve worked with where they say, but if I start paying myself that money, what if I need that money later on down the line?
Sally
00:17:46.110 – 00:18:15.590
What I would say there is. This probably sounds a bit boring, but actually doing a budget for the next 12 months doesn’t have to be complicated.
It could be like Google Sheets or Excel.
Just work out what your kind of average income is, what your average costs are, and then you’re gonna know that you’re gonna have enough money to pay yourself. You know, obviously you’re gonna have a few things come up here and there, but I’d say, yeah, start is something like that. It’s not.
It’s not hard to do.
Becca
00:18:15.670 – 00:18:56.740
Yeah. And. And start somewhere again. A lot of clients I meet, I’m. They’ve never paid themselves anything, so they might do the thing.
I used to call it the, the perfume buying.
So, you know, every now and again they work really hard and going to buy myself some perfume out of my business account to reward myself, as if that’s a salary. But they’re never actually paying themselves anything properly. They’re just buying the odd treat here and there.
And I always say to them, just start somewhere.
Even if you start a little direct debit of £50amonth out of your account, that goes into your personal account for your personal spending, at least you’re starting somewhere. And then increase that because otherwise you’re never going to feel confident to pay yourself.
Sally
00:18:57.050 – 00:19:11.210
Yeah, yeah, I would say, yeah, like you say, start just paying an amount each month, the same day each month. Yeah. And then increase it from there. Because people are working so hard. They’re not. You’d be better off going to work for someone else.
Becca
00:19:11.930 – 00:19:43.390
I know, and I think that. But I think that’s the big problem. Right.
That’s why people are scared to look at it, because they don’t want to go and work for someone else and they want it to be a success. And they’re scared that if they sit down and look at the numbers and the numbers tell them they’d be better off somewhere else, that, that.
That means they failed in some way, that. That means that they haven’t done a good job.
But I think, I guess our job today is to encourage people that, well, once you know that information, you can do something about it. It doesn’t have to be the end, it could be the beginning.
Sally
00:19:43.470 – 00:19:44.830
Yeah, yeah, definitely.
Becca
00:19:44.910 – 00:20:16.180
Okay, so let’s get practical then, because if it is going to be the beginning, if there are people listening, thinking, oh, my goodness me, I’m terrified. The thought of this terrifies me. I don’t want to feel like I failed.
I don’t want to feel like I should go and get a job at Tesco’s and they want to get this sorted. I want to give them Some practical guidance. So let’s start off with the first numbers.
So if someone is basically tracking nothing, what are the first numbers you want them to be able to know in their business? What should they actually be looking at on a regular basis?
Sally
00:20:16.420 – 00:20:24.890
So I would say definitely turnover. I think a lot of wedding businesses know what their sales are, so definitely.
Becca
00:20:24.890 – 00:20:28.850
Turnover, just to be clear. So turnover is everything that comes into the business?
Sally
00:20:29.170 – 00:21:10.830
Yeah, yeah. Then profit. So I would say work out your profit on each wedding that you do.
So what is your turnover, your sales for that wedding, and what are all the costs that you incurred to. For that wedding to go ahead? That is your profit.
That is really key because some people offer different services and I would then kind of concentrate on the ones that are more profitable.
Some people just sort of build time in, don’t they, with bits and pieces, you know, if they’re not profitable, you could have taken on something that was. So that is really key if you’re doing different sort of services to see which ones are the most profitable.
Becca
00:21:11.550 – 00:21:44.360
Just to stop on that one, because I want to break this down really basically for people, so that people don’t feel overwhelmed. So, okay, so they’ve worked out everything that’s coming into their business. They’ve worked out the turnover, now they’re looking at the profit.
So let’s say, for example, let’s keep the numbers simple. They are a celebrant and they are going out to a wedding next week and they’re being paid £500.
So how are we working out the profit that they’re making on that £500? Are we taking into account all the overheads or not at this point? Are we just looking at the costs associated with that particular wedding?
Sally
00:21:44.670 – 00:21:47.790
Yeah, so just the costs with that wedding, no overhead.
Becca
00:21:47.870 – 00:22:09.230
Okay, so. So it’s £500 and we’re saying, right, well, it’s going to cost me £50 in petrol, so that’s now £450.
It’s going to cost us £50 in materials to print out our stuff. Okay, so now that’s another £50 off. So now we’re at £400. Are we then taking into account all of the time we’ve spent working on that wedding?
Sally
00:22:09.230 – 00:22:13.600
I would, yeah, in that bit. Yeah. I would take into account all your time. Yeah.
Becca
00:22:13.600 – 00:22:28.080
Okay, so let’s say the wedding itself is an hour and we’ve got to be there three hours. So we then take off three hours of our time.
But then presumably we also need to take off the time that’s spent in Preparation on discovery calls, in writing, the ceremony, and all of that kind of thing.
Sally
00:22:28.160 – 00:22:32.880
Yep. And that’s generally when people realize they’ve not made any money.
Becca
00:22:33.920 – 00:23:00.110
Okay, so we take all of that off, and then we’re left with a number. And that number is the first number that we’re looking at for profit for that wedding.
And so then what we’re doing is looking at a percentage potentially. So say we say the wedding’s 500 and maybe we’re left and we’ve say, okay, well, we had 10% profit from that service.
We’re then doing the same for all our services. So we can see which of the services give us the biggest percentage of profit.
Sally
00:23:00.110 – 00:23:05.660
Yep, yep. And then I would then double down on those ones and lose our bonds.
Becca
00:23:05.740 – 00:23:51.240
Okay, perfect. So what’s interesting about that is, and I’ve, again, I’ve done this in kind of a bigger picture.
Strategy sessions with clients is often the thing they think is the biggest profit is actually the thing with the smallest profit and vice versa. And they’ll say, oh, I, I, I don’t do this. It doesn’t make me anything.
But actually, when you look at it in the way we’ve just described, that’s actually making them a lot more percentage of profit than some of the things that feel like they’re making them more money. But once you’ve done all of the math, it takes it off.
Now, I guess it’s not fair to say that they’re not making any money because the, the money that we set aside in that for their time, technically they could be paying that to themselves. So they are making that. They might not be making profit in the business, but it’s not that they’re not making any money for themselves.
Sally
00:23:51.320 – 00:23:52.840
Yeah, yeah, yeah, that’s right.
Becca
00:23:53.000 – 00:24:25.360
Okay, fine. So that’s the first two steps there. So we’ve worked out what’s our turnover?
We’ve worked out, okay, let’s look at all of our services and work out the percentage of profit so we can see which of these services is worth spending more time on. Which are the services either we need to get rid of or we need to put the price up on. Because that’s the alternative, isn’t it?
We can go, oh, wait a minute, I should charge more for that so that I make more profit and I have a profit percentage that’s consistent across the board. Okay, so now we’ve got all those numbers, at what point do we then throw in the overheads? Because that feels a bit scary.
Sally
00:24:25.440 – 00:24:51.700
Yeah, so that’s when I would go and look at all your overheads. So I suppose the simplest way is actually to look at your bank account and go, most things are monthly now, aren’t they?
So look at your last month and write down, or on a spreadsheet, write down all of your monthly costs.
And then if you’ve got any annual ones, maybe stuff like insurance, things like that, then take them and divide them by 12 to work out your average kind of monthly costs.
Becca
00:24:51.860 – 00:25:15.830
Okay, so then we should have a number for our monthly turnover. So that’s. That’s anything before we’ve even booked a wedding. Right.
So that’s web hosting, email addresses, insurance costs, associations, training, and all of the above. Right. That’s. What if we want to invest in new stock things that we want to hire out, new cameras, would that count in our turnover costs?
Sally
00:25:16.310 – 00:25:23.270
Some of them. Stuff like equipment, maybe not. You could. You could capitalize that and that’s something different.
Becca
00:25:23.830 – 00:25:44.770
But we won’t go too in depth into that. But let’s. Okay, so we’ve worked out all of our turnover. So now we know. We know our turnover, we know our profits and our percentages.
Now we’ve worked out all of our overhead costs and we’ve got a figure for each month. So now how do we work out the, like, the combination between all of them and what we’re actually left with?
Sally
00:25:44.930 – 00:25:57.220
Okay, so, so we’ve got the turnover and we’ve got the cost of that wedding, which gives you your gross profit, which we said before. And then you’re going to take up all of your costs and then you’re going to come down to your net profit.
Becca
00:25:57.380 – 00:26:24.700
Okay. And so whatever is at the bottom of that is basically what profit you’re making in your business on a monthly basis.
So say we had three weddings in a month at £500 and we worked out that each of them was making us £100 profit. That leaves us with £300 profit. And then if we’ve got £200 of expenses to go out of that, then actually we’ve only made.
We’ve got £100 left at the end of the month, Correct?
Sally
00:26:24.860 – 00:26:25.420
Yep.
Becca
00:26:25.660 – 00:27:23.750
Okay, lots of maths going on on the podcast, but I think it’s really important that we do make it simple because I don’t want people going, oh, I don’t understand gross profit and net profit. I’m out of here. Because actually there is some basic maths that everyone can be doing to work this stuff out.
So to answer my initial question, the numbers, they should be looking at number one. Is turnover. That is how much money they have coming into the business in a month. So they could start doing this.
Looking back at May, so look at May or June and choose a month and go, right, how much money came into my business? Write that next to turnover, then do your working out. Well, what was the, the service and what was the profit on that particular service you sold?
Then work out your overheads.
And once you’ve done all of that, you should have a number at the bottom and that will tell you whether or not your business, business is making profits. Now, if they do this maths and they come out with a negative number, what, what do we do?
Sally
00:27:25.510 – 00:28:21.700
So it’s probably a couple of things. One you said before was look at your prices that you’re charging because, I mean, in the last two years, costs have gone up massively.
And I know a lot of people are just too scared to put up their prices because they think, oh, no one’s gonna pay, no one’s gonna pay them. But if your costs are going up, you, you have to put your prices up. You can’t, you can’t run your business at a loss. So that is something.
Look at first pricing, then obviously look at your costs then. Because a lot of people spend money on things that they’re not actually using. A lot of subscriptions, you know, just repeat, don’t you start it.
Don’t really look. Probably paying for like, like two or three things that, when maybe they only need one.
So, yeah, saying go through your bank account, go, do I actually need to be paying these things? Yeah, that’s where I would, that’s where I would start.
Becca
00:28:21.780 – 00:28:59.070
Okay, so if you’re, if you’ve done this numbers, and it’s looking scary, the two things to start looking at is, number one, should I put my prices up or do I need to sell more stuff so that I get more turnover coming in? And secondly, can I decrease my costs? Am I spending more than I’m earning? Therefore, do I need to, to get rid of it?
Now the other thing we haven’t factored into my calculation, I’ve just realized is this tax pot. So we talked about the tax and how people don’t account for the tax.
And in all my little calculations there, I didn’t do anything to account for the tax. So when we’re doing this like monthly review, what should we be doing? How should we be sorting out that tax money as well?
Sally
00:28:59.230 – 00:29:28.770
So if we go back to the figures we had where we ended up with 100 pound of net profit, that is what you would pay your tax on, obviously it would depend if you’re limited company or self employed, but I’d say between sort of 20 to 25%. But you know, it would depend on circumstances.
So I would put that much aside because, yeah, a lot of people come around to pay their tax and they have spent all the money.
Becca
00:29:29.650 – 00:30:51.670
Yes, exactly. Okay, so now our hundred pounds has got worse because we’ve now got to go and put at least £20 of that £100 into our tax pot.
Gone away, and we’re left with it.
But you know, we, it’s joking aside, but I think this is the reality for a lot of people listening and that’s why we need to, to really look at these numbers. And I would encourage people to spend some time thinking about this.
I know it’s scary, but when you see the numbers in front of you, exactly as we said earlier, confidence comes with evidence.
Once you can see it, it will give you the confidence to put your prices up because you’ll realize, oh, wait a minute, I am working all the hours of the day and all I have left to show for at the end of a month is £80. And I could have earned £80 by doing a paper route. And I think that’s the reality of it, isn’t it?
And that’s what then gives you the confidence to go, no, I need to charge more or I need to be more visible on my social media, I need to do more marketing, I need to do all these things.
Or on the flip side, sometimes I think people do these numbers and then the result is much better than they thought it was going to be because they’re so scared it’s going to be bad, they haven’t done it.
And actually once you do this, you realize, oh, wait a minute, actually I’m walking away with quite a lot of profit in my business and I’m quite happy with that. So I think the thing is they need to actually just do it. So how often then should we be looking at this stuff?
Should we be doing it on a weekly basis, A monthly basis? A quarterly basis? A yearly basis?
Sally
00:30:51.830 – 00:31:05.970
I would say minimum monthly, yeah, you can do it weekly if you really want, but I would say definitely monthly. You could stretch it quarterly, but I think three months is quite a long time.
Becca
00:31:06.770 – 00:32:12.660
Okay, so getting into a habit basically of sitting down on a monthly basis.
And again, this is something I’ve implemented in my own business and it’s made a big difference is I do what my friend Taylor from NG calls KPI day and it’s on the first of the month where I go through all my key performance indicators, which basically means I have spreadsheets and I fill in everything from how many Instagram followers I’ve got got to my percentage of costs for that month and my profit and all of those things. And it’s been game changing because I can suddenly see, oh, this has worked really well for me.
Oh, my website visits were down and also my profit was down, therefore maybe there’s a correlation. And suddenly you’ve got all of this picture of stuff that you didn’t know before that gives you the answers.
So getting into that habit and having a little system for yourself of sitting down and looking at it once a month, I think it’s really important because I do think a lot of people. And again, I’ve been trying to change the narrative on and telling people, do your tax return in May or June, don’t wait till December.
But people leave it so long that then they haven’t got time to find out the money. They’re doing it too late. They’re looking at. They’re looking back rather than being in control.
Sally
00:32:12.980 – 00:32:32.050
Yeah, I mean, you’re looking. If you’re doing it in, in January and your year end is like March, like nine months has gone since then. So that is a long time. And that.
And those figures then are not where you are today. You can’t rely on them as today’s because. Yeah, it’s just too far. Too far gone.
Becca
00:32:32.130 – 00:33:11.570
Exactly.
So we’re talking about looking back, but I also think to be successful, and I’m sure you work on this with your clients as well, we also kind of need to look forward as well as backwards. So I guess step one is getting control of where we’re at now and being able to report on it.
But you mentioned earlier about budgeting and looking forward. So what should we be thinking about if we’re looking forward, projecting for the next three months?
Because if we were working in a proper business, as I call it, you know, in a big corporation, I guarantee they’ve got financial officers doing budgets and setting forecasts and all of these kind of scary words. But what does it actually look like in practice for us as small business owners?
Sally
00:33:11.570 – 00:33:55.230
Yeah.
So I think you can take that monthly figure and once you’ve like done, say three months, you can then to use that to predict, say the next three months, go, look, this is roughly. I know it’s seasonal, so it does sort of vary. But just use that as an average going forward. These three months were like this.
This is roughly what the next three months are going to be like. And then kind of build out. I’d say 12 months is a really good thing to try and build out. And then you can see.
I mean, ideally you’d want to kind of track your budgets to your actuals, but yeah, there you can sort of see, am I going to be making some money in the next 12 months?
Becca
00:33:55.390 – 00:34:10.510
Okay.
And so in that, would you be planning for things like new equipment costs, planning for things like how much you need for, I don’t know, if you want to go on a conference or do some training or, you know, your bills. You’d put all of that into your projected budget?
Sally
00:34:10.830 – 00:34:11.950
Yeah, I would, yeah.
Becca
00:34:12.500 – 00:34:23.860
And I think people are afraid of this because it feels sometimes like guesswork, but I guess it isn’t guesswork entirely, but it partly is. And it’s okay if we’re not completely accurate. Is it better to just have something to start with?
Sally
00:34:24.260 – 00:34:40.789
Yeah, I think it’s best to have something to start with. And then as you’re going along, if things change, then don’t leave it as it is. If something’s increased, then go and change it.
You know, it’s a moving sort of document that you. You sort of tweak all the time.
Becca
00:34:40.949 – 00:35:55.850
Okay, so to recap, then, if we want to be confident on our business numbers, really, it’s two things we need to, number one, track all those numbers we talked about and do it on a monthly basis, but also at least once a year, and then review it regularly, even quarterly, if once a year is too much. We should be also projecting forecasting, budgeting and planning.
And you know what’s interesting about that, again, is it makes sense, thinks it’s not. I think we see finance as just this tiny part of our business.
But what I want to encourage people, and I’m sure you do as well, is actually it’s the whole business.
So when someone comes to me and they want help with something, they want some training, for example, and they need to know whether they’ve got the budget to pay for that or not, or if they want to take a course, they need to know if they’ve got the budget to pay for that rather than it just popping up on Instagram and them deciding to spend a thousand pounds on it. Well, do you have a thousand pound in your training budget? And the same with your marketing.
People say to me, oh, I want to do something different with my marketing. So I’ll say, what’s your marketing budget? I don’t have One.
Okay, well, you know, we could spend a million pounds on marketing your business, we could spend a billion pounds on marketing your business, or we could spend 100 pound on marketing your business. But you need to know how much you’re willing to spend on marketing your business in order to make the profit you want.
Sally
00:35:56.090 – 00:35:57.130
Yeah, yeah.
Becca
00:35:57.610 – 00:36:43.790
Okay. So we’re changing the narrative. We need to make sure that we are budgeting better and also looking back better.
But you brought up an interesting point and I want to hear more on your thoughts on this. And it is, it’s not unique to the wedding industry, but it’s definitely something that we see a lot.
And I think it’s that difference between cash flow and profit.
Because we know that in the summer months, sometimes we feel rich as wedding business owners because it’s when all of our final deposits come in and we’ve suddenly got all of this money and then we get to November, December, January, February, and we can’t afford to eat and we can’t afford to pay our tax bills because we are a very seasonal business. And a lot of the money comes in at certain times, times of year. So how do we go about managing that side of things?
Sally
00:36:43.870 – 00:37:20.050
Yeah, that’s probably a little bit more complicated because I would say you should also have like a cash flow forecast of what cash is coming in and out, because that is not going to be the same as.
I mean, obviously you’re still going to have your money coming in and going out, but there’s going to be other things in the cash flow that are not in, like your profit and loss account. So things like your tax, your tax bill, your vat, your deposits, those sort of things aren’t in the profit and loss.
So, yeah, ideally building out a cash flow, but that can be probably a bit too much for some people.
Becca
00:37:20.530 – 00:37:38.100
Well, we won’t go into detail, but I do think, I do think everyone should be thinking about it though, because, you know, if, if you get, if, you know, lots of money’s coming in in August and no money is coming in in December. Well, we need to make sure we keep some of that August money to pay our bills in December. Because that’s how businesses go under.
Sally
00:37:38.180 – 00:38:02.260
Right? Yeah. I mean, businesses can still be profitable, but they run out of cash. Yeah, I see that quite a lot.
Or people are having to put their own money in the business at a time of year where they don’t want to. Who wants to put money in their business at like Christmas time and January? January when your tax bills due?
That’s I see that a lot and yeah, it’s awful.
Becca
00:38:02.980 – 00:38:43.240
But the good thing is, in some ways in our industry is quite often people are booking us ahead so we be able to do some kind of basic cash flow ahead of time.
Because if someone books us now for next summer, we should know, as long as that continues to go ahead, how much projected cash we’re going to go get in next summer.
In some ways more than a business like, I don’t know, the fish and chip shop down the road because they don’t know whether any customers are coming in tomorrow until they walk in the door. Whereas we do know or at least have an idea that that money, money’s coming.
So I guess we need to find a way to, to look at that across the year and work out what portion of that needs to be split out for other months of the year.
Sally
00:38:43.240 – 00:38:59.400
Yeah, I mean, I suppose you could go back to your pots.
Thing that we were talking about is if you’ve got deposits coming in and you’re not using them yet is to put them aside, you can’t spend that yet because that is for when that’s due to be spent next year. So that is a good idea to try.
Becca
00:39:00.160 – 00:39:08.960
So basically then what we’re saying is when someone pays in a deposit for the wedding, we shouldn’t be spending that now. We should be putting that to the side until that wedding’s happened.
Sally
00:39:09.920 – 00:39:25.920
Not happened.
I would say put it aside until you need to start paying costs for that wedding, which, you know, you might have some now, but I’d have thought most of them are going to be nearer the time of the wedding. So, yeah, don’t use that cash.
Becca
00:39:27.140 – 00:40:01.930
And it’s interesting, isn’t it, because I don’t actually know the limit on pots and spaces in something like Starling. I know Monzo do them as well, but in some ways you could almost, if you, if it allowed you to, you could have a pot for every single wedding.
Especially if you’re only not doing many weddings.
If you’re doing 10 a year, for example, you could have a pot for all those weddings and then you’ve got all of the money organized and you know where to spend it from and you’re not scrabbling around looking for that money that you spent on a new computer that you were supposed to spend on cake ingredients for the wedding cake.
And we laugh about it, but I think this is the reality that a lot of people are doing and that’s why it’s funny, because it’s, it’s scary and funny at the same time.
Sally
00:40:02.010 – 00:40:12.810
Yeah, yeah, it is scary. Yeah. Because people just see, oh, I’ve got, especially this time of year, oh, I’ve got a few grand in my bank account.
Oh, yeah, you can go and buy that new computer, which they may need,.
Becca
00:40:12.810 – 00:42:14.840
But they should have budgeted for and, and thought about it.
And actually, you know, when you’re conservative and this is how I’ve shifted my whole mindset around the tax I said earlier, sometimes, sometimes it pays back because it is much better to get to your tax bill and feel like you’ve got money coming back to you that you can spend on something nice than to get to your tax bill and think, oh, my goodness me, I cannot pay this. I don’t know how I’m going to pay it.
And so, you know, putting in the work in early and being conservative and maybe putting a bit more aside than you think you need to, knowing that at a certain date that will then free up and that does become profit is. It’s exciting. It makes your tax bill a lot more fun than worrying about it. And I think that’s been the biggest shift for me.
Get in control of my numbers means I’m not scared of the VAT bill, I’m not scared of the tax bill. I’m not scared of those costs coming out because I know that I’ve thought it through and I know that I’ve got the money aside for it.
And I think that’s, you know, at the very least, after listening to this conversation, I hope that people at least start to put that money aside, either physically in a space or at least as my dad used to do on a spreadsheet. He used to just have that running total.
So he knew that, that, that needed to be in his account at all times because he wasn’t lucky enough to be running a business in the age of spaces and digital bank accounts like I am.
But yes, I always remember his VAT spreadsheet because he would always say, if my VAT bill ends up being lower than I expect, then we’ll be able to go on holiday.
And actually looking back, I think, well, he probably set some good foundations for me, even though I didn’t know it as a child, just by talking to me about those things and showing me his spreadsheets.
And that’s why I have my little Disney that just continues to get topped up every single month ready so that when I’m ready to go on my Disney holiday, I’ve got the money set aside for it. Okay. One of the other things you Talk about is money leaks. So money leaking out of our business.
And I know that’s one of the things you try and fix for clients. So what are some of the common money leaks? Where are people losing money in their business?
Sally
00:42:15.800 – 00:43:12.120
Definitely underpricing. That is a massive money leak. Really? Really. Because a lot of people are picking prices from someone else’s Instagram.
They’re looking at other people that are in their kind of space and going, oh, they’re charging that. I can’t charge any more than that. But, you know, you don’t know if they’re profitable, if they’re making money.
You’ve just got to look at your own figures. So, yeah, underpricing, massive, massive sort of leap of money and probably lack of sort of financial structure. Not having a plan as well.
You know, if you’re just, like we said, oh, just going to go buy a computer, if you’ve not, if you’ve not worked out, have you got the budget? Have you got the budget for that, then, you know, you’re, you’re losing money there.
So some of the other areas we talked about was before, some of the costs, you know, you’re paying, you’re paying subscriptions that you don’t actually need.
Becca
00:43:12.280 – 00:44:15.800
Yeah. And I think that that’s a big one as well, like reviewing your subscriptions.
But it’s interesting because also I think sometimes when we, these conversations, people will then hear this and go, right, I need to cut all my subscriptions. And that’s not necessarily what we’re saying.
So, you know, I, I joke about it sometimes with things like, so I have a membership and people are in the membership, they’re paying every month. And sometimes they’ll come to me and they’ll say, business is down, I’m quitting my membership. Which is absolutely fine.
But sometimes I think, well, that might be the time you need it the most. Like you, you actually need the help now to get that back.
And so, so I kind of want people to reframe that and think, okay, well, if I keep that membership or I keep that piece of software and it costs me this much money, how am I going to utilize that to make either the time or the money back?
Rather than I need to cut everything back and spend nothing, because then people cut their marketing budgets, they cut their budgets for everything, and then suddenly their business starts to fail because they’re not doing all of the things they need to. So how do we make that differentiation between knowing what to cut and what not to cut up?
Sally
00:44:15.800 – 00:44:42.280
Yeah, that is quite. Yeah, it’s a good one, isn’t it? Yeah.
I mean I wouldn’t cut people as well cut like accounting fees and get in the help from sort of coaches and stuff like that. But a lot of times spending that money, you’re going to make more money than, than what you’ve spent.
So yeah, be realistic, don’t, don’t cut things just to save money, you know, cut things that you are not using. Yeah.
Becca
00:44:42.280 – 00:46:01.610
And I think, and I think when you get control of your numbers and kind of the whole theme of this convers, once you get control of those numbers, you can make better decisions. So you’re not just thinking, help, I need an extra 100 pound a year so I’m going to cut my accountant fee for that month. Right.
That’s a snap decision. Whereas actually when we’re in control of it, we can look at it and go, right, this year I’ve spent X amount on I don’t know, this piece of software.
If I stop paying for that, how much more time would it cost me to do that task? And therefore is it actually end up costing me more in time than I, I’m spending on it?
If I cut the accountancy fee, how much money am I actually going to now spend on doing my tax return? Maybe getting it wrong, maybe not doing it correctly, maybe, you know, not saving as much as I could or not understanding it.
And so we need to make better decisions.
Whereas actually if you look at something, I don’t know, a Netflix subscription you’re paying for and you haven’t turned on Netflix for the last six months, well, let’s get rid of it. Or you know, again, people paying for things when that is covered somewhere else.
So I’ve heard of people where they’re paying for a credit card every, every month which includes travel insurance and they don’t realize then they’re paying for their travel insurance on top.
So just getting control of your numbers, understanding it and then making wise decisions rather than just split second, let’s just cut everything and cut back.
Sally
00:46:02.250 – 00:46:02.810
Yeah.
Becca
00:46:03.530 – 00:46:25.350
Okay Sally, before I let you go, you obviously help people with this. This is the whole point of you starting this side of your business is because you are passionate about helping people get control of their finances.
And I know that you have a bit of a blueprint that you look at with clients with three different milestones. Do you want to just briefly walk me through that, what, what that is and what it looks like?
Sally
00:46:25.830 – 00:46:43.350
Yeah, so it’s a 12, like a 12 month program, a one on one kind of coaching and we look at three milestones, which is gaining clarity, building confidence and driving growth. And yeah, we work on that one to one over the 12 months. I do some.
Becca
00:46:43.430 – 00:46:51.350
I was just going to say what, what do each of those milestones Just give us an overview so, you know, get clarity. What, what are we doing in that? What are we getting clarity.
Sally
00:46:51.980 – 00:47:30.390
So I think a lot, I said before, a lot of businesses have like weak financial foundations and that the clarity piece is like getting really clear on where you kind of want your business to go, what you want to purse, what you want personally in your life, how your business is going to achieve that. So a lot of that is like vision, mission, getting your goals for your business and looking at the numbers, which we’ve obviously talked about.
So that’s kind of the gaining clarity. The building confidence is, is then being confident that you understand your numbers and how it’s going to help you then grow your business.
So increase your profits and increase the amount of cash you have in your business.
Becca
00:47:30.710 – 00:47:41.670
Okay. So you’re basically looking at it holistically. You’re looking at the whole picture across a year and what are the outcomes?
Like what, what would you hope that people achieve when they’ve worked on this stuff?
Sally
00:47:42.070 – 00:47:57.030
Well, yeah, definitely more in control of your business. Business. I like to try and get people to achieve 20% profit growth, which, you know, I think is achievable.
I can’t think of other things at the moment.
Becca
00:47:57.670 – 00:49:26.500
Well, I, I would say 20% profit growth for most people is probably a good milestone to be thinking about because if we can achieve 20% profit growth, then, then we, then we’ve done well, especially if we’re starting at negative or very low profit growth. So I think the big message from today’s episode is to not find this stuff scary and to get clarity to look at the numbers to stop being afraid of it.
And if that means you need to. Again, I’m an advocate.
I talk about this a lot of just booking time in your diary and going and sitting in a coffee shop or a separate space to do something, some deep diving on strategy or on numbers, and just sit down and take your notebook and just go and create some spreadsheets and work on this. And if you don’t feel, feel confident to do it alone, that’s when you enlist some help or pay someone to help you with it as well.
Sally, it’s been such an interesting conversation.
I know it’s one that’s uncomfortable for a lot of people, but I think it’s important that we start Talking about this stuff and that we say, I guess I don’t want people to walk away feeling any sense of shame about their numbers either. Like if you are someone listening to this and you’re thinking, my numbers are a mess, I’m not making any profit, that’s okay.
Sally’s mission here is to help you do better.
Not to make you feel uncomfortable, but actually sometimes in that discomfort it is the driver to make us realize we need to, we need to do something about this. Now you have a free resource. Do you want to just tell us a bit about that and I’ll make sure I link to it in the show notes.
Sally
00:49:26.900 – 00:49:43.190
Yeah, it’s called where is the money going? And it’s a financial guide to get more in control of your business.
Pay yourself properly and yeah, kind of really build, build your life, really build from your business business.
Becca
00:49:43.430 – 00:50:15.690
Fantastic. I will put the link to that in the show notes.
So if you are interested in that or if you’ve ever asked yourself that question, which I think we all have, where is the money going? Then that’s the resource you need to go and get and, and work through it.
Even if it’s booking that time in the coffee shop, booking some time with Sally, like have a look at it and get control. Do not get to January and have to pay your tax bill and have a stress. That’s not what any of us want for you.
Sally, I always have my podcast with the same question and it’s this one. What’s one thing you personally wish you’d known sooner in your own business?
Sally
00:50:16.570 – 00:50:40.440
I think for me was like getting help is not a failure. Like being in business is lonely.
And I think getting other people to help you, I mean, I’ve done like one on one coaching with people, group coaching. I’m still in a group program and I think I’ve progressed far more being in those programs than I would have trying to work it all out on my own.
Becca
00:50:40.440 – 00:51:00.960
Yeah, absolutely. And like you said, it’s not something to feel like you failed.
If anything, the people who do the best are the people that learn from the best and the people that go faster are the people that learn from other people’s mistakes and don’t make them themselves. And yeah, I think that’s definitely one for us all to learn from.
Sally, if people want to find out more about you, about your business, where are the best places for them to.
Sally
00:51:00.960 – 00:51:09.820
Find you, you can go on LinkedIn, Sally Agara and, and Instagram. I think it’s Sallyogara.
Becca
00:51:09.820 – 00:51:24.820
Amazing. And again, I will make sure I put all of the links in the show notes so people can go and find you there.
Sally, thank you so much for being so open and ready to talk about money with us. All is much appreciated and I’m sure we will speak again soon.
Sally
00:51:24.820 – 00:51:26.020
Okay, thanks for having me.
Becca
00:51:26.180 – 00:52:05.120
Such an interesting conversation. And I know for some of you you’re going to be panicking and thinking I don’t know my numbers.
And I just want to reiterate to you one more time, it’s okay. But just like we said earlier, conf comes with evidence.
And once you do that hard work, just sit in a coffee shop, go through your numbers, get those numbers we talked about down on paper, then you can make smarter decisions. You’ll feel back in control of your finances and that’s when your business can thrive.
And if you need help with any of those things from a strategy side of things, then reach out to myself, reach out to Sally. We would love to help you and do make sure you get that workbook because all of us sometimes wonder, where on earth is that money going?
I’ll see you next time.
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