Welcome back to another episode of Entrepreneur Money Stories! Today on the show Danielle, the Founder and CEO of Kickstart Accounting Inc. is flying solo. With an unwavering passion for empowering women in service-based businesses, she’s dedicated to unraveling the complexities of financials, enabling entrepreneurs to make a lasting impact. Today, Danielle delves into a topic that often sparks anxiety – operating in the red. But fear not, her insights will guide you through this challenge with a level head and strategic approach.
What Does Operating in the Read Mean?
When your operating income reflects a loss, you’re officially operating in the red. Danielle kicks off by emphasizing the importance of accurate bookkeeping and monthly profit and loss analysis. Unveiling the root causes of such losses is pivotal, as they could stem from isolated incidents like annual subscriptions or project revenue dips. In some cases, seasonal patterns might be the culprit, as seen during vacation-heavy periods. Identifying whether your business follows such a seasonal trend is crucial.
Should the loss extend for more than three consecutive months, it’s time to widen the lens. Danielle advises considering broader market shifts that might be affecting your business. Understanding your finances is paramount. She highlights the impact of becoming an S-corp, where your previous draws now translate into expenses, potentially altering your business’s profitability. Collaborating with your financial team becomes essential to grasp the implications and make any necessary operational adjustments.
Taking Action
After exhausting these considerations, it’s time for action. Swift decisions are crucial, with a focus on non-personnel cuts initially. Using the expense grading worksheet, Danielle demonstrates how to trim expenses without compromising your valuable team members. While cuts might be tough, remember that you can reintroduce these elements later. Survival is the key objective at this moment.
As you navigate this challenging phase, building a cash reserve is imperative to adapt to the evolving market landscape. Luxury expenses take a backseat as you build a financial cushion. Danielle then suggests pinpointing your business’s primary problem without succumbing to fear. Resist the urge to panic and concentrate on addressing one issue at a time. If it’s a revenue decrease, is it a marketing or market-related challenge? A deep dive analysis can offer insights into the underlying causes.
Questions for Reflection
Danielle encourages introspection amidst this period of financial challenge. Each valley holds valuable lessons, whether it’s a brief setback or a more extended struggle. Revisit your money mindset stories that might be exacerbating the situation. Kickstart’s money mindset mastery program can aid in reframing your perspective for positive change.
Are you putting in the extra effort? Revisit the strategies that yielded success before. Examine your schedule, habits, and interactions. Rekindling those practices can rejuvenate your momentum and passion. Consistency reigns supreme; avoid distractions that divert your attention from your business objectives.
Fuel your business with renewed energy and surround yourself with those who uplift you. Danielle underscores the importance of leadership during challenging times. Visualization and focus on success are potent tools for steering your business out of fear’s grasp. Remember, succumbing to fear isn’t an option, even when uncertainty ripples through the entrepreneurial community.
As we conclude this insightful episode, Danielle’s guidance echoes in our minds: face challenges head-on, adapt strategically, and lead your ship through the storm. Thank you for joining us today on Entrepreneur Money Stories, where wisdom meets action.
Key Points
[02:32] What does operating in the red mean?
[11:08] Taking action
[17:05] Questions for reflection
Connect with Danielle:
Website | Kickstart Accounting
Facebook | Kickstart Accounting Inc.
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