0:00:00 - Nicole McNeilly
you are your business. So, like you know you looking to say, well, what's going to make me happy? Like, yeah, you have to look at, yes, you're a business owner, but what? What's your whole pie look like? Right, and that includes your home, that includes your travel, that includes family, that includes you know what, how, what kind of life do you want? And I think, I think COVID really made people think about that a little bit more. We were stuck at home and we were thinking about things like that, about balance, like hey, do I really want that hour and a half commute to the office every day? Pretty nice that I don't have to get in the car and be angry, and traffic right. And so I think people's you know, mindset has shifted. So what is like what actually makes me happy? Because some people are fine grinding eight hours, but then you add another two hours of commuting and that two hours really stretches them thin. That time is precious. Two hours a day is a lot of time, right?
0:01:05 - Betsy Jordyn
So welcome everybody to this latest episode of the Enough Already podcast. This is the show for consultants and coaches who want to forge their own past and success in their careers and in their lives. I'm your host, betsy Jordan, and I'm a business mentor and a brand messaging strategist, and today's conversation is all about money. What's all about? Not just about earning money, but what you do to keep your money and how do you manage your money effectively. So as entrepreneurs, I know, as consultants and coaches we love helping people, but as business owners, we may not love helping ourselves with our finances, and for this reason, I brought on Nicole McNeely, who is my CFO. She has done amazing work, her team is incredible and she's got so much wisdom about how to manage our money. So, without further ado, welcome to the show, nicole.
0:01:55 - Nicole McNeilly
Thank you for having me.
0:01:57 - Betsy Jordyn
So, before we get into just all the deets about money, tell me a little bit about your background and how you became a fractional CFO for entrepreneurs like myself who have these small businesses, and why we need a CFO in general, because you know, aren't we too small to handle that kind of support? So continue, tell me a little bit about your background.
0:02:19 - Nicole McNeilly
Sure. So I started Wolf accounting and consulting five years ago. My background is in bookkeeping, so I worked for small bookkeeping firms here in the Denver metro area and then I went to a large CPA firm and we really partnered strategically with bookkeeping and how it relates to tax and so I learned from CPAs how to have like a tax lens when doing bookkeeping and that's really helped clients strategize with their CPA and the rest of the people on their team whether it's a financial advisor, a lawyer, their own internal staff and it's really helped bridge the gap between what they do daily and how often they are talking to their CPA, because most people talk to their CPA once a year, maybe twice quarterly if you're really lucky, and so I really helped clients understand what are they have going on operationally daily, monthly, quarterly, and really try to help communicate to CPAs so that we're tax planning, we're not missing anything big events that happen in businesses, you know and really kind of help bridge that gap.
And so I found that a lot of people needed that kind of middle person glue to kind of keep their teams together, and so that's that's what we do for our clients.
0:03:47 - Betsy Jordyn
So I love that. You know, because I experienced that middle person, because right now we're the middle of tax season and your teams all over my finances and you're sending stuff to my accountant. But you also do like a higher level type of strategy stuff, so I can call you for more strategic financial decisions, which seems to be different than accounting. So could you like differentiate between, like that finance side that makes you more of a fractional CFO, versus just the accounting side, which is something that we have to do anyway? You know whether we work with you or not, but the finance side, where you're creating this extra added value around, helping me think strategically, or business owners like me think strategically about how they're using your money or spending their money.
0:04:30 - Nicole McNeilly
Absolutely so. It really is a two prong thing. So taxes, everyone has to file, but you don't want to just use your data just for tax reporting. It's really important to understand how your company works, how your cash flow works, understand good expenses, maybe not so good expenses. You know revenue streams. It's really important to use your data that we're putting into a QuickBooks or a stage or some accounting software and to use that data to make strategic decisions within your business.
So, for example, if someone says you know what, nicole, I just feel like my bank balance gets really low, like I get to where it's like $1,000 and that really stresses me out.
Like by using the data and you explaining a little bit about your process, I can give suggestions that, like you know what, instead of billing every two weeks or once a month, you should try billing every week.
You know there's like those little tiny tweaks that sometimes because we're so in our business, we're not working on our business that you kind of just need that one person to make you know a few suggestions looking from an outside perspective to where, if you tweak just maybe one thing or maybe the timing of a few things, then you're like oh well, now I have more, more money in my big account and now that like reduces that stressor that I had, that you know, it gets to a point where, like, it makes me feel uncomfortable. So those are the things where we use the data. Talk about what you want to see better, want to change, or hey, like I'm stressed out about X, y or Z, and then we use that data to help you tweak things within your business. And then you know, and then hopefully either pivot operationally, do things a little bit differently, and then you know, away, you go and hopefully the stressor is gone.
0:06:19 - Betsy Jordyn
Okay. So now I understand all the onboarding stuff we were doing. Is that? So a lot of what you do is it's not just like bookkeeping, but it's creating like the financial metrics and financial systems so that you can use data to make decisions. So now I know why we categorize like different ways, that I sell different things, so that we could actually have that data to decide. You know, is this revenue stream profitable or not versus the overall?
0:06:43 - Nicole McNeilly
Absolutely, because people sometimes go well, nicole, what should I charge people? And I said, well, that's, it's a great question, right. But I'm like well, what are your expenses? What's your overhead? Are you paying a contractor or an employee to do work? Like all of that has to go into. Then then, at the end of the day, it's money in minus money out and then a net number and do you think that's like a value for what you do? You know, and so obviously you don't want to price yourself out of whatever market you're in. But then it also has to make sense of like are you making a percent over what you need to be to like surviving and being able to run a business?
So a lot of people go, oh, am I charging enough, or maybe I'm paying too much for that contractor? And the only way I can help you find that answer is to use the data and look month over month. And this is why monthly reporting is important. Because if I said, hey, betsy, what have you done for the last six months? And you're like oh, I haven't been keeping on my bookkeeping, so I don't know, the answer Like, this is why the monthly bookkeeping is important, so we can run month over month, year over year, and then say, well, hey, your sales are trending this way or that way. And then again that helps. You say, well, hey, I need to do a fee increase. Or hey, my subs are increasing, my subscriptions are increasing, my software is increasing. I also need to increase my price. So that really helps to make sure that you're on the right track, charging you know the appropriate amount and bringing in the right amount of revenue.
0:08:13 - Betsy Jordyn
These are really good things to know about, things I should be asking you about. So thank you so much for sharing that and I love that you're bringing in you know really some of the answers to my first major question that I had about. You know the content for today, which is like, what are those big money principles? You know that every consulting coaching business owner, entrepreneur should know about, no matter where they're at in their business development journey. So you just talked about like the month over, like. So one of them you mentioned is having the monthly reporting. Is one you mentioned like the you know money and money out profit. Can you like dive into, like if you're going to say like the top three to five things, like everybody needs to know about, what are these principles and why are we not and to what degree do we follow them and why don't we follow them?
0:09:00 - Nicole McNeilly
Right. I think a basic way of thinking about it is really, does your money in cover all your money out and do you have enough to pay yourself? I mean, that's like the bottom line of any business. Like, I need to make money, I have expense for that business. You might have employees, you might have payroll, contractors, whatever and then I want to pay myself and, depending on what kind of entity you have maybe that's your payroll, maybe it's distribution guarantee payment, it could be whatever but at the bottom line you make money, you spend money, you need to pay yourself, and then what's the bottom line after that and you want a little leftover, but then that bottom line is what gets taxed. So at the end of the day, my goal is lots of revenue, lots of expense, pay myself appropriately and have a positive number, but have that be the smallest possible number at the end, because that's what you pay tax on. So you don't want $100,000 of net revenue at the end of the day, because that's what you're paying taxes on. I'd love to have 20 or 30 or 40, right, and so it's different.
You have to think differently because a lot of people like, oh, just about revenue, yeah, but if you don't have enough expense, then you're paying a lot of money in tax. So, and also, are you paying yourself what you're worth? And that's another you know point I like to make about understanding your worth, and maybe we deep dive into that a little later but are you paying yourself what you think you're worth and that you feel rewarded by doing all of you know, the work you do within your company? Because a lot of people feel undervalued, even owning their own company. Like gosh, I wish I made more money.
And so, again, by using metrics and having true reporting that we can rely on, I can say, okay, well, where can we find $10,000 more within your business so that we could transfer that to pay yourself, right? So you kind of have to put on different hats and different situations. Like you know, how are you going to make money? Is that consulting? Is it, you know, a service you're selling? What's your monthly burn rate? And a lot of people like don't understand that, but like it just exists. What does your company take to operate? So you have Zoom subscriptions, you have Microsoft, you have any kind of proprietary software you have to purchase, and so, at the end of the day, like like
you just wake up and what's the cost of just having your business exist? That's a really key number, because if that's, let's just say, $5,000 a month, you know, like I would tell you, then your sales have to be at least $10,000 to cover that $5,000 cost. Put a portion aside for yourself then to still have a positive number at the end of the day, right? So so that's like a good starting point. What does it cost to have your business? Then you know, well, how much do I have to bill. And then that gives you a good idea of like, well, do I have enough clients to bill that $10,000? Do I need to go out and get more? Or oh, hey, I could, I could, I have 20,000.
So then that leaves a lot left over to pay myself, right? And so then you kind of almost work backwards. I think that a good starting point is how much does it cost for me to operate whatever you're trying to do? And then you kind of work backwards and then say, okay, I have this much money left over. Then you're kind of that third, you're the third part of that and say, okay, well, if this is what I bill, this is what my expense is, this is what I can pay myself, and then hopefully those margins grow, so then your expense stays the same, hopefully your revenue can get larger and then the amount that you can pay yourself can get larger.
0:12:34 - Betsy Jordyn
So I think that that's an interesting thing that you're bringing up has to do with tactics but also mindset, because I think a lot of people, when they leave corporate and they start specifically like a consulting or coaching business, specifically a coaching, consulting business, is we treat it like okay, I landed this client with a company and they the mindset is it's almost like a salary, like whatever the revenue is, it was I get paid and it's like I'll just keep my expenses to the bare minimum, like I won't even you know, maybe I'll just do the free zoom code subscription, I'll do free everything else to keep that because that's my salary and that's one of the things that you're saying here. That's different is you have your business revenue and then you have your salary and then you have the net at the end and they're not all the same and I think that's a mindset difference is I have a salary that I pay myself out of my business revenue, but my revenue is not my salary and my salary and my salary is not my profit.
0:13:33 - Nicole McNeilly
Absolutely, and those like it can be confusing, because as an employee, it's a total different mindset than owning your own business. Because, honestly and two people's detriments at the end of the day you're what you pay yourself kind of comes last, right, because if you have $10,000 of income and your expense is 8,000, and there's only 2000 left for you, I would say, well, you probably shouldn't pay yourself 1000, because then you need a little bit of money left in your bank account to roll over for the next month, right. And so it's a mind shift. And so that's why I think, when you talk about starting a business or going from an employee to now owning your own business, it's really important to put pen to paper, get out an Excel spreadsheet and really kind of do like a hypothetical situation of like, what are my costs? What can I bill clients right away and really have a good understanding. Otherwise, you know you're going to, you know feel kind of like oh hey, I don't have enough to pay myself.
And a lot of people do have to go backwards salary wise when they start their own business. But then the question is, how long until you're back to where you want to be salary wise, right? Maybe it's three months, maybe it's six months, maybe it's a year or, like in my case, when I left the big firm and I started my own, you know I was able to pay myself my true salary by month two. I just had to be able to make sure I stayed on top of my billing, and so my salary really was linear in that sense. But I knew I had enough clients to have enough money in the bank account to pay me what I was used to getting paid. So maybe it's a timing where you try to gather your clients before you leave that job entirely, so that you know you have three, four, five clients to be able to get you by until you can then take your next step in growth.
0:15:27 - Betsy Jordyn
So that's really great advice, like you know, to sort of like plan, plan for your eventual and looking at, like, what is my, what is my replacement salary. But I think that there's sometimes, like when I deal with people who are leaving corporate I don't know how you would speak to this one is, maybe they made a lot of money but they were really not happy in their job and they think, okay, I made $400,000 year one, I need to make $400,000 in the business, you know, because that's what I'm used to. Would you say that that's a right size target for a business, like starting out? Or what would you suggest to somebody who's like they made really good money and they want to replace it? It's different than trying to replace, you know, $100,000 salary or even you know, or something less versus a you know that sides of a salary yeah, I mean I don't.
0:16:16 - Nicole McNeilly
I don't think most businesses you're gonna be able to transfer that Immediately, right, and I think it then matters like, well, why are you leaving that job? You know, like, if it's work life balance, if it's family reasons, if it's high stress, maybe your health is declining, like there could be lots of reasons why you left that kind of environment. So I guess my thing would be like, well, we don't actually want to recreate that same environment, right, like you want to have a balance, you want to have this new company. That is not like what you're leaving behind. But with that, I think, realistic expectations of you.
Know, well, if I was at 400, then maybe my goal should be 200, right, or something you know. And again, it's industry standard. But if you're working 60 hours at that job and you're suddenly gonna work 35 or 40, then you have to do the calculations, say, well, if I work 20 or 30 percent less, what would that be realistic salary Be? Because even though I own my own business, I work way less hours than I did in a corporate environment. Sure, there's some weeks where I got to put in 40s to 60 hours, but that is not my norm.
So if you take my salary when I was working 40 50 hours a week, you know, normally. And if you're pairing that down, then obviously your, your income would be peered down with it. Um, you know, but then maybe you don't need to hire XYZ people to help you because you have more time. So again, that's where you kind of have to balance and be realistic and, I think, doing the math ahead of time, saying, okay, well, can I survive?
0:17:51 - Betsy Jordyn
on 200,000?
0:17:54 - Nicole McNeilly
Is that like, does my personal life support me only making this? And that's where you almost have to do your personal Accounting as a new business owner. What is your personal spending look like In conjunction with starting this new business? Because then maybe you say, okay, yeah, you know I'm gonna cut this, this, this, out of my personal life so that I can make a little less money Personally. And then you know you're still, you know you don't feel like then you're, you know you're poor using a credit card to get by or anything like that on your personal life. So unfortunately, when you become a business owner like that, then you almost have to do kind of a personal strategy saying you know, collectively can my personal life handle maybe a dip in income For a certain amount of time or until you get to your next like, oh, this many clients or this much revenue, kind of situation.
0:18:47 - Betsy Jordyn
You know there's another way to look at it as well, and I'd love your opinion on this is sometimes, when we're making a lot of money you know our lifestyles out of balance, so we feel like we need a lot of money in order to offset it. So, like when I was switching so I was. I had a highly successful consulting business that you know was made me great money, but it wasn't like making me happy. You know, I was traveling a lot, I was away from home all the time and I want to be more at home with the kids and all of that kind of stuff. So I pivoted from consulting to the mentoring business that I have now, and that pivot Took me way back financially for a couple years.
But what I found from a pure profitability standpoint in terms of, like, my income, is I was spending so much money on just things to like Recover from that, like I was going on a lot more trips, like I would do a lot of trips, and it's like, yeah, I still wanted to travel, but I didn't need it in the same way like, oh, my god, I got to get away, you know, and sometimes there people are like, well, I've got like this huge house with you know this huge mortgage and you know, but the kids are out of you know like the kids are. At this stage I'm like, well, do you need that big house? Because maybe you could sell it and get a smaller house, have less of a payment, and now your revenue Pressure is less. Is that like good advice or is that bad advice? Like that, no, I think that's great advice.
0:20:03 - Nicole McNeilly
And ultimately, like you are your business, so, like you know, you looking to say, well, what's gonna make me happy? Like, yeah, you have to look at, yes, your business owner, but what it? What's your whole pie? Look like right, and that includes your home, that includes your travel, that includes family, that includes you know what, how, what kind of life do you want?
And I think I think COVID really Made people think about that a little bit more. We were stuck at home and we were thinking of about things like that, about balance, like hey, Do I really want that hour and a half commute to the office every day? Pretty nice that I don't have to get in the car and be angry, and traffic right. And so I think people's you know, mindset has shifted. So what it's like, what actually makes me happy?
Because some people are fine grinding eight hours, but then you add another two hours of commuting and that two hours really stretches them thin, when they could be at home eating dinner, or they could be, you know, exercising, or they could be out with friends. Like that, time is precious, two hours a day is a lot of time, right? And so that's where I think people are Reprioritizing to say well, you know what, if I make 50 grand less like gosh, that's probably worth it, because then you break it down, what your hourly wages and if you get two hours a day back by not having to grind. You know, some people are like well.
Hey that's only a hundred dollars a day. That's worth it to me, right.
And that's where, um, you know, you can kind of take dollar amounts and and like I said earlier, Putting a value on your time, and I think that's hard for people to do, but my time is valuable because I have a dollar amount associated with my time and I know that sounds like kind of Alice and like it sounds weird, but you have to put a value on your time and if something's not worth your time, sometimes I say you know, that's not that I, I'm not gonna do that, because that's, that's not a smart decision, because my time is valuable and I think a lot of people who start a business don't see their time as a monetary value. So they do things for free and oh, I'll just do that and oh, I'm a startup, so I'll just give that and and I'll, you know, do a lot of things and go to all these meetings and not charge people and People tend to like and it's like well, no, if you're worth $200 an hour, you're worth $200 an hour. Maybe you were $75 an hour. Whatever that dollar amount is, your time is precious and that really has helped me as a Business owner, a mom of small children you know all of those different hats that I wear a wife. It's really helped me say, okay, is this important? And sometimes the answer is no or I outsource it to say you know what? That's not a good use of an hour of my time and that's you know.
Again, it's that mind shift and you have to do that in your personal life, like is is picking up my kid from school, if that's important, then you have a hard stop at 3 30 and then you outsource To someone else after 3 30 to get work done that you're not going to right.
Or I want to work out in the morning, so I want to start my day at a certain time.
If that's a core value to you, then you shouldn't make that exception, because your time is valuable, you know, and so it's. It's hard to explain and and a lot of people I talked to you they they haven't like been able to wrap their head around their time being a monetary thing and when you do it kind of almost like makes decisions easier, you can say, yeah, that's not where's my time, or you know what, that is a hundred percent worth my time. That is gonna make this client super happy. They're a high-paying client. This is like I need to be right here right then, and then I have someone else go pick up my kids from school Because, like, this is really important, right, and so then I'm making those constant different decisions, maybe daily, but I think that kind of helps you Find a balance and then also be when you're in your business, in your business, and when you're not, you know, try to have a, have a, have a time away.
0:24:21 - Betsy Jordyn
It seems like there's a meta theme of what I'm hearing, of what you're saying is like be of intention of what you're choosing to do. Like really be conscious of what it is, that you know where your money is, what your goals are and all of this. And when you're making decisions, you know, be intentional. Like it's fine to do whatever it is that you're doing, but don't do it out of fear, you know.
Don't do it is like, why have to do this because this client's not gonna want to work with me. It's like, no, I'm gonna use this time because this is important to me. I really want to be here for this client. I don't know which way it's gonna go, but it means something to me, so it's worth it. Versus like, well, if I don't, if I don't give them this for free, then maybe they're not gonna like me or you know any of those reasons. But to say no, I really I think this goes what you're earlier saying, like I own my worth, means I own what I have to offer and what I'm trying to create and I'm gonna get paid Appropriately, you know, and I'm going to use my time in a way that is congruent with that worth.
0:25:18 - Nicole McNeilly
Totally, absolutely. And a lot of people have like a barter system and I'm actually very against the barter system Only because I think everybody should be paid what they're worth. So I'm not gonna trade bookkeeping with my hairstylist Because I, you know, because then oh, I don't have to pay for a haircut and a color because I do your bookkeeping. I'm like no, if you're worth that $350 haircut, I'm gonna pay you that because I value your service, like it's important to me, right, and but then my services too. So like I love partnering with people but I'm gonna pay you what you're worth. You're gonna pay me for what I'm worth. And a lot of people like, oh, what if we like kind of work together and we trade it? And I was like, no, like I will pay to whatever your fee is. Like if I find If that's valuable to me, I want to pay you which worth, and I think that kind of goes along with I know a lot of people are like oh, we just like trade and did it.
And again that goes back to their uncomfortable, setting a value to their time and their worth, right, and this is where I'm like no, I don't want any favors, I'm gonna pay everybody. I don't want to discount, I don't give discounts, um, I just. I want to partner with people and have that mutual respect of like I can count on you to Help me with this or help a client with that, and all step in, oh, your client has a question I'd be happy to, to meet with them, and I feel like that kind of just helps that idea of, like you said, having having a value and also getting paid for it. And then you're not in that slippery slope of, oh, I do things for free or Sure, I'll do that because I feel guilty, or, like you said, anything out of fear. And and you also have to let go of the fear that Someone may fire you or it may not be the right fit. And I'm finally at the point after five years to feel like you know what, if it's not the right fit? It's not the right fit, it's okay, not everybody's the right fit for everybody. I might be a too expensive for you. You know we may not jive Personality wise, like it doesn't really matter. If it's not the right fit, it's not the right fit, and I think that's where that fear comes in of like, oh, I can't lose the client or whatever, and I just feel like if it's not the right fit, the universe Will bring a different client into your world that is a better fit, that will probably generate more revenue than what you lost. Like I don't force relationships anymore and if it's not there, it's not there and that's okay, you know.
And I think that kind of goes back to that, to where, like, if you go, you know what, hey, I'm booked today. I I'd love to help you, but it's got to be sometime tomorrow. Would that be okay? Where it's not, like, oh, my gosh, now I feel like I can't pick up my kids because the client asked me for something right. And that's where you have your heart boundary. Be like you know what? I'm open tomorrow afternoon with that degree, you know. And that's where you stick your ground, because your time is your time when it's important, and so you're, you're meeting those needs, but you're also meeting your needs too as an individual, as a parent, you know, as as a partner, all of those things, and so that's where you feel like you're failing at like all the things sometimes. If you keep that boundary, then you feel good. Oh, I'm gonna talk to that client tomorrow and then I'm gonna go do whatever I have planned with my family.
0:28:28 - Betsy Jordyn
So it seems like there's an equity principle that's going on here is that I shouldn't be given more. We should keep the balance going. I don't do barters but I do energy exchanges. Well, I will be clear that it's like okay, this program's worth $5,000. Their program's worth $3,000, so we'll do an energy exchange, but I'm not going to. It's not going to be equal. You could pay me $2,000. Now we have an energy exchange and we don't have to exchange money, but I'll just charge you for the $2,000, that's fine. But I think that's where it's holding your worth around.
The equity in the relationship, which goes to other types of situations that a lot of new business owners find themselves in, is like oh gosh, this is hard to do this on my own. I'm going to go find a business partner. Somebody else is going to share the burden with me. How do you make sure? What's your recommendations for, especially new consulting and coaching business owners who just marketing's really hard With your firm? There is a financial need. You're not quite as optional. Somebody's going to have to do the bookkeeping because it needs to get done, but in our business models there's a lot more vulnerability and there's a lot more variability. So what are your principles about partnerships and how do you know if it's a good partnership and what are the things that you should put into place to make sure that everybody's protected in the partnership?
0:30:01 - Nicole McNeilly
Yeah, I've actually had a couple of clients whose partnerships have not gone in a positive way. So I've had the experience of I didn't work with them when they became partners and formed it, but I was with them on the back end of how to unravel that. And I think the best advice is a super solid operating agreement Like that is a piece of paper, like any contract, it's like a pre-nep, it's a contract, it's all those binding documents that are very important that when things do go sour, you use to then as a guide to unravel things. So like, for instance, if you have at least two partners, my suggestion is everything's equal, even if you have three or four partners. Everything should be 50, 50, 33, 33, 33, 25%, everybody.
Because what people tend to do is one person usually has money and capital. One person brings sweat equity, and that's really really tough, because the sweat equity person how do you put a value on their time? Right, we come back to this time as a value. So one person's like, well, yeah, they gave us a half a million dollars to start and it's their money. But that person's like, well, I'm not going to run the business, you're going to actually run the business, right.
And so then they come with like, oh well, I'm the one getting up every day and I'm the operational person, right. But then like, what's your value? Like, how do you monetize all the work that you've put in? You know whether the hours have been tracked or not. Like, let's see, it's like two years worth of work. Like, how do you monetize that versus the other person's? Half a million dollars? Right, and normally the person that is bringing the sweat equity they just don't they're going to probably be the losing partner of that partnership. So I would suggest, if you're partnering with someone, everyone brings the same amount of money. Everybody has equal. You know dividing equal, like what your strengths are in dividing the work.
So, like, one person does this, one person does that, but to get that as equal as possible so that you know everyone's participating in you know, hopefully the same capacity and that like, well, one person's always on vacation, but I'm always the one grinding here, like you want to partner with someone who has similar values and to put it in writing oh, we each can take six weeks of vacation a year, and when the other person's on vacation, the other person has to be on 100% of the time.
0:32:47 - Betsy Jordyn
You know like that nitty gritty.
0:32:50 - Nicole McNeilly
So that then when you're like, well, hey, you travel a lot and I don't really travel a lot, so like that seems unfair to me, right, and so talking about like I had three women started a business and one was pregnant, and they're like, well, she's going to take a maternity leave and I go, I know, but you're equal partners.
So when you pay yourself. Every person will be paid the same, like your, your three equal partners. And they're like oh, but she's going to take some time off. Well, you better put that in your operating agreement. If there is an extended leave of any partner, then they will be reduced by X. I said you need to put that in writing. So that's where an operating agreement and a business attorney is very, very, very important to to discuss all the situations, all the possibilities, and then say if the business were sold, how do you unwind it. So it's really like you know, doing your business backwards.
A lot of people are going to fight, like do I get paid my money back first? Do partners get equity first? Like, all of these things matter and the calculations can be very different. And any lawyer will say, well, what is your operating agreement? Say, and so you really, you really need to think of the worst case scenario when you're making an operating agreement with partners and say, like, what could go wrong? Let's discuss it now and you put everything in writing so that when and if some of those things do come to fruition, you can say, oh well, it says right, here, all debt will be paid and then things will be split according to this Cause.
A lot of partners like loan a business money and they said, okay, well, you're going to pay me back first, and then we all get our thirds. And they're like, no, we're going to get all our thirds first, and then I mean that's like a big difference, right? So then you say all debt is paid, then the leftover will be split. So the timing of all of those kinds of things can be very significant and you don't. I mean an operating agreement usually can unwind those things without having to go to court and you know, hopefully a legal battle. But it's almost like you have to plan the worst case scenario of how your business could go before you actually start it and really have. You know, I wouldn't skip on a business lawyer I don't think you need lawyers for everything, but I think a good, solid business lawyer to draft that operating agreement where everybody has eyes, everyone's at the table agreeing, and then you pass it out in the beginning and not the end of the relationship.
0:35:23 - Betsy Jordyn
So I've asked you many different questions and clearly this is like a major passion area for you around that one and it is for me on a couple different things, like I would probably just add in one other thought or two thoughts on the operating agreement. Is one don't mingle money until the operating agreement is signed would be another big thing. And the second and a lot of consultants get into this kind of scenario is oh like, because other people want to come in and say, well, I'm afraid of marketing, I'm going to go work with this person who's more established. So one person might be bringing in not just the. You know, this person has money, this person has the sweat equity, but this person's been in business for five years, 10 years, they've got all the intellectual property, they've got the brand repute and they got the money, you know. And then this person comes in and they have really nothing except for, like, some sweat equity and maybe some hopes for the future that you can grow this.
That's not an equal partnership and I think that that's one of those things where pay attention to, if you're choosing a partner, that your partner should be equal to you be bringing equal, because I think you're.
You're just using the scenario between the money versus the sweat equity, versus, like there's them, like whatever the equal is is you've got equal skin in the game, you got equal talents that you're going to bring this thing forward and you've got equal, you know, brand repute. Like one plus one equals not two. But and you're not going to bring that. Because in my experience of partnering, I don't always choose the equals. I choose people who, like I'll help you get these ideas to the finish line, and then it's like but no, I don't, I don't want to do that, or I feel like I'm worth more and and that's part of the discernment process, so just one quick I just want to that one quick question around how to discern that. And then I got some other questions for you. But like how, what are like three things that you should be looking for to ensure that you have an equal partner, not just a partner that you're choosing because it's like, well, it's hard to grow it alone, so I might as well partner with somebody.
0:37:31 - Nicole McNeilly
I mean, I would ask for their financials of their business. I think that says a lot about a person. Are they organized? Do they know what their profit is? Right. So I think saying, oh you know, would you mind sending over your business? You know, if they're established and they have their own thing, what do your financials look like? Because you want to vet them before you partner with them, right? So I think that's one.
And if they're reluctant to be honest about the money, I think that could be a red flag, right? I think transparency with like contacts to like a lot of people are like oh well, these are my people and I don't want to share my you know, whatever. And so I think, being open about your finances, I think being open about your quote, unquote, roll a dex or whatever that looks like right. Being able to oh oh, I'm open, my network is your network, you know. And so you kind of feel that out like, oh, so like would we share, like who you know and who you work with, I think, someone who's open to that and not like, oh well, no, that'll have to be me talking to that person, right? So I think that's another red flag and I would suggest knowing the person.
I think the longer you know someone you get to know good things, bad things, idiosyncrasies, like all of that. And I think you know, maybe waiting and like collaborating a little bit with them, seeing how you work business wise, because people in friendships and personal relationships, little different than like people, can be very different in business. So I think having a relationship at least a year and really trying to work with them and maybe collaborate a little bit, first test the water, see how they are business wise and you know, sometimes you think it's a good fit and sometimes it's not, and it's always fixable. But those are kind of the three things you might want to test the waters before, like actually creating a business, like together.
0:39:21 - Betsy Jordyn
That sounds like really great advice, you know, and also just making sure that they truly have complementary skills. Like really being clear as a business owner. Like I know I'm not the best at finance and I'm hiring you, but that doesn't mean I have to make you my business partner, you know.
0:39:37 - Nicole McNeilly
Like I can just pay you. You know why do.
0:39:41 -Betsy Jordyn
I even need a business partner. I could just pay you and I think it's like really owning, like where our deficiency are just deficiencies are, and also being willing to invest in our business. Which is the next set of questions that I have is, like because a lot of new business owners, even seasoned business owners, because we're so afraid of investing in our business, like we run our business so tight, we never invest. You know, like I invested in you. So there's a reason why and I hope you know, like the expectation is that I'm going to get a return on my investment, that because I could just go to my accountant and just have the books handled once a year, you know, but I'm handed, I have somebody who's like my partner all the time.
So what is the reluctance that people have about investing? What would you say is the decision making filters? Like there's a lot of different investments. I've run by you around, like I want to hire, you know, a VA at certain points in time, or I might want to. You know I might have all of these questions. So what would you say about Making these decisions? How do you know when it's time to invest in your business? How do you make smart decisions about investing in your business.
0:40:48 - Nicole McNeilly
Yeah, I think again goes back to the value of your time and I outsource a lot and I partner with a lot because, again, I don't do my own taxes. I have CPA, just like you, guiding me in my business and quarterly looking at my stuff too, and so you have to think about what do you want to do, because a lot of people are doing their QuickBooks at nights and weekends because they're like oh well, I have to do my accounting on nights and weekends, but I don't have time and all this and it's like a stressor, right.
And I would suggest nights and weekends are not when you want to be doing like number crunching, right, Because you're doing, you're working on your business all day and then, like no one should be doing bookkeeping at 10 o'clock at night, like you know, just as a good principal, right. And so this is where you have to say, okay, what is what am I worth and can? If I am going to spend my eight hours in the day working on my business, then I need to outsource this, because not only is that not my talent or what I prefer to do, but also it's not a good use of my time, because you're not working eight hours, you're working a 10 hour day if you're trying to do your QuickBooks for two hours at night.
So then you're like, oh well, that's really a 10 hour day, and so you know it's not worth my time to like do the QuickBooks, because I mean, our point is we're in it and we're so quick and good and efficient. If it takes you two hours to do your QuickBooks, we could do it in one. If it takes you four, we could probably do it in two. So maybe it's better to pay us two hours, then you don't have to worry about it. And then again you're creating those healthy boundaries and you're creating though this is what my time is worth, and you know what it's not worth my time to to have the stress of trying to do QuickBooks, because that's not what I know and that's that's doesn't come easy to me, and I think accounting and bookkeeping and bill paying and taxes are a huge stressor of most people. I think that's a common thread I see throughout. And so I think you have to say, well, hey, if I got those two hours back a couple nights a week and do the math right, if I got the, so that's 10 hours a month. What I take, what my hourly rate is not do those 10 hours and take that money and pay someone to do it. You know like it can be a simple calculation like that, if there's fear there of like should I or shouldn't I and what is the cost, and someone should be able to say, oh, I can do this in X amount of time. This is the fee. You take the range, can I afford that?
And I like to tell people accounting is a good expense to have because it lowers your, your net amount, that your tax on. So people like I don't really want to pay for accounting, yeah, but that's also reducing your taxable revenue. So if you, let's just say you pay someone $2,500 a year to do your bookkeeping, you're reducing your taxable income by $2,500 because that's a direct expense. So as long as you haven't have cash in the bank to pay that bookkeeper or to pay that VA or to outsource your invoicing to someone else, whatever that task is, you know it's if you have cash in the bank to do it, it's just a good business expense because then you're paying less tax on on your revenue. So I hope that makes sense. But I mean that's kind of how you kind of have to back into looking at it.
0:44:11 - Betsy Jordyn
So, like I'm hearing a couple of things and one's a big aha for me that I just had, as you were talking, is some of it is is it might turn out to be a wash Like, if you invest in it, it's going to come out on your taxes. You're going to reduce your whole thing, your taxes are going to be lower.
So there's a wash element that we are not thinking about. But the bigger principle that I never really thought about it until you just made this connection is because you're connecting money and time. And so every hour that I spend on tasks that I could outsource at a lower rate or get done faster is every hour I could spend on higher value things I can. I can have more time to serve more clients, or I could have more time which will bring in revenue. I could have more time to create the new product or service which will bring in more revenue, like my job as the business owner.
I don't know if I'm thinking about this differently. Is my job as the business owner is I bring in the revenue? I should be really only doing things that only I should do and everything else ultimately could go, because that's just going to buy me time to grow my business. So that's the scale strategy. That is how we scale. We have to really build our infrastructure of our team. It doesn't have to be a full time team, it just could be like it could be a 10 hour a week.
0:45:29 - Nicole McNeilly
Va that just does your invoicing is guess what? For you and I to do our own invoicing. That's probably not the best use of our time. You could be in a meeting with a new client that wants to be onboarded, or you know. And that's where, when I went from a one woman show to a two woman show, the first person I hired was an assistant.
It wasn't another bookkeeper, because I knew how to do the bookkeeping but I couldn't keep up with my invoicing. I'm so worried about doing the work. And then I'm like, oh well, I didn't build that person for the work I did and it was hard to like keep the work going and then stop and then invoice. And so the first person I hired was someone to you need to do my invoicing, you need to run payments, like you need to make sure money is continually coming through the door while I crank out work. And then at some point I hit a number of clients where I'm like, okay, now I need another bookkeeper. And you know, now I have a team of five and like I haven't done invoicing in years. I mean I will like if she's out, but like I don't do that because that's just not, that's not a good use of, like my time. So it's the same thing Outsourcing assistant, outsourcing contractors to do, you know, you know work that they could prep it so that you can put your finishing touches on it, like that's a good use.
0:46:47 - Betsy Jordyn
Bookkeepers, branding and marketing and websites yes, marketing people, it people like I.
0:46:55 - Nicole McNeilly
Yeah, I am in the market for a marketing person, but I have an IT guy. He does all my stuff, you know, and I don't. I don't know technology, I don't have the time to Google all the things when things are wrong. So I mean I have my tea, I have all the people on all the teams, right. And then I do have people that I consult like, hey, what do you think about this and that? And you throw ideas off of and, like you said, none of those people are my partners, but I do. I, you know they're a part of my team as a business for sure, and kind of, you know, collaborating with people and you know. But I pay my IT guy, you know, like I mean he fixes all our problems and all that kind of stuff. Same thing with marketing, bookkeeping, anybody you know. So yeah, I think, I think you nailed it with that Like it's, sometimes it's a wash, and again, you just have to be comfortable with the price point, and a lot of startups are not comfortable with my price point, and so I will say, well, would you like me to train you on how to use your QuickBooks? Oh, yeah, nicole, that would be fantastic. And some of them manage their own books and every few months they go hey, could you teach me how to do embossing, could you teach me how to do this? And then they keep coming back and I teach them just that one specific thing that they wanna learn. And so with us it's not an all or nothing situation.
Some people do their own. I train them on their exact business, like oh, you don't have to worry about that, you just focus on doing XYZ. Some people say, oh, I did it, but I don't know if I did it right. Could you review my work? So some people have me and I review their own bookkeeping and go oh, we got a little sideways here, and then I fix it, and then that makes them feel better, right. And then some people, we take on everything and everything that they have and we do all of it. So you can find someone to do any level of that work at any point in time either train you to do it, help you do it, partner with you you do have, they do have or outsource it completely. So it doesn't have to be an all or nothing. And as your business grows, you might have to say oh, I wanted to have that.
I want them to take on more because I don't want to do it anymore. So it doesn't have to be just like a bookkeeper no bookkeeper, you could have something in between too.
0:49:13 - Betsy Jordyn
So it seems like is that the scale strategy is like hire people and partner with people that are not replicants of you.
So a lot of consultants and coaches might say I want to partner with another consultant because we can have double the clients. But the real scale opportunity is you still serve the clients, but you get your other people, get your marketing team in place, get your IT team in place, get your finance your operations. You know whoever else could be around you. You know social media marketing, your visual branding, graphic design all of that kind of stuff. That's not core to what you do as a consultant or coach. They're the better use of your money and your time than trying to partner with somebody who's just like you, and that's how you would scale and then pay attention to like you can invest in them. It takes money off of your overall revenues for tax purposes, and so could you wind up being a wash, but even more importantly, it could free up your time to do the things that only you can do, which will grow your business to the next level.
0:50:15 - Nicole McNeilly
Absolutely, absolutely Awesome.
0:50:18 - Betsy Jordyn
Okay, so we talked a lot about different things around. You know money and how to think about it, paying yourself, owning your worth. You know all kinds of stuff about partnering, outsourcing and all that kind of stuff. What else would you want to tell me about consulting and coaching business owners and their finances? And I'm just not asking the right questions.
0:50:40 - Nicole McNeilly
You know, I think kind of along with building your team is we don't know what, we don't know, right, and it's so hard to know things that you we're like I don't know what, I don't know, right, and a lot of people use this phrase, I don't know what I don't know, and it's totally true, cause you're kind of like well, am I missing out on something that I just don't know about? But like who do I go? Who do I ask? I mean, I think this is a question that, like any business owner in any level, is that like you have to surround yourself with a team where, hopefully, people are asking questions?
and it's more about question, asking of like well, what else could I be doing? Or like, is there a more efficient way to do this? Or what are our options here? Like, asking those questions, I think makes also people feel like you know, a lot of people have this anxiety of like, well, you know, maybe I'm doing things right, maybe I'm not, like I just don't know. And I think this is where, if you have that team, you need to talk to people regularly and you need to say am I missing anything? Nicole?
Like I'm looking at your financials, I just think their numbers on a page Tell me what you see. Not enough people ask me just tell me what you see when you look at my financials. And I could say well, hey, you have lots of cash in the bank, you have this, you have that, but do you see this number? You know you're setting a lot on this. One thing is does this help you generate revenue? Because this is your highest expense, and maybe it's contract, or maybe it's travel, maybe it's conference, maybe it is marketing, I don't know. Whatever it is. Does this drive revenue? And if the answer is no, then this number should be smaller.
And then what in all these things drives your revenue Right? And so, like I see different things all the time, all different people, all different companies, and I don't think people ask me enough just like point blank, like, hey, nicole, like any suggestions for me? Or I need to ask more in turn too. Tell me how it's going, what are your stressors? Because I could look at your data and I could suggest like we talked about the first thing a little tweaks. Then maybe that little tweak is actually a big thing, that you're like oh my gosh, why didn't I think about this before? You know, like there's even things that I'm like how did I not think of this? And you just don't? Because you're so wrapped in your business that it needs just even a question that someone poses where I'm like I don't know the answer to that, how do I not know? And then, in the deep dive process, you're like, okay, all right, well, you know what I'm, okay that I'm not stressed about that anymore. That totally makes sense, right? So I think you need to ask questions to your team, your CPA, other business owners join a group where you can bounce ideas for free off of each other. Like, hey, I'm struggling with this, any ideas for me? I mean, I think having you know business ownership can feel isolating sometimes.
So I think, having not only your team that you may have to pay for, but your paid team, right, your CPAs, your lawyers, your whatever but then have that community of other business owners, maybe women business owners, you know whatever community it could be people just like you, but it also could be different businesses. And you're like oh, that also applies to me. Never thought of it that way and I think, having that community to bounce ideas off of. And then you said, well, what are your struggles? And then you go oh well, I didn't think about that, but you know what, now that you mentioned it? And then that's where, like the things that you just don't know, what you don't know, then you feel more comfortable about the unknown things because you have these people that you know, you shared experience, and then you have professionals who can actually kind of help you, ease, you know, in whatever, whether you're startup, you're trying to grow or maybe you're just trying to maintain, you know.
And then CPAs can be like well, have you dentists up? Have you done this? Like, if you have a good CPA, they should say like do you have a retirement plan? That's a business deduction, and a very good one, right? If someone's not suggesting, you know, some kind of retirement plan to business owners, you know, once they have a good cash flow, you're not with the right CPA, right? So again, people, you just should talk to people more than you probably think, because then people are like, oh, I don't want to bother my CPA, yeah, bother them. Like because you don't know what you don't know. So like say, hey, what else could I be doing? Like, look at myself, and so you know, I think asking questions is probably the best thing I can tell people, and you know to try to talk to as many different people as you can.
0:55:36 - Betsy Jordyn
That's fantastic and it's almost like we're going back full circle is get your data in place and get your metrics in place that you have something to even look at, and then ask the questions. And ask the question of like, well, what am I missing? And then I heard another thing in what you're saying too is you know, hold your people that you're hiring to the fire, like, hold their feet to the fire to make sure that they're the right people, cause I've never had an accountant say are you investing? So that's interesting news for me, and I had accounts for 15 years. Where can people find out about you? And do you support business owners only in the Denver area, or are you able to support people outside of the Denver area?
0:56:14 - Nicole McNeilly
Yeah, we have clients all over the United States and even some in other countries, so we can serve anyone anywhere on any time zone. We have one client in Australia so we talk at very late at night, early his morning, so anywhere, I mean, we can be 100% remote. We're 100% online so we can be reached. You know, I would say 60% of our clientele are Colorado based, but we have tons of clients on all the coasts, texas, I mean literally everywhere. So we're not.
You know, the CPAs and some of the financial planners we work with you know do specialize in Colorado, like state law, and I would suggest everybody have a good CPA in their state to just make sure they're taking advantage of all the knowledge in their state. But bookkeeping is really it's kind of like universal in that sense that we'll take a client anywhere in any time zone with a small little need, like ham Nicole, I'm a startup, I just need a little bit of help to someone who has multi-million dollar businesses or personal lives that they need accounting help with and you know we can help get them organized as well.
0:57:31 - Betsy Jordyn
Can I just do a quick reframe as a client and a branding person, because every time you say bookkeeper, I like something falls off of the back of my neck because you're not positioning yourself for what you actually are. When you're looking for a strategic financial partner, you know like that would be stronger, because that's more of who you are. You're not a bookkeeper, you're a strategic financial partner. That's how you operate. You were a bookkeeper, you evolved into that, because that is what that's the value that you're bringing to the table Strategic financial guidance to make the smart decisions based on the data that's in your books. And you have somebody else. I have another person on your team that I work with who's my bookkeeper, but you're the strategic financial partner. So I just would encourage you to try out all language.
0:58:16 - Nicole McNeilly
Thank you, I appreciate that. I love it. I love it, Betsy. I love it, Betsy.
0:58:21 - Betsy Jordyn
Own your worth, girl Own your worth.
0:58:23 - Nicole McNeilly
I know, right I? Just I need to be like listening to my own words, right I?
0:58:27 - Betsy Jordyn
just talked about owning your own words right. And you did own your words, and your website address is www.
0:58:33 - Nicole McNeilly
AccountingWolfWithAnEcom.
0:58:38 - Betsy Jordyn
Awesome. I am so grateful for you to be on the show. You had so many great insights and you know I'm gonna be asking you like oh, nicole, what do you see in this? You know, in the future and for everyone listening, thank you so much for joining in on this money management conversation. Money may not be our favorite topic of something that we like to do with our clients, but it's definitely something that we like to experience, which is like really good cash flow and revenue and all that kind of stuff.
So thank you, nicole, thank you for everyone who's listening, and I do have a freebie for those who are listening and to check out the show notes I have an opt-in on how to calculate the startup costs for a brand new enterprise, like what it takes to start your own consultant coaching business, what it takes to operate it on the regular. I'm gonna have Nicole look at my spreadsheet. So I don't have the opt-in that I'm saying here, but I will have it by the time this is launched, because I want Nicole to get her expert eyes on it to make sure it's amazing for you. And so that's it for today. Thank you all and until next time. Thanks for listening. Thank you for tuning in. If today's episode lit a fire on you, please rate and review enough already on Apple Podcast or subscribe wherever you listen. And if you're looking for your next step, visit me on my website at betsyjordancom and it's Betsy Jordan with a Y and you'll learn all about our end-to-end services that are custom designed to accelerate your success. Don't wait start today.
