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Parker Stevenson on Business Unveiled

How to Build a Profitable Online Business

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How to Build a Profitable Online Business

PARKER STEVENSON ON BUSINESS UNVEILED 

How to Build a Profitable Online Business

Building a profitable online business can be challenging. But remember if it were easy everyone would do it. There are so many different and competing ideas and methods that it's difficult to know where to focus your time and energy. 

There are some key tips to making sure your online business is not only successful, but also financially sound. I’m so excited to share this week’s guest, Parker Steven, Partner and Chief Business Officer of Evolved finance. He will be sharing his top tips to building a more profitable and financially stable online business. 

MAIN TOPICS
  • How can an online business owner make their finances easier and less stressful?
  • What are the most important expenses an online business owner needs to be monitoring?
  • How much should an online entrepreneur be paying themselves?
KEY TAKEAWAYS

Keep your business and personal finances separate

Making sure you're getting a monthly salary each month is so crucial

You need a better bookkeeping system

MORE ABOUT OUR GUEST

Parker is a managing partner and the Chief Business Officer at Evolved Finance; a bookkeeping firm that specializes in helping online entrepreneurs to build more profitable and financially stable online businesses. For over 6 years, Parker has been advising some of the top coaches, course creators, influencers, and thought leaders on how to make more sound business decisions using their financial data. Before joining Evolved Finance, Parker spent five years at adidas America where he became the US product manager for golf footwear.

EPISODE TRANSCRIBED

Hi, y'all. It's Angela. I'm back for another episode of business unveiled. And today, we are going to have some fun. Now I know that you guys think that finance is not that fun. But when you actually know that your business is making money and your business is actually profitable, it actually becomes fun to understand the numbers because I'm a walking poster child for not understanding my numbers for 10 years. And then finding, well, actually, someone gave me a name of a coach. And they're like, you really need to like call this guy and it completely changed my life to understate it. So I'm excited for you guys to hear from. He's a fun, finance expert, but like he's a fun finance expert. Parker, welcome to the show.

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Thank you so much, Angela. I appreciate that. If you can combine fun and finance into one sentence, we're off to a good start.
Right? It's like all the F words like the positive f words. But we were chatting even before we started recording, y'all. And I got to know a little bit of your background. And so I want you to like share with people what you thought you were going to be doing because you're actually creative at heart. But then when you understood the finances and understood how impactful you could be with helping other creatives. That's when you really found your jam, but I would love for you to share with everyone. How did you get to where you are today?
Yeah, no. Yeah. So I know again, my name is Parker Stevenson. And so this to give everyone some context, I'm a co owner and the Chief Business Officer for a bookkeeping firm called evolved finance. And so for me, when I was in college, I got my degree in business at a liberal arts college in Los Angeles. And while I was in college, I was a musician. I've been playing music since I was 10 years old, I got the business degree because I knew all right, let's just, it'd be good information to have, it's a good backup plan. But I thought I was going to be a musician, I have family in the music industry. So I knew it was possible to make a living from music. But you know, living in LA, I got to play a bunch of cool shows, you know, open for some amazing bands played in front of 1000s of people. And so when I was in college, and even after I graduated, you know, I thought I was going to be a rock star, like that was what I was going to do. But I, you know, cuz that's a totally normal thing to expect. But ultimately, once I got into like my mid 20s, it being in a band is like being married to three or four other grown ass men at the same time. It's all you know, it was a grind, I will say that, and I loved my time as a musician, but it just didn't work out, you know, the odds aren't in your favor in that degree. And again, have these awesome experiences that definitely shaped who I am today and gave me skill sets that I think have been really helpful for the business world. But eventually, I was like, Alright, I kind of want to get an adult job like a grown adult job. I don't want to be working full time and then working at night as a musician, and just like juggling two things at once. So it's actually not a surprise. I'm a Virgo. And so I didn't realize this, and I'm not even that big into astrology, but it was kind of like, Okay, this might make sense. I need more organization and structure. So I went to the second thing I loved which was golf, and I was like, how do I get into the golf industry. So I moved back down to San Diego where I'm from, I ended up getting a job at TaylorMade. Adidas golf, the biggest golf manufacturer in the world. I worked for more on the data side, ended up being the US product manager for footwear with selling $50 million a year and footwear for golf, and had an amazing experience there. But also realize, okay, I kind of want to be a little more in control. Like I want to, you know, I had that entrepreneurial spirit. I have a lot of family members who are entrepreneurs as well as just kind of in my family that I then eventually partnered up with my now business partner, Cory, Cory Whittaker and his wife are best friends with my wife. They grew up together. Cory started telling me about this little bookkeeping firm, or company him and his wife were running. And I was like, I think I can help you guys grow this and I think it would be fun to learn something different. And sure enough, I jumped in seems crazy looking back at it now. But Six years later, we've like quadrupled the business. I love teaching people about finance, I now know how to do bookkeeping, which is not something I ever would have thought I'd known how to do. But I've just loved the journey of building the business, we now have a team, there's like 15 of us, total. So the company's grown a lot. So really enjoyed the ride. But again, definitely quite different from where I thought I'd be when I was 21 years old. So
it's like, we don't really know what the hell we're gonna do. I think it's funny. It's like, go to college, and what do you want to be when you grow up? And it's like, you people, usually, it's like, you just pick something because we're kind of like, forced into it. And yeah, I don't I don't agree with with the way that society like does that. I mean, it's great for learning opportunities and business opportunities, and it helps you figure out what you don't want to do. But the golfing industry, I didn't realize that that much money goes into like footwear. And I know how much people play golf. I don't play golf, but I was the beer cart girl at the golf course. College and I make damn good money. I'm sure you. It was so much fun. I did learn to swing like on a simulator thing. It was kind of like a 3d thing, but like actually going out to real grass to like swing. The club never really happened for me. But I'm really good on like the 3d games. Anyway, total sidetrack. But so you brought something to the table to this company that probably your business partner doesn't like, are you guys completely different when it comes to where you really thrive and where your business partner thrives?
Well, I think in a lot of ways we do we have very complementary skill sets. But we have the same doubt like what's made our partnership work is we have the same values, we share the same vision, there's trust within each other to know where our strengths and weaknesses are and letting each of us lean into those strengths. But for me, especially like what's crazy about of all finance is Corey started this business him and his wife when he was like 1819 years old, he's never done anything other than evolve finance. So he got so good at serving the customers building this this model that worked for you know, a small team him his wife, and are now bookkeeping manager, Susan. And so he understood the processes for bookkeeping, he understood the online space, he really understood the niche we were working in. But for me being a musician and having to learn how to promote a network and market and then being in the idea side, and starting from customer service and working my way up to being you know, a US Product Manager and getting a lot of really amazing experiences in a corporate environment around really high performers, like people like I worked with amazing sales people, amazing marketing people, amazing operations, people that I just had maybe a more broader sense of business, that I was able to kind of take that vision, and especially I'd say, my creative background, to look at what they were doing and see a bigger vision for it, get Cory and I aligned on that vision, and then start taking some actions and taking some like leaps of faith into growing this business in a way that, you know, maybe Cory wouldn't have thought of, but we always talk about how like, if you remove one of us from this business, the business is going to be hurting because of it. But when you combine our sort of superpowers together, we have a really great service. And we're getting really good at reaching more people with our service, which is a little more of where I come in.
And that is the case that I wanted to get out. Because I know that some people that listen, they'll reach out and say, do you have a business partner? Is it a good idea to have a business partner? And I'm like, I've heard great things. And I've heard not so great things. I mean, my family, the people on family that were entrepreneurs, one of my uncle's he would say, don't ever have a business partner. Don't do this, don't do that. And I'm like, Well, I started that way. But then when you learn that you're really good. And like you said, your superpower is a certain thing. And then there's this blind spot, there's this missing, it's like a void a hole. And when you fill it, businesses can actually thrive together, but and you set it perfectly. Like you've got to have the vision, the same vision and the trust, and then help each other get there. So businesses with partners do work. It's just a matter of having those foundational values of exactly what you were saying. So that is awesome. So you guys have an online business and anybody here probably listening, they probably do some form of online business, especially post pandemic, if you weren't doing business online. You share a shit learn real fast, like how to do some business online. So for people that are doing business As online, like, what are some things that they can do to get their finances in order? I mean, for me, like, like I was telling you earlier, before we started recording, if I didn't have my bookkeeper and like accountant, I would probably be bankrupt. Like would be not probably would be because they it I don't like the numbers like it's not very fun. But I do enjoy the first of every month like when I get my two reports like what our online sales have done and what our profit clients have done. And like if we're trying to pivot and go more online sales versus a ton of profit clients, because it takes up so much of my time, then I need to know those numbers, I need to understand where to say no. And where I should be saying yes. And the numbers don't lie in the data doesn't lie. And so that's been the number one key for me and growth, like as a business to know where are the numbers coming from, because we're not all keeping up with it in our head unless, like possible, you are a finance person. But then again, it's like, it is impossible, because there's so much money going out. And then there's money coming in. And so what are some things that people can do just to y'all, it doesn't have to be stressful, it really doesn't like what are some things I can do?
Well, I just want to just to speak to one of your points there Angela is is I people actually like finance, I really believe it. What people don't like is organizing their numbers. The hard part is taking all this financial data, organizing it in a way that then it makes sense, right? It's the bookkeeping, and no one wants to be the the bookkeeper for their own business. It's just not one of the activities as a business owner, that's going to drive value for your business like you, as the business owner are going to know how to grow this business, find more sales, find more customers, market your business better, like those are the things that are probably your superpowers versus sitting there and sifting through your credit card statements, bank statements, and all this PayPal and stripe. That's the part No one likes to do. But what our clients realize is they go oh, What I don't like is bookkeeping. What I love is seeing how much money I'm making. And like you said, the numbers don't lie, like using this feedback the scorecard so to speak, which is your financial report, to then make better decisions. So your business can make even more money. And if you're not in business to make money, I don't really know what you're doing. Obviously, we want to help our customers and provide value. But the whole reason we want to start businesses is because we want to make more money than we would be able to make working for someone else, your finances and understanding the financial data in your business. That's fun. I love again, that's coming from a musician, when I learned how to do that I was like, Oh, I could start or run any business now. Like I it makes sense. Like it all it all kind of all the activities and the actions that you're doing in your business on a daily basis. Now we're kind of like tangible, right, it's on this this report where I can see cool, all the work all the effort, all the operations that we're doing in this business, here's how much income it's bringing in. Here's the thing, the places we're spending money on, here's what we have leftover, like who doesn't want to see profit in their business, right. Um, but I think some of the places that business owners complicate this is just not knowing how to kind of create this basic fine net, like foundation for your business. And so the number one thing is, let's get your business and personal finances separated, we've had decently sized businesses come to us where the business owner still kind of has everything combined. And that's makes tracking what's in your business super complicated and stressful. So like, let's get your groceries out of the business account, and your shopping. One of the things that I guess if I'm going to give some tough love here is that everyone loves the idea of being an entrepreneur. But we don't always understand the responsibility that comes with that. And so one of the extra responsibilities you have as a business owner is that you now have to manage a household budget, which everyone does. If you're an employee, you have to manage a household budget. But now you have to manage the finances for a business as well doesn't mean you need to be doing the taxes or the bookkeeping yourself. But you have to now be monitoring the financial health of a business as well. So if those two things are combined together, everything becomes murky and cloudy and you don't know it's harder to make decisions from the financial data in your business. So we want to keep that those two things separate. So have dedicated bank account credit card merchant accounts for your business. The next thing I would say is we want to have an accountant involved in your business. The biggest mistakes we see business owners make is they trust the wrong person to file their taxes because they had and Jenny do it because like, oh, I've used QuickBooks before I'll do this for and I'll just submit taxes and they're like they have no idea what they're doing or they let their business partner do it because like, Oh, I don't want to spend money on accountants. Our business is simple. Let me just do it. And then these these decisions, come back and bite them in the ass down the road. Yep. Because the person Didn't understand all the intricacies of filing taxes for a business, you know, we can maybe if you're just getting it, if you're just an employee sharp, maybe you can use, you know, TurboTax to file your taxes. But once you start running a business, even if you're not making that much, just getting an accountant involved, I plan to spend 500 to $2,000 a year on someone filing your taxes for you, at a minimum, just assume that's going to be a sunk cost. And if you do those two things, right off the bat, I mean, obviously, there's more things we can do. But like, even if your business is just getting started, if you do those two things, you're gonna make filing your taxes easier, you're gonna make it easier for you to keep track of what's going on in your business. And you're not going to worry about are you doing something wrong at the end of the year with your taxes, that's going to come back and end up being a big tax bill or something that catches you by surprise. And now all of a sudden, you're like, my business isn't very fun, because I have this huge bill, I have to pay the IRS that I was ready for. So those are like two of the main things I would say, everyone like if that's in a sore spot for you dive into that, open the business accounts, go start interviewing an accountant and get those pieces in order. Because again, that's part of that extra responsibility we have as business owners.
And I love the way that that you explained it. But I'm sitting here shaking my head, we actually we have a client that is we're building an online course for him. He is that kind of like a DIY CFO, like trying to teach people actually how to get their businesses ready to sell. So you know, way down the road. But one story that he tells is about a lady that her husband passed away. So she acquired, you know, this huge business that was doing about 3 million in revenue. And she didn't really understand but she jumped in, she got her, her hands and our feet and our knees dirty, as we would say as entrepreneurs. And he asked her about like her day to day tasks. And a lot of them she was like, well, payroll and keeping up with this. And it all had to do around everything was around finances. And he's like, well, how much is your time worth? And she just kind of looked at him? And she said, he said, How much do you pay yourself? And she said, I guess around $30 an hour? And he's like, but your strong suit is building relationship? relationships, right? Like with new clients? And how much is that worth an hour? And she did know that she's like, well, when a salesperson brings in a new person, I would say it's worth about $750 an hour. And he's like doing math. And he's like, okay, so we free your time up and paid someone like you just said $2,000 a year, and you can make one sale per hour that would bring the company $750 in revenue, don't you think that you could outsource and pay between 30 and $50 an hour, like for someone to do the bookkeeping and accounting, and then it's like a light bulb went off. And she was like, I never thought of it that way. And so most of us are not conditioned to think about how much is our time worth? And how can we work smarter, not harder. And it's just like having groceries delivered or getting a blowout and my mother's like you are so spoiled. And I'm like no mom, it's about time, why Uber to a meeting, when I have a car in my garage, if there's traffic, I can sit on my computer and get something done or get a proposal out, versus sitting in my car in traffic and not getting anything done, where I can actually be bringing revenue into the business. So why would I not do that? But what I've realized is sometimes like you can't have those conversations with people don't who don't own businesses, like they just think that people are spoiled. And it's like, No, your time is worth something. And that's what you have to look at is working smarter, not harder. So my next question is like, what are the most important things that business owners need to be monitoring in their business? Like if they're running an online business?
Yeah, I mean for our clients, if we really get down to the nitty gritty, because obviously, there's like monthly software expenses, or maybe you're doing continuing education and you have a business coach, and you have utilities and supplies and you know all these pieces like sure there's a lot of different things you can spend money on in your business, but for online businesses, and let me just kind of define this. The online businesses we work with are a lot of coaches, course creators, people with membership sites, people with coaching programs and service providers, influencers, you know, these types of businesses. For them, it's two things, advertising and labor. There's, it's I can't even really think of a business where the profitability was so was so broken or the business was so broken Because of something that wasn't either the way they were marketing the business, or how they built their team up and how much their team cost them to run the business, outside of that, it's pretty simple. Now, if you're like, in e commerce, we don't specialize in e commerce businesses. But if you have inventory based businesses, or a brick and mortar business, then yes, you're gonna have some different expenses. But the beauty of online businesses are that we don't have a lot of overhead, we don't have to have a big facility, we don't have to buy a bunch of inventory. Our whole team works from home, we have a 15 person team, and we're all working remotely. So we're saving on Office expenses and things like that, we don't have to worry about our rent going up. So for online businesses, what is the cost to acquire new customers, whether you're doing a volume game, where you're trying to sell a $40 mini course, and you have to sell a ton of them every month in order to, you know, build a six or seven figure business or you have like a high end coaching offer, where you're charging your customers 10 to 15,000, all the way up to $30,000 for a year long program, whatever that may look like there's a cost to acquire that customer, whether it's through ads, whether it's through affiliates, whether it's just through time of like developing relationships, and networking, or investing in your SEO, whatever those things are, we need to understand what are the costs of acquiring customers and advertising, Facebook ads, and Google ads are just probably the most popular way of doing that for online businesses right now. And they but they also scale a lot of our clients, businesses faster than almost anything else that they can do. And then the second piece is obviously the team because eventually you're not going to be able to do all the things and one thing that Angela, when you're telling that story about that woman who inherited that $3 million, your business, not everyone just lands in a business like this and lands in a $3 million, your business our businesses grow over time. And so what happens is eventually you get you kind of wake up and go, Oh, crap, like, there's too much to do. Why am I trying to do all of it that we've had conversations with our clients are like, but I don't want a big team, I don't want to Well, it's like, then you don't want your business to grow, you're going to need other people involved in your business, if you want to be able to scale. So what happens is, a lot of the times our clients, their businesses can grow really fast online. And so they have to play some catch up, and are like, Oh, damn, I need some people because I can't do everything. And they might over hire too fast. Because they're not thinking about, well, what are our operations? What are our systems in place? How do we make sure that works, getting done efficiently, that that's where making sure they're paying attention to their labor costs, will allow them to get that feedback that they need to be like, oh, okay, we got to cut back on some contractors or some of these other things and start thinking about how are we getting the work done? because initially, you're just thinking about how do I make money, where's the revenue coming from, but once you start to get more consistent at generating revenue on a monthly basis, then it starts to become more important that we have the right team members in the right place at the right salaries in order for this business to be able to grow while also stay profitable. So if you're, you know, trying to figure out what's going on my business, why aren't I profitable, and you're an online business, I can almost guarantee you, it's going to be one of those two things. And if it's not one of those two things, then it's probably because your business is small, and you need to make more money, you just need to learn how to drive more revenue. So just over and over again, we see this all the time. It's just a consistent pattern. So I'm not telling everyone this because I read it in a book, like literally looking at 1000s of profit and loss statements like these are the key things to be paying attention to as your business grows.
Well, and also to like something that you brought up is really important. I'm all about like, sharing stories. But I was at a conference a couple years ago, and a guy was standing up on stage saying how he did one webinar, and he made seven figures. And, you know, all this glory and makes it sound so easy. And so I raised my hand and I'm like, Can you just share how many webinars you've done? And what exactly was your overhead? So are you doing this by yourself? You're talking about this big launch? And yes, your revenue was seven figures, but everyone that's listening who's never done a webinar, who is trying to understand affiliate marketing and, and trying to run ads and trying to do these things. I think it's really important for them to understand that this shit doesn't happen overnight. And he's like, yeah, you're right. I've probably done 3040 however many and I'm like, okay, and what's your overhead? Because I know in my head, and I mean, I'm just thinking, to having a conversation with myself. I'm like, every time I do a webinar, it cost us at least around 50 to $60,000 to run It all do it all. And that's maybe doing three or four a year, plus adspend plus new, there's so many things to do it right. And so it's like, what's the the real? What was the real profit? Like, what was your net? Did he share that with you? Oh, he just kind of looked at me like, you stupid blind. Why are you?
And I have so much respect for the fact you asked that on stage, because there's so especially in this industry, there's so much desire to want to talk about, look how much money I can make, but it's like, are you making it smart? Like, are you being smart about how you're making it? Or did you return? Yeah, yeah.
I'm just Well, I, I'm pretty sure he wanted to punch me. But that's okay. But he was just this podcast,
I want to know who it is. You have to fill me in on the details after this. Because I am so curious.
I'm just like this is so it's almost like standing up there. And selling a lie in the story is not a lie. And it is a true story. But give a little context and a backstory to, like this stuff doesn't happen overnight. Like you have to tweak and test and a B split test and people who are not selling online courses or who who are not influencers. It just you don't know what you don't know. And again, because this is such a gray area, that and it's such it's kind of like a new service, I would say is still kind of new, even though influence has been around for a couple years. But it's so different back from when I was growing up. And they were paying celebrities and models and actors and like people who are trained in the movies to do these brand deals. And now you have these everyday people hopping on tik tok, and like getting the brand deals, which makes it seems obtainable. Anybody can do it. Yes, anybody can do it. But it takes effort. And it takes some strategy. And it takes one thing of focus and dedication and consistency. And if you're not that, it's never going to work, you're never going to make 678 plus figures, not even in a year, much less a month or a quarter. If you don't understand your numbers, you don't understand the big picture. So that's why I was just challenging him. Because again, I know we we have spent overspent doing our first few webinars, we lost a ton of money. But I needed to know that. So next time, I could be smarter and know like, okay, we shouldn't spend as much ads here. Do more affiliates use our relationships that we already have with people so that we can help their audience because they already like and trust that other person. So that's when we learned how to get into affiliate marketing. I really studied it. And again, it's all about we're building relationships, just that what we're doing right now like podcasting, which is a tool to build relationships. So it's just like, when people oh my gosh, some people they're like, oh, my god, they're just an influencer. They take pictures of themselves all day and Baba, and I'm like, have you done it? Are you making money doing that? Because that's, that's a full time business for people and they don't realize how much work it is. And then I'm getting really heated, like taking up for them?
Well, Angela, one thing I think I want is I want to simplify this story even more. So this guy who's up on stage and saying, let's say he said I have a million dollar a year business. For most of us like having that seven figure business is the dream, right? Like to be able to say you do a million dollars or more a year just feels like this big, this big accomplishment. And it is like to be able to sell a million dollars at anything is a really big deal. That's not easy to do. But if I told you I had to spend $900,000 on Facebook ads, in order to make a million dollars in revenue, you'd go Okay, that million dollars is still cool. But the fact you had to spend $900,000 to get there isn't very cool. So that's where as business owners, we have to be thinking more strategically than just like, how do I sell and how do I market of course, those things are hugely important and everyone listening, we have to be able to find that audience and consistently generate revenue throughout the year. But there gets to be a point we're just making money isn't enough. Like just the ability to drive more revenue isn't enough. We have to be more strategic around how we're spending money on ads, how we're building our team, how we're building our systems. And I don't mean to do this to scare anybody off here about entrepreneurship because it happens gradually. It's your business. You see the growth, you start to put these systems in place. But this is the part of running a business that I don't think every entrepreneur signed up for. We've seen some of our clients who businesses, their businesses grow very Quickly, and they're forced to have to learn more about this stuff quicker. But this is why it's so important to understand just the basic financial concepts around running a business, how much money do you bring in? How much money is going out? Where's that money going out to? What are the main areas of your business that you're spending money on? And then how much do we have left over, because at the end of the day, I'm like you and I don't give a crap about how much money your business brings top line, a smart business owner, a savvy business owner and accomplished business owner is making sure there's money left over at the you know, in your profit, because that shows you know how to run a business, you're not just a sales and marketing person, you're actually the CEO of your company, understanding how to make sure that the financials are actually really healthy,
which is so important. So and if you don't want to do it, and you're running a creative business, like my God, outsource it, and put someone in place who can understand it, and explain it to you. And so the other big, I guess, it's kind of like a myth that I would love to know your thoughts on. So as far as like, and again, these are like new clients coming in, and they're like, well, I want to be like this person, because they have 5.3 million, blah, blah, blah, and I need all those people to sell my course or my thing or my widget. And I'm like, mindset reframe. I'm like, it's about the quality. If you go and ask some of these people, unless you're Kim Kardashian, maybe I don't know. Like, you, okay, you're looking at the numbers of how many followers you have. And you look at the engagement rate, meaning how many people were actually engaged, that's all great. But if they're not buying from you, and they're not paying to be part of something, what it what is that to you, it's nothing like it has to convert into some type of dollars or brand deals or something. And I guarantee you, the smart companies that are doing brand deals are looking at your engagement. And they are going to want to know, case studies of what's the ROI with other deals and other sponsors. And we we went through that with my first podcast, and people wanted to know, what are the numbers? What are the reach? And I'm like, well, let's back up. It's not always about the numbers. I understand that can be important. But let's look at the engagement. And how many people are actually engaging? How many people are on our email list who actually opened it, click on it, listen to it, comment on things get back to us on things. Like that's the real question here is what is the engagement rate? So when you have people that come to you, that have these huge followings and these huge numbers? Are they all really making money?
So the ones that work with us do? Yeah, as I'm sure you're aware, Angela, there's a lot of big personalities and a lot of big business coaches in this industry. And we're fortunate to work with a good amount of them, we've met a lot of them talked with them, and a number of them, our clients, the ones that work with us tend to because again, a part of our bookkeeping services, we want our clients to feel empowered to understand the numbers, you know, we're not, we're not just gonna give you a report and go Good luck. We want you know, in our onboarding process, we have weekly group calls, we want to provide the support that our clients need, in order to understand this part of the business. And the thing is you don't need like a lot of I think business owners go I need like a CFO, and it's like, No, you don't need a CFO, you need proper financial reporting, you need a good tax person. And you need to maybe have someone on your team who's maybe helping you update a budget and a forecast. And if you can do those things, you can grow your business, to almost whatever height you want to bring it to. But ultimately, we want our clients to be able to look at the numbers and go, this is really easy. Here's what my profit is, if my profits, not where I want to be, then I look up at my expenses and go Where Where are the expenses that are eating into my profit the most is that simple. Once our clients come in and do that, they go, Okay, I need to change my business model, I need to change up my strategy, I need to make sure that my offer make sense that I'm pricing my offer properly. So obviously, there's things that there that can work. But if our clients are open to our suggestions, this answers are usually pretty simple. And they fix it. And the businesses that don't end up working with us, especially some of the bigger names out there, I know for a fact are struggling and it's a bit of a shit show behind their businesses because they want someone to have easy answers and they want to just have someone else take care of it. But as the CEOs of our own businesses, we can't just expect to take no responsibility for the parts of our businesses that we don't like, like, you still have to talk to your accountant about your taxes, you still have to get them some documents, right, you still have to work with your operations person to make sure that the technology in place for your webinars working, we still have to have this overview and understanding the basics of what's going on in our businesses. So for us, I mean, we've seen window. So just to give everyone some context, we typically want our clients to be at about 30% profitability. That means if you're making a million dollars a year, we would want you to be keeping about 300,000 in profit, that's after even some of your benefits you get as a business owner, maybe writing off some of your payroll, your cell phone, maybe a little bit of rent, whatever it may be. Because of the online, online businesses can be so profitable, we have clients who are making 40 5060, even 70% profitability. Now, it's a smaller handful of people crossing, you know, going beyond the 50% mark, but it's definitely possible. But even our clients were closer that maybe 25 to 35% range, still making very, very good livings off of that profit and making far more money than they ever would.
If they you know, we're just working in their normal day jobs. But they're still like, what I like to say is funny one of my clients that I did a workshop for, for her students, and afterwards, they sent me a coffee mug and put one of my quotes on it, it's my favorite coffee mug, but it says a profitable business. never happens by accident, you can have a, you can have a year where maybe you have a really profitable year, because you had so much revenue come in, and you just couldn't catch up on the expense side to support all that. So you have a really good year, but eventually, it's going to catch up to you for not paying attention to those numbers. And that's what I think our clients who are doing, you know, have profitability in that 3040 50% range. They're taking it seriously. They're thinking about how do all the pieces of my business connect in order to make sure that you know, along the way, making sure my team is supported there, I'm I'm fairly compensated, the people might might students are still getting or my customers are still getting really great experience. But again, I'm getting paid. I'm building my wealth from this business. And this is where I think sometimes as business owners, we want someone to just just give me the percentages, just give me the answers. And let me just copy and paste that into my own business. And sure, there's strategies, we can learn their skill sets we can learn that we can get from other people. But eventually, it's up to us to understand how does my business fundamentally work? How does money move in and out. And again, the bookkeeping is the hard part, the filing the taxes is the hard part. That's what you paid those people to do. But understanding the basic Profit and Loss aspects of your business, how money moves in how money moves on its, or moves out, it's really not that complicated. If you can add and subtract, you can understand this part of your business, you just need to make sure you're getting that data, getting that information, you need to make those decisions. And our clients are proving over and over again, clients who you know, have been creatives, they're they're people of backgrounds like me, they're artists, they're not people who necessarily where like, you know, went to business school and got an MBA and know a lot about finance. They just brought the right people in, they learned learned a new skill set, like looking at a profit and loss statement. And you know, we, we have so many clients who are running really profitable businesses and don't feel stressed out about it, they don't feel worried, like this thing's going to go off the rails, and it's because they have the right people in place to help them.
It's so important, so important. So one more question as we wrap up. Sure, cuz I think a lot of online businesses and entrepreneurs, we all get different answers. But how much should online businesses like if you own a business, if you're the entrepreneur, you're the leader, you're the driver? How much should we be paying ourselves?
So this is the question. I love answering, but usually disappoints people, because again, I think we just go Just give me a percentage Parker, like 20% of my profits. Cool. I'll just do that. But there's two things that we kind of have to take into consideration here, we have to take into consideration how much do you need to make? And also, how much can the business afford? Like how consistent is the business generating revenue for us to pay you what you want to make. So if we look at the first piece, again, talking about that responsibility of needing to have a personal budget and then having our business finances on lockdown, if you're in a situation where you're going full time into your business, and you have to make $5,000 a month after taxes in order to pay your bills because you don't have a spouse that's working or like you have to make that then you're going to take every dollar of profit out of your business to make sure you're making $5,000 hopefully you're making more like Seven, putting two grand away for taxes and then using the five grand to pay yourself. But it's really important we understand what's our monthly not personally, what do I need to live because sometimes, you know, business owners go, Hey, my husband or my wife makes a good, good living, I can maybe take some of these profits in my own business and invest it back in, I don't need to pay myself a high salary right away, fine. But it's important you understand? What's my personal financial situation? How do I make sure I accept and understand what that personal financial situation is. And then I can make a decision around what I think my business should be able to pay me. And then on the flip side, we have to understand what is the monthly profit My business is generating? How consistently is my business generating profit. And that's where again, if maybe you need to make $4,000 a month, and you look at what your business is doing. And you can easily pay yourself four grand a month, cool. If your business is absolutely crushing it, and you're generating $30,000 a month in profit, then it might be time to give yourself a raise of 10 or 12 grand, which would obviously change your personal financial situation quite a bit. But we can't make this decision around how much to pay you without understanding what you need to make personally. And without understanding how much profit is my business actually generating? And how much of that profit? Do I want to use to pay myself instead of leaving in the business in order to invest back into it and help it grow? And this is that dance, we have to learn? We have to learn how to build a balance, like how do I make sure I keep the business healthy and protect the business, while also make sure that I'm getting paid what I want to get paid. And I'm building my wealth from this business. And this is that peace that you just can't do without taking your finances a little more seriously. Again, just understanding and having the visibility into what's going on with my personal finances, what's going on with my businesses, businesses, finances. And once you have that information, your grown adult, everyone here is smart enough to look at that and go cool. This feels like what I can be paying myself, this feels reasonable. But if we don't have that information, then that's why people come and ask me what's that percentage, because they just don't have that visibility yet. And that's usually a sign that we got to get a bookkeeper involved, we need to have some better financial tracking, so that these decisions can be made with with confidence and with a knowledge of what's going on your business and not just doing what someone tells you to do, because that's what you read in a book or that's what another business owner told you without knowing the full context of what's going on for your business specifically.
Yes, and that's a great way to end is don't compare your today to someone else's today. And don't compare yourself to your friends business, or even somebody that's in the exact same industry as you. That's one of the smartest things that I learned from one of my consultants is he's like, I don't care what Suzy and Jane and Ashley are doing, even though you all are in the same industry, I care about what you need, what do you need to live? What do you need to pay your bills? What do you need, and then we can figure out how to charge for things, because everybody else over here is doing packages, when you don't need to be doing that you need to figure out your business model, and what's going to work for you. And then what he suggests that I'm like, Oh, that's never gonna work. Nobody does that way. And it took about two years to really turn things around and get there. But then when you create the value, the clients do come, if you are putting out a wonderful service and you're making a lot of people happy and you're solving their problems, people are going to pay for it. So that's like the biggest thing that in my business that really helped me understand was a finance person saying like quit doing Rails is doing like quit comparing salary. And
I think that's really important to understand, depending on where you're at in your business, you're going to have to go on the journey that you need to go on to get to know your customers better get to know your business model. Better that again, you might look at someone like Amy Porterfield or Daniel Leslie or someone some of these these really successful online business owners and go, Oh, I'm going to do what they're doing, because that must work. But they've had the benefit of going through all the stages of growing their businesses to get to where they're at. And there's things you can obviously learn from them. But I've seen it over and over again, all of our clients, business models adjust and evolve and change over time as they get better at what they do as they understand their customers. And it just they go on that path that they need to go on in order to learn what they need to learn in order to get their business and eventually to that level of maybe some of the entrepreneurs that we all aspire to. To be like, but I think that's so important to emphasize Angela, because it's so easy to compare ourselves to other people and think that just some of these people woke up and their businesses were just the way they are now. And they went through all the same crap you're going through in your business right now. They're just a little further at this point. Yeah,
it's all about time. It's all about time. So we'll put all of the links in the show notes. But you guys have a webinar that our audience can go and listen to. So what is something that they can take away from that webinar? If they go and check it out?
Yeah, so it's this workshop that we have called know your numbers. Now, if you're like, Okay, this was a great podcast, I know, I got a lot to learn. But I need someone to start to explain this a little more. To me. This workshop is essentially the four like fundamental principles you need to understand as a business owner around your money. And we talk about some like tactical things on how to put some good systems in place into your business right now. And then we give you a free budgeting and forecasting spreadsheet to use for your business and a personal budget spreadsheet to use for your personal finances that we've kind of tailored for, for business owners, we should honestly be charging for this we don't because our whole goal is is that if we can get more online businesses crossing that six figure mark that then you become an ideal customer, for us as a bookkeeping client, that then you come to us and we would gladly take over your bookkeeping. So our goal is to just help you know, anyone that goes to this workshop to go, Oh, my finances aren't as complicated as I thought they were, this is something I do want to take, take more responsibility for. And then as your business grows, you know, we would love love to take over your bookkeeping for you. So you're no longer doing it in a spreadsheet, or trying to learn how QuickBooks Online works yourself.
Because it's not that easy all Trust me. It's not go to evolve finance comm slash webinar. And again, we'll put it in the show notes. If people want to directly connect with you, do you have a favorite platform that they can connect with you on?
Um, I mean, we have a Facebook group that we'll put in the show notes that I would recommend joining that because I have a podcast that I do for vol finance, where we talk, I just, it's just me talking for 15 to 20 minutes a week about all of this stuff about the back end of running a business that I'd love for people to join the group ask questions, I'd love to answer your questions and help anyone any way I can. That's awesome. What's the name of the group? It's the profitable bi if you just did, yeah, it's groups Ford slash football finance. But the group is called the profitable and predictable online business. But if you type it all finance into Google, you're going to get all of the things for us any social media platform you like to follow or whatnot. But But yeah, I'd love to help just demystify some of this for anyone who is kind of trying to figure this stuff out in their own businesses.
All the things this was super helpful. Parker, thank you so much for being here today.
Thank you for having me, Angela. Appreciate it.
Awesome. And everybody that's listening or watching. Thank you so much for tuning in. And be sure to check out next week and I'll catch you on business unveiled again. Have a great day. Bye.
Welcome to business unveiled podcast. This is the place where we help overwhelmed, time starved entrepreneurs like you make the profitable shifts to get more done and get more out of life. I'm your host, Angela Proffitt, award winning eight figure entrepreneur and CEO. And in every episode of business unveiled, I'm bringing you conversations that will give you the expertise and strategies that will scale your team and business so you can get shit done. That's GSD in our world, so get your time back and grow a business that helps you be present in your life. Let's do this, y'all.

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Published: September 2, 2021

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