As an entrepreneur, it’s important to be familiar with your finances and know how to use your numbers to make crucial decisions in your business as you continue to grow. 

In today’s episode, I’m growing through the different phases of business and success and walking you through what you need to do as an entrepreneur to become the CFO of your business.

In this episode, Danielle also discusses: 

  • Different phases of your business financially 2:15
  • Training and development needed when you’re making under 100k 4:42
  • Taking time to think about big purchases 6:33
  • Preparing for bringing on team members 7:49
  • Determining the role you’ll have in your business as you grow 14:44
  • Who you need in your business to support you as you grow 19:43

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Full Episode Transcript:

Intro  0:00  

Welcome to entrepreneur money stories, the podcast for women entrepreneurs who want to dig into their money stories so they can break free from limiting beliefs around money once and for all hosted by Daniel Hayden, owner of kickstart accounting, Inc. This podcast is a series of real conversations about money mindset with valuable and action packed takeaways for the entrepreneur who’s building their abundant empire. Danielle is a reformed corporate CFO who’s on a mission to help rural breaking female entrepreneurs understand their numbers and gain the confidence to create sustainable profits. And now here’s your host, Danielle Hayden.

Danielle Hayden  0:40  

Welcome back to another episode of entrepreneurs stories. Today I want to dive into how you can become the CFO for your own company, right? The CFO of your growing business? What does it mean to be the CFO and what’s needed at each stage of your growing business? First off, what is a CFO a CFO is also known as the Chief Financial Officer. Usually, the CFO responsibilities include offering operational guidance to the company, ensuring that the company stays compliant, providing Accounting Oversight, managing banking relationships, so that they’re in place and working, and then provide the financial clarity and evaluation for future critical decisions. In your specific Small Business. This might not look like the details of the numbers, right? I don’t want you doing the bookkeeping, I don’t want you getting in the weeds, I want you to be able to start to learn how to look at the numbers, evaluate them, and understand how to use them to make crucial decisions. As the CFO of your business. These key business decisions ultimately boil down to you. Your team may know everything from a number standpoint, but when it comes to making risky decisions, you are the only one who will know the ins and outs of your business from both a professional and a personal level. And these two intersect as entrepreneurs. As small business owners, we see various stages of business growth. And internally here at kickstart accounting, we break these up in a very specific way, we have our startup phase at under 100k, then gross revenue. Next Level is 100 to 250k in gross revenue. Next is 250 to 500k, and 500k to a million. These are the stages that we see our clients go through. And there’s different needs at every single stage. So what does a business under 100k need to keep in mind to be the CFO of their business during this time, we’re really creating the foundations for future accounting success. During this time, we are ensuring that we have separate business and personal expenses, we are working on determining and setting up the accounting system that works best for our business and creating the standard operating procedures for future efficiencies, building the foundation for growth, putting in place the building blocks and the team. In order to help you get to the next stage now. And every single one of these stages, we have to review our numbers. So in order to be the CFO, in order to be the CEO of our business, we have to review our numbers. So as we do this process, there’s a few things to keep in mind so that you are objectively looking at your business to understand the needs of your business. While you’re still under 100k. During this time, it is important to remember that it’s okay to take a loss when you’re investing in your growth. It is vital to pay attention to how much you are spending and where you’re spending it. However, this is the time that we see business owners really pouring into their business, reinvesting the profits into their business, and spending a lot of time and money and development of themselves to become an entrepreneur. This is a major shift. A lot of our clients that we see are coming from a full time position outside of their company as an employee and shifting into their business full time. And so during this time, we are growing the foundations building a website brand networking, website development, what subscriptions are we going to use? What is the back end software that we’re going to use to create our business? And then again, the training and development in order for you to look at your business like the CFO during this time? What are some key things for you to look for? There are very specific trends that we see for our clients during this time. We have to watch the amount of money Spending on subscriptions, especially if they have proven to be unnecessary or not necessary for you to run your business, then this is a time for trial and error, we are building the back end. So we have to decide we might do a lot of testing, a lot of development and a lot of research. But we have to watch that we’re not accumulating those subscription costs. We are terminating, we are letting go of any subscriptions that are not serving us. So there are a few questions that we always ask, when we are analyzing our spending. Do I need this today? Is this setting me up for the future? And is this right for my business? Now, another big area that we see at this stage of the business is pouring into training and development. And there’s a few things to keep in mind and some questions to ask yourself to make sure that this is the right use of funds, I want to make sure that you are getting training for the things that you need training on. Again, this is an area where we see a lot of spending. And I’m not saying that’s wrong. I believe in mentorship, I believe in business coaches, I believe in getting the support that we need to help us break the foundation. However, there’s also a few other trends that I unfortunately see with our clients signing up for courses and completing them. It’s okay, we’ve all done it. I know I’ve done it too. However, signing up for courses, not completing them shiny object syndrome syndrome, I know raise your hand, I’m bracing it to we’ve all done it. So I put it in a 48 hour rule for our clients. If there’s something that you want to sign up for in regards to training and development, and it is a large dollar, I want you to email your bookkeeper and ask them can I afford this right now. And our company policy is to respond to our clients within 24 to 48 hours. And we’ll give our clients some facts, some numbers, and some quantitative research that we’ve done in order to support this decision. However, what we’re really doing is creating a buffer and time between you and that purchase to decide, do you really need this training? So there’s a few questions they ask yourself, what is my background? What is the expertise that I have? What is the training and mentorship that I really need? Alright, the next stage is 100 to $250,000 in gross revenue. So as I hit the stage, there are different things that we need to focus on as the CFO of our business. During this stage, we see our clients focusing on hiring and building out their team, we have to be sure to consider all the factors and possible incurred expenses when considering hiring a team. paying an employee their hourly rate or their salary is not the only thing that goes into bringing on a new employee or contractor. It is essential to plan for all the expenses to avoid creating a leaky ship. And unfortunately, we’ve seen this with our clients. And that’s why it’s so important to not just have bookkeeping in place, but to look at your numbers as the CFO, and plan for these strategic business decisions. We have to continuously monitor our time, energy, and the cost of employees and contractors in order to stay profit, profitable, and foster even more growth within our company. As a CFO, you have to be aware of your cash flow to make sure that you can stay at a net profit and still afford your pay as the business owner, as well as paid for your people that you have added to your team. Taking the time to analyze and prepare for your team members is going to create an environment for success. You’re going to be able to hire with confidence, you’re going to bring that team member on knowing that they’re going to be able to have a long term position, a long term seat within your organization, you can download the new hire cost calculator at Kickstarter, Kenneth Hire longtime listeners have heard me say we have an opportunity to make small adjustments in our business to make a small savings contribution for big impact in the future. So as we know that we are looking to start to hire in our business, or we know that we’re going to need to add on additional team members. It’s important to start to set aside funds to save for this team member so that you can confidently bring them onto your team. But what did we save for what’s the amount? Use the new hire cost calculator but I want to walk through some of the costs, that we’ll have one time costs such as computers, monitors mouse keyboard, so decide what type of equipment that you will need for that employee. If they’re a contractor, you should not be sending them equipment, then we’ll have our ongoing costs. ongoing costs include our wages, so the hourly rate or salary, the taxes that will need to be paid on those wages, any paid time off, so PTO time, benefits, or 401k. More and more, we’re seeing in this job market, the need for benefits or retirement options in order to attract top candidates, or a stipend towards those benefits training time. How much time are we going to need in order to get this individual up to speed and then pour into them moving forward. Because the training doesn’t stop after 30 days, training is a continuous opportunity month after month. And then remember all the software costs we talked about, we’re going to have to add this team member to all of our business software. So what do we need to run our business and add the additional costs of this individual to be added to our business subscriptions. And then this one is one that surprises our clients every time for just the cost of culture. So we have to pay our team members, not just when they are client facing or revenue generating. But the time that it takes in order to have one on one meetings, training meetings with other team members, maybe a daily huddle, general time to get organized. So this is the cost of culture that’s outside of the revenue generating time. Once we have the new hire cost calculator completed, we can start to save for our first employee, or our next employee, again, so that we can hire them with confidence. Now, once you have hired this employee, the work isn’t done. Sorry, CFO, come on back. Once we’ve hired, it is important to continue to evaluate the impact of each new hire on your business. We have to define the key performance indicators that you’re going to use to monitor this expense. And we have a really simple one that we like to use, that it’s the total cost of payroll, adding all of those things together, divided by your total gross wages. This will give you a percentage of payroll as it relates to your sales. This is really important so that we can start to see any issues before they become big problems. We don’t want to wait until the house is on fire. We’re no longer profitable or losing money, cash flow strain in order to make a change. By monitoring these KPIs key performance indicators, we can see when there’s a small fire when there’s a small flame, and we can start to address it before the whole house is on fire. This is a really important metric to help you as the CFO, you have your business during this time. Now the next shift that we see in our clients is the 500k and above. First of all, I want you to celebrate if you’re here, this is a big milestone, and that doesn’t get enough time and attention. In entrepreneurship, we tend to just hit goals and then strive for the next one. And we don’t stop with time and patience to celebrate. Alright, once the celebration is over, you’re done. You’re done doing your happy dance. Let’s step back in our CFO shoes and talk about what comes next. as your business grows, everything else grows with it. You have more team members, more subscriptions, and overall more responsibilities. This is the time that we encourage our clients to start spending more time outside of their business. And looking at the key performance indicators, reviewing weekly dashboards, reviewing monthly financials and all the other essentials that fall into the CFOs wheelhouse. This is the time for consistent analysis, because we are consistently growing.

Danielle Hayden 14:09  

This is also where it gets harder to main, maintain profitability. And so it’s important that you’re still working on your business. You’re hitting your goals, and you continue to have the desired lifestyle style, work life balance, and the ability to keep tabs on your business. I’m going to share a really important strategy that we see entrepreneurs use at this stage. Now if you’re listening to this podcast and you have not hit the stage yet, you are at such a benefit because you get to ask yourself these questions before you get to this growth. The question is what role will you have in your business? Now this runs on a spectrum. But will you continue to work with your clients or do you want to lead your team? We hear from our clients all the time. I am passionate About my craft, I love working with my clients, I don’t want to stop that role, I want to be boots on the ground, I want to be working with my clients. However, as the team grows, we have to have accountability, development and training for those team members. So who is going to pour into your team as you’re working with your clients? Again, there’s lots of gray area in between. But as we start to understand what you want your role to be, we can start to position other people around you to help you maintain the work life balance to help you maintain the role that you want in your business. Now on the other side of the spectrum, they are visionaries, are visionaries, want to lead with big decisions, they want to be the ideal maker, they want to pour passion and culture into their business, they want to mentor and train the team. Usually, these business owners have left the day-to-day client work. And it really embraces their role as the leader, I keep on emphasizing, there is lots of room in between, there’s a lot of gray area for you to live in. However, by asking yourself a good decision by asking yourself where you want to be, ultimately, you know what team members you need to start to put around you so that you can achieve that, that balance that you could achieve that role? Now there’s a few things to think about. After you’ve considered this and you’ve made this decision. What will you delegate? What standard operating procedures do you have in place? Is everyone following the standard operating procedures? Caring for the brand, caring for you the business owner? And are you staying profitable? And are you at the right price point as you continue to grow? What role you choose in your business is going to determine what you delegate, what role you choose in your business is going to determine what SOPs you need to have in place before you hire. What rule you choose is going to allow you to understand who you need to hold accountable for following the standard operating procedures that you have deciding what role you’re going to have is going to help you understand your profitability and whether or not you need to raise your price points. How many layers of leadership management and mentorship Are you going to need in your business? I’m so proud of you for being here and listening to this podcast. This is the hard stuff. These are the difficult questions. This is the uncomfortable, you’re becoming comfortable with the uncomfortable. And I am so proud of you. I know what I just asked you to do is not an easy question. But it is an important question so that you can start to create the framework and the systems of who you need around you. Hey, podcast lovers, I hope you’re enjoying another amazing episode of entrepreneur money stories, I had to interrupt to tell you about an exciting new tool we

Danielle  18:08  

recently launched. If you’ve been wanting to learn how to start managing your business finances, but don’t know where to start, then visit Kickstarter accounting To receive our new five day video bootcamp series, you will receive a video each day that will take you from accounting overwhelm to money powerhouse.

Danielle Hayden  18:29  

So you’re ready, go to Kickstarter counting All right, that’s an episode. Next up, we’re hitting a million dollars. Again, I really want you to celebrate here. And if you are nowhere near a million dollars, keep listening. Because you are at an advantage. Because you get the opportunity today, to learn what you’re going to need for the future, you can start to think about how you’re going to put these things in place so that you’re set up for success when you get here. Because I believe in every single one of you because you’re doing the hard stuff right now. Alright, so once we celebrate, sharing a happy dance, this is the time that we see business owners really struggle to maintain profitability. That’s why I want you to celebrate first is not all good news. Once we hit seven figures, it’s exciting. But it’s a new beast of growth. This is where we need to start hiring layers of leadership and management. We need to consider what other resources that we need. Now I’m so proud of you for being the CFO of your business for looking at the numbers using quantitative data to make business decisions. However, we can’t continue to grow on our own. We’ll need things such as a mentor, a board of directors, leadership team and an operating system. In order for us to continue to grow, we have to shift our mindset. We have to have accountability for ourselves. Our team and the lives that we’re touching. Now, if you’re listening to this before you get to this, this milestone, you can start to put these positions in place today, I’ve seen clients, hire mentors, appoint a board of directors, the launch operating system such as Eos, and appoint people as part of their leadership team, who long before they hit a million dollars in revenue. And by doing that, when they hit this milestone, they don’t hit as much turbulence, because they already have those foundational pieces put in place, they’re able to come into this milestone with the right foundations and the right mindset for success. Now, this is also the time as we get back to putting the CFO shoes back on, this is also the time that we need to start to focus on the future. Now, although I want every single business to be creating an annual budget, looking at a 30 week cash flow forecast, looking at the weekly cash dashboards, this is the time that it becomes instrumental for your business, we have to look at an annual budget, we have to be looking at a rolling 12 month forecast, we cannot be making weekly business decisions in the dark. So having a weekly Financial Dashboard that the million dollar mark, we see clients really struggle with managing the cash flow of their business. And by looking towards the future, but implementing these tools and strategies, we can start to look to the future and plan for our cash needs. Now, it doesn’t mean we stop doing all the other foundational activities. Each one of these layers are built on top of each other. So as the CFO of your business, your title, still Chief Financial Officer, you created the foundation, you’re still looking at your subscriptions, you’re still looking at your training and development, you’re still ensuring that you have those foundations of your accounting system maintained if you put in way back when you were doing 100k a year, but you are set up for the future. But you are set up for success right now. We have to keep an eye on it though, but it is created. And now our job is to maintain, we have the tools to help us understand how to hire, how to analyze when we’re going to go bring on team members. And to plan for the impact of each additional team member, we have decided the role of our business, and we have been able to hire the people around us. In order to support the role that we want in our business. I want you to give yourself so much credit for making it to this point in the podcast. Because I am proud of you. This is not easy. Continue to be comfortable with the uncomfortable. Ask your money team for help. You don’t have to do this alone. And each of these stages are packed with changes. They’re packed with different needs and opportunities. So contact your money team, ask for help and share this resource with other entrepreneurs. I love to pour into you. I love supporting other entrepreneurs. So if you liked today’s episode, please like and subscribe and share this episode with one other person so that they can have the opportunity to step into the CFO role of their business. Thank you so much for being here. I don’t take your time lightly. I appreciate all of your support. We’ll see you back here next week.

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