Building Financial Alignment through Brand Vision and Operational Efficiency

What's up? Welcome back to STOKE Sessions. We're on season two episode nine. Today, I've got a hot one for you. We're joined today with Corbin and Dave from S and B Strategy Consultants.

They run a bookkeeping and fractional CFO company based out of Georgia.

Atlanta. Yep. Right.

Based out of Atlanta Atlanta, Georgia. Really stoked to have these guys on today. We're gonna be talking through a pretty poignant conversation, especially if you're running a small to medium sized business over the course of the last, let's say, eighteen to twenty four months.

Today, we're gonna be talking all about the financial impact of, alignment between the vision of your company, the operations of your company, and the financials of your company.

If you're a small to medium sized business and you're looking to grow, it is absolutely imperative that you create alignment, between, like I said, the vision of the company, the operational fitness of your company, and then, the financials of your company. So really excited to kick it off here. Like I said, I've got Corbin Cook, founder and fractional CFO at SMB Strategy Consultants, Dave Miller, who is a sales consultant for the SMB team, and then Harry van Nijergen. I probably just absolutely murdered his name. Harry, I'm sorry for the millionth time. Harry is the CFO here at Magnetic.

You'll probably hear me refer to him all session long, as g, g man, something along those lines. He's got a really cool name, much like if you're in California or in the United States.

The Spanish, double r can obviously be, communicated as, like, a like, a rolled r, the r.

Harry's got a name just like that. Really hard for me to pronounce, but I love him to death. He's one of the smartest men that I know. Really glad to be partnered up with him at Mag. And, the augmentation that we've seen through employing the SMB strategy team, over the last what has it been, Corbin? It's been about a year, a full year now?

Yeah.

It's been It's actually almost, come up by a year and a half.

Yeah. Yeah.

It's been a really cool augmentation for us. And just to kinda, like, open up and set the tone of, of where we're at as Magnetic and kind of, like, a little peek behind the curtains, like, twenty twenty three was a really tough year for us.

Twenty twenty four has been challenging.

However, with the help of the SMB team and the brains of mister g man, we've been able to weather the storm that has been the first q one and q two of two thousand twenty four.

We've really done a lot of work over the course of the last eighteen months to set ourselves up for success, to be able to take some of the peaks and valleys with a little bit less stress.

You know, going into twenty twenty three, as a, you know, relatively small agency, maybe a mid midsize agency or small to midsize agency.

You know, we opened up twenty twenty three with a bunch of really good solid retainers on our hands with the clients that we we had worked with, over the course of the last few years and got into twenty twenty three, and I will never forget this. We literally came back from Christmas break, opened up my emails and got, like, emails from all of our biggest retainer clients on that day, saying that they needed to drop their retainers to decrease retainers by thirty, forty, fifty, sixty even percent.

And as a relatively small business, that is a massive blow.

You know, the financial impact is obviously huge.

Running as a service business on relatively tight margins, What that does to cash flow is really tough to, to weather, really tough to recover from. But today's session is really all about preparing yourselves for that, as small business owners or, you know, if you're sitting in a financial seat or an operation seat. It's really all about preparing yourself for some of those storms. And I think the work that we did, like I said, with the help of the SMB team last year, we really set ourselves up so that we could free cash flow, get into a financially strong position, make sure that the position of the financials aligns with the operational efficiency of the business and also with the mission of the business and the vision of the business.

So, quick opening for us. Like I said, you know, I'm really excited to have these guys on and talk through some of the critical elements of how you as a small business or a medium sized business can, can kinda sell set yourself up for success with the financial and, you know, economic turbulence that we've been experiencing for the last couple years. So, Corbin, Harry, wanna first, like, thank you guys for being here.

Pleasure to be talking with you both today, but let's get into it. Let's talk through some of the things that we can do. What are some of the the points that we can give out to some of these business owners that are, you know, looking to tighten up their operations, tighten up their financial position, and and look towards the future here.

You know, one of the things that I I run into when I work with companies is that people don't always trust their numbers.

And, I don't think that was the case necessarily with Magnetic, but I find that the the foundation for most folks is to make sure that when they do get their financials that they can trust them, and they're not constantly second guess what they're seeing.

Most business owners, they they make decisions from their gut instincts.

And what we what's important is to have the right financials to validate their gut instincts.

Because it's usually, they lay live or die on these decisions. And if you have good data, then your decision making ability is your your gut instinct, which is what probably most of most owners and most operators, like, that's their c their special sauce. Right? Mhmm. That's what makes them amazing.

But when they so I've seen business owners who are really successful and make bad decisions from their gut that could have been made differently had they had the right data.

Where does that data come from? What where do you build that trust from? Is that through, like, just really strong bookkeeping, making sure that you've got all of the right inputs, outputs, or where do you see that, coming from?

Yeah. That's it. And and for whatever reason, the the owner the the businesses that I've worked with, they they didn't have a process in place to review the financials, to really understand what they're looking at. And so, that's really the first thing is it is is strong bookkeeping.

It's making sure that the bookkeepers are putting things in the right class, in the right category, that you understand your chart of accounts enough to design it to where when you look at it, you don't have to interpret a spreadsheet. You're looking at specific, you know, classes of whether it's, you know, lines of business. It's you know, it could even be certain. You can even, like, you know, separate it out expenses per customer, but you need to design your financials to make it easy for you to make good decisions.

For sure.

I think, Matt, Matt, I think you when you when we first started with you, you you, you said you needed one truth source.

Yeah. One source of truth.

That was one that was one of the first things we worked on with you guys, and that has really come along well, I think. So Yeah. That was that was stating that. Yeah.

For sure. Yeah. I mean, there's nothing like financial pressure that will make you just, like, absolutely hone in and and zone in on what needs to happen. But, yeah, I I remember that very clearly because, you know, as we started going through things, during that time, early twenty twenty three, Previously, I hadn't been as connected to the financials of the business.

At that point, I jumped in full speed ahead, and that was pretty much my only focus for, for a good long while with, obviously, the help of of Harry and, and the SMB team. But, yeah, I mean, getting getting to that point, you know, as I started getting into the financials, I started seeing disparate numbers, disparate, stories, and that's that's always what I'm trying to do in my position is kind of create the right story line. But, Corbin, just as you're saying, if you don't trust the numbers, you can't create that story line or even worse, that storyline shifts from day to day, from week to week, from month to month.

And as a business owner, that sends your brain into an absolute flurry of just, I don't know which way to point myself right now. Yeah. I think we we did that pretty quickly, obviously, with the help of of the team, but getting to the point where, you know, we could see very clearly, hey. This is trustworthy data.

These are trustworthy numbers. We can start to paint that picture, start to tell that story line, and start to figure out which way is forward from there. I think the the other thing for myself and for Harry as we started into that was that, you know, accounting not not always, but, traditionally, accounting can be a very, like, past past heavy. Say again?

Yeah. Back backwards looking. Yeah.

Yeah. Past past looking, backward looking, function within a lot of businesses. And I think immediately as we got into that, you know, my brain and I don't know if it's just some weird, you know, twitch the way that my brain works or or maybe it's the, you know, my past experience in, web development or marketing or anything like that. But for me, it was it was all about, like, how do we create a forward looking picture? How do we use this data now that we trust it to not just report on the last thirty, sixty, ninety, you know, hundred and eighty days worth of data that we've got, but proactively look into the future and say, okay. As a small service business, how can we really get proactive in financial preparedness?

And that's that's really once we had the, you know, the trustworthy the trust in the data and the and the storyline down, that was really what we took as, like, our our, you know, fighting mission was, like, let's get to the point where we have six, twelve, eighteen months worth of data in front of us so that we can see when these ebbs and flows are gonna come in the future. So, it's been really impactful for us. Like I said in the beginning, you know, what that's allowed us to do is really get to the point where we can see any sort of financial dips, financial issues long in the future, so that we can take action on those things now and protect ourselves and protect our employees. You know, if you look at, twenty twenty three and even now in twenty twenty four, like, twenty twenty three was a massive year of layoffs for most companies, big and small.

We certainly, you know, right at the beginning of twenty twenty three, we went through a really small round of layoffs here in the US, and it's the worst thing ever to do. But in comparison to some of these larger scale companies or even the medium sized companies, you know Yeah.

Macroeconomics, it it kinda forced companies into that. There were just tens and hundreds of thousands of people that were getting laid off left and right, really changed the, the employment market pretty considerably last year. And even again this year, I think, Harry, you and I just looked at a report that came out recently that said in the tech sector and marketing sector, there's been, I think in the first four or five months of the year, there's been over a hundred thousand layoffs here in the US. So that trend is continuing.

Some people might say that that's, you know, in part due to AI taking jobs.

I don't quite subscribe to that a hundred percent just yet. I think we're still in the infancy of AI, getting to the point where it's really taking over jobs. But no matter what, there's been a lot of layoffs. And I think, you know, the work the the point being is that the work that we did, through the course of last year really enabled us to get to the point where we could, safeguard our workforce, safeguard our our employment, our staff, in order to keep our company healthy because of a lot of the groundwork that we did in future forecasting our financials last year.

So, let's get into a little bit more. I know, like, the the crux of this conversation is really alignment between vision operations and financials. So, again, Harry Corbin, what do you guys see once once a once a you know, whether it's a CEO or CFO has that, trust in the data, what are some of the next steps that people can take in terms of creating the alignment, making sure that their vision is correct, and creating the alignment between operations and and financials.

I mean, I think the the next step once you trust your numbers is to begin to, you know, assuming that you trust them, then you know why they are. Once Once you understand how they got there, you can now decide, well, am I gonna be able to repeat this? Like, with the retainers you were talking about or with new customers.

So deciding that if I understand how I'm functioning as a business from an operational standpoint, how do I now grow?

And then you begin to build out the future.

And once you start to build out the future, you then have to examine your operations. Can we, from a manpower standpoint, do this? How do we scale? You know? And and and Magnetix case, you're able to leverage two continents.

Right? So you're able to leverage, you know, you know, the South African team alongside your US team. And that in itself allows us to design the future in a way that makes sense.

And then, you know, dealing with scalability is how much input we had to put from a financial commitment to achieve a certain new customer ratio. Like, how do we get to the next customer?

And I think that that's where a lot of businesses, you know, struggle is to arrive at what's predictable.

Yeah.

But, you know, it goes to the vision.

You understand why you exist, who you exist for, and you then move into, well, how is that, you know, happening? And then you understand by financials is what is reality because vision and operations usually aren't reality. Right? They they usually function Very rarely. Outside of reality. And and that's why Harry and I, our role is so critical.

And even the bookkeeping, you know, team is because you have to have reality.

And once you become mature enough as a business to combine that, that's when your forecast begins to become a predictable way to move into the future.

So, Corbin, you you obviously work across multiple industries, not just in the creative service space or the agency space like Magnetic.

Scale of one to ten, is it easier or harder to work with creative agencies Loaded question. I already know the answer.

Well, yeah, I know.

I mean, honestly, it's about how motivated people are to to change. Right? Because Yeah. And you and you what you described a minute ago in in the twenty twenty three year, it was you were thrown into a point of this has to change.

It wasn't something that you could be creative about. You know what I'm talking about? And so at that point, I mean, Matt, you be you went from being more creative to being and I don't know if this is, you know, if you've always been dialed in, but you are incredibly dialed in these days. You know? I don't know you any other way. You're dialed into, you know, why is this happening this way?

What needs to be happening, and how can we make it more efficient?

And so I I don't know if you call that creative, but that is very dialed in, you know, to what needs to be done. And I think even in a creative agency, you know, the a burn rate or a, you know, not being able to continue my love, that if you have a passion for marketing and you have a passion for being creative, if you can go if you're a videographer and you have to go get a real job because you can't afford you can't get out there and do it anymore, that's motivating. And that motivation is that's energy, and I love energy.

Yeah.

That was Yeah. There's definitely a a a different way of reporting to creatives than what financial people normally would to to other, other financial people or or other CEOs.

But I love that about the industry as well. I get to to use a bit of my creative, creative skills as well.

If Gotta get out those Bob Ross.

Presentation.

Whatever.

Whenever time I see when I hear his reports, I'm always like, man, that looks amazing.

That's very pretty. That looks amazing.

Pictures in there and yeah.

It's very concise, and it it uses imagery that conveys the message right off the page. Yeah. Here, your your reports are all star.

Yeah. It's needed. And and, especially, I think, Harry, that's something that you and I have have, continually fine tuned, and we'll probably continue to fine tune that a bit more. But, you know, Magnetic is running up on twenty years, in business. You know, we've we've been around the block a lot of times. We've made mistakes.

We've learned a lot of really cool lessons along the way.

But one of the things that we continually fine tune is that if we want action to come out of our, you know, member group, the the executive group within the company, and even down within, you know, the lower levels of our company into the management layers and the production layers, Simplicity of communication is always key. That's something that I'm personally always working on, Unite. That's probably the biggest piece of feedback that I get from the executive team is, like, say it again, but make it simple. You know?

I think that that with financials especially, and even more especially within the creative services space, you know, we've got some of the best creatives in my opinion, on the face of the earth here. And creating that storyline, drawing that picture of, like, hey. Here's where we're at from a financial perspective. Here's where we need to be.

Here's the things that we need to do to get there.

You know, it's a it's always a it's always a battle. It's a really fun battle. And I think that's, you know, for me personally, one of the things that always attracts me the most to the business that we run is that, similar to the SMB team, you know, I get to work with a lot of different companies and a lot of different industries. It makes things really exciting, and I think that's the the same from an executive perspective and a financial perspective is that continually building that story, refining the way that we communicate to each other, refining the way that we, draw that story.

And that picture is is, always a challenge, and it's super fun. But, yeah, what else from a, like, there's there's a few things, and I don't wanna see the conversation too heavily. Obviously, you know, I've been tied into this for for a long time here, but some of the things that we did, I just wanna make sure that we can create some action for people that are saying, hey. You know, I know where I'm at today as a business.

I know that I can be better. What are the things that some, some of these owners business owners can deploy that help. Once you've got, you know, a concrete vision for your company, you're trying to create more financial strength, trying to get to more of that future based financial reporting. What are some of the tools and and some of the, tactics that people can deploy to help their business be more future proofed?

I'll kinda leave that there. I think there's a couple things right on the tip of my tongue, but I'll let you guys kinda go ahead and, then explain.

I've got a Asia.

Yeah. I've got a couple of things that I, would recommend companies to to keep an eye on and keep a track of. So once you have that solid, base of bookkeeping and you you can trust your numbers, your bookkeeping is accurate and timely, you can use that data and and really create valuable reports from that.

So things that I would recommend companies to really keep track of, especially companies in the service business, who wanna keep track of of, cost ratios, be that employee cost ratios, the revenue, software or for service business or companies in the or other agencies, something to keep important to keep track of as well.

Your cash flow, that's never ending battle for for most small businesses, and something that you really need to keep your thumb on.

Forecasts, sell forecasts, work closely with your sales team, know what's in the pipeline, get that client, client split or revenue contribution per client. Keep a close eye on that because that is a major risk for many companies as well. If you've got too much of income coming from one client, you're at risk If that client, cancels their contract or reduces the price, of their contract, they're gonna run into cash flow trouble.

Another another important thing on that is project versus retainer revenue, whether you're in a service business or or a creative agency.

Project versus retainer revenue creates that Houston Fallon cycle that we've we've always talked about.

So keep a close track on on the split between project revenue and retainer revenue.

What do you you've got you and I have been talking about that for a while. So what is your recommendation, and and why is that so important?

I guess, feast, famine, but what happens when you have too many projects?

So the absolute worst place where you can be is is have a lot of project income, but you've got permanent staff. So as soon as that project ends, you you're you're stuck with your high overhead cost and and employee cost, where with retainer revenue, fixed long term contracts, it's it's much stabler and easier to plan and forecast and, provides a lot more job security to to your employees.

And and Magnetic does a good job of of of developing project work within the long term contract. Right?

Yes. Yeah. Yeah. We've we've been lucky to to, do that where we have a big project, first phase, which then converts into a long term ongoing retainer for our clients.

So we've been lucky with that. Yeah.

And and no no But is that is that luck or is that by design?

Definitely by design.

We identified identified the risk with project incomes a long time ago. And, Etienne, one of the rainmakers here and CEO, founding partner at at SA has been really focused on signing long term, long term retainer clients.

That definitely does design.

Been a pretty concerted effort for a long time. I think, you know, in the infancy of Magnetic, you know, we would take on some of these large scale projects. And they there still are some, that'll hit our books every once in a while, you know, big video productions, big, you know, commercial shoots, big web projects, things of that nature. There might be, you know, one off branding, but we're pretty strategic about setting the conversation up with with our prospective clients to say, is this going to turn into the long term relationship that you need and we need in order to really have, you know, financial benefit on both companies?

I think we we try and set things up as much as possible in a partnership fashion so that Mhmm. Long term, you know, the the benefit our clients see, they'll they'll get benefit from a one term onetime project. But the real benefit that they get is when the alignment happens between branding. And it's kinda the same thing that we're talking about right now. Right? It's it's branding, creative, and marketing.

Those are the three main pillars of magnetic.

The big the big impact that our clients see is when brand is set up correctly like the vision that we're talking about here.

Creative is set up correctly based on what the brand says and the strategy of the brand.

And then marketing kicks off and the messaging and the tone and everything is just pulled through. It's one solid stream that goes all the way through, the impact that that clients see when all three of those things line up is, it's undeniable.

Explaining that to, you know, a company that's like, hey. You know, I have budget for a website. That's what we need right now. That's sometimes the challenge that we run, but we are certainly always looking to set up a long term engagement partner with the clients that we take on.

It it kinda gives them a chance too to make sure they get to know you guys. You know? So it's it it kinda takes that pressure off them having to get married for the next five years in the beginning. Like, it's, alright.

Here yes. Yes. We're gonna do your website. But truth is is that once we build it with our brand DNA and our strategy, like, it's really gonna work best if we carry it all the way through.

And you'll understand that later, but we're giving you a heads up that after we're done with the website, we're gonna have a conversation around phase two.

For sure.

And then it's like, boom. Now that's and and that's a way that a company who's listening can begin to to do what Harry was just talking about, you know, reduce the amount of project work that doesn't turn into retainer work. But having a clear process, having a sales process that identifies that on the front end so that after phase one, you're not coming in saying, well, gosh. You know what we could do now? It's like you're already setting the stage, phase one, phase two, phase three.

And and that way, it's not they have a choice to say, you know what? We don't really gel as well as I thought we did, so we're gonna pass. But if not, then it's an automatic rollout into the retainer business, which is what's going to provide them that security and that cash flow they need to run permanent salaries.

Yeah. That's right. Exactly. And, Harry, you mentioned, you know, creating a a good open relationship with the sales team, making sure that the sales pipeline is something that's always being taken into an account, within the financial team.

It's a huge piece of what we do internally for ourselves, but it's also a huge piece of what we do for clients that we work with. Right? Like, we don't just fire off marketing and report desperately on marketing campaigns as they fire off. It's more, how do we put all of these marketing campaigns into one long term storyline so that your sales pipeline gets, filled up, so that your funnel is is is full and complete and create that financial security long term for the companies that we work with and, you know, subsequently for ourselves as well.

Yeah. One of the things you mentioned, Harry, was talking about, you know, understanding your costs and making sure that you are very aware of that. And something that's interesting is, you know, for a while, I was, I'm I'm no longer, you know, licensed with them, but there's a concept called profit first.

And the the idea is, it it's a really simplistic idea that isn't always easy to implement inside a normally functioning business.

But the idea here is that if you want a ten percent or a twenty percent net profit, and you know you have salaries, you know, that or for that matter, if you know you have fixed operation cost of a certain amount, right, then what you need to be able to do is is recognize that you're gonna have a salary cap. So it's if you know what your net income needs to be, your profit, you you know what your operational expenses are to deliver on your promises, then the point in which you understand how to control that profitability is what we call a salary cap.

So just like the NFL or a baseball team, you have a certain salary cap. Right? And then everyone has to fit into it. That's how they know how to buy and trade players.

Same thing with a creative agency is that you know that you can if you need certain players on your team, you have to recognize that in order to be healthy, you have to maintain a salary cap.

And, you know, within Magnetic, it that's always kind of been the struggles. How do we make all this work? Well, we know what healthy needs to be, and we ebb and flow that salary decisions to match up. It's not exactly a salary cap, but the idea here is that if you're trying to plan your business to be healthy, you have to start with that net profit in mind.

And then your expenses if you can't shrink your expenses anymore, then that is what it is. And then the next thing is always the largest amount on anybody's expense list is the payroll. That could be the owner payroll. That could be your technicians and the folks that are gonna go out there and design and and be creative.

But you've gotta control that salary cap, And then you always know where you fall within being able to hire or Yeah.

Chaos.

Yeah. With, for service businesses, yeah, payroll definitely the biggest expense. And in Mag, with our solid base and and the the reports that we do, we can pretty much estimate what our profit's gonna be just by looking at the employee cost forecast for for the next twelve months.

So it's it's a yeah. We've we've hit the nail on the head there. We've got that cap. We know where we wanna be profit wise. And if our employee cost is outside of that, we can pretty accurately estimate what's, what our margin is gonna be at the end. Yeah.

So, obviously, this changes from business to business. But, Harry Corbin, what are some of the ratios? Like, we've we've talked about employee, to revenue cost ratios. We've talked about portfolio, somebody help me with the word, portfolio balance, or client balance.

I'll say client just because I know a lot of the people that listening aren't necessarily in the creative services, space, but, you know, the ratio of how many clients to how much revenue. What are some of those general revenue and ratio, percentages that you guys would suggest for businesses to be healthy? Obviously, it's gonna change a little bit from here to there. Maybe there's a place where people can look up their specific industry, but what are some of the ratios that you guys would suggest people stay within?

Yeah.

Definitely the best competitors to business.

But, for for Meg, and and I think good rule of thumb for most businesses, none of your clients should be bigger than or contribute more than fifteen percent of your total revenue. That's one five fifteen.

The less, the better, and ideally around ten percent max.

For employee cost, rule of thumb, sixty percent total employee cost. That's permanent employees and contractors.

Here at Mag, we try and aim for between forty and fifty for, permanent employee costs and then between five and ten for for contractors. You always wanna wanna have a couple of contractors in there, to to help you with with overflow of, of production work or tight deadlines or or that occasional project that does come in where you don't wanna, appoint a permanent employee for that.

So that's, Corbin, in your experience, you're in the service business as well.

What are you guys aiming for?

Yeah.

I mean, it's it's similar. I, you know, I do find that it's like I I I subscribe to a lot of the industry, you know, papers that describe these things and and even do case studies with different companies that are the right size. And I just find them to be very difficult to match because it's every company is so different.

I think with Magnetic, you're you're one hundred percent dialed in there. And, and I think fifty percent is is the right number. I just don't always know if they can get there. Like, I have a lot of, you know, you know, law firms, right, that are higher than that because it's it's based upon they have very few expenses outside of their the, you know, the expertise of the the the lawyers.

But, you know, contractors like the trades, it's you know, definitely needs to probably be under fifty percent, like plumbers and electricians. We have a a a large electrical contractor, and it needs to be less than that.

But I think fifty percent if you are above fifty percent and you're not like a team that their product is their people's mind, like an attorney, then I think you have a problem.

And I think if you can say to yourself and you can logistically get down to what my my OpEx is, what is my expenses, what is my net profit, then you're gonna know how much you can afford and your employees if you want that twenty percent or if you want that ten percent.

And if you're not there yet, then your revenue has to change.

So let's let's try and close out on, because I think that's a a really big topic, and I think there's there's huge value that business owners can take from that. But let's try to close out on some ideas around figuring out exactly what that ratio is for your own business.

We talked about trusting the data. That's first and foremost.

I think having having the vision for where you're trying to take your company, where you want your company to go, what you want your company to produce both for you as either, you know, an owner, founder, operator, or whatever your case is. But, setting that path toward financial security and getting down to crunching some of these numbers. Are there any specific advice pieces or tools that you guys can recommend for people to go and figure out, like, okay. What is my current OPEX? How does that relate to my current revenue?

What are these ratios for me? Is there is there something that either of you can recommend, people use to go and help start calculating that?

Well, so we we use a tool called that. You y'all seen this, the vertical IQ.

And so right now, that's my current tool that we're using for it. You know, if somebody wants to if someone wants a report specific to their industry, they just need to DM you, and, you can pass them over. And I'll I'll be sure to to come up with the report that matches their industry and and company size.

But it goes back to just you can keep it simple.

If you want twenty percent and you have a fifty percent employee cost, that means you can't spend any more than thirty on your operational expenses.

And if you want if you're okay going down to ten percent, which is just barely okay, then you can then you can have a forty percent OPEX and then work towards thirty.

Mhmm.

So it's it almost becomes more complicated when we when we drop in the industry papers because there's so many different ratios there.

But if you can look at QuickBooks or whatever accounting software you're looking at and you can you wanna take your total amount of the cost of whatever it is to develop, so we call that the COGS, cost of goods.

Then you take your total expenses, and that lines at the bottom there. That number plus your COGS equals your total total expenses. Right? And, of course, what's left over is your net.

Well, you just, you know, pull out your any salaries that you pay, whether it's contractors or payroll. You subtract that out, and now you have your numbers as far as what it takes to run your business.

And the the the next goal from that is to look at it month by month and to see if you have consistency or if it's all over the place.

Yeah. That's huge. And, obviously, you know, we've we've done that quite a few times now, and I think that, that's where the reality and the vision kind of create alignment too. Right?

Right. Because a lot of times, you know, as an owner operator, you'll get these visions of, like, oh, you know, in two years, we wanna do x y z, and it's some big, you know, the b hag, the big hairy audacious school.

But I think exactly what you just said, Corbin, is where the reality kinda kicks in and and it allows you to say, okay. Let's step back and look at this and what are the you know, if we need to make massive changes, improvements, anything like that in order to hit those goals, You could see it pretty clearly and especially with, you know, a couple months worth of data and consistency that that storyline becomes way more clear.

Hugely impactful for business owners.

Ironically, I've been going through a book called the, SIMP approach. Simplified examination simplified examination to maximize profits since I started with you guys, Matt, and I'm actually on ratios right now.

Oh, cool.

So maybe we can, you know, have a call with me, and I can go through that. That but I've been I'm actually looking at some of the notes that I've made throughout the time I've been going through this with you guys kinda and using it. So it's kind of like a simplified form of the four d x, but, actually, I'm I'm doing the ratios right now.

So Very cool.

Maybe something we can set up just as a one one of our calls. I can go over that with you guys.

Yeah. Yeah. I'd love to check that out. Simp has multiple meanings. I don't know if you I have a I have a thirteen year old, and if I say simp to to my son, it's, it means something very, very, very different.

Oh, really? Which is we okay. So quick funny story is that my last name is Simpson. You guys know that.

Yeah.

Yeah. My wife's license plate for a long time read, simps, like s I m p s.

Okay.

And I didn't know what simp mean, but meant, but if you I don't know if urban dictionary is where I wanna send people on this podcast.

A simp is somebody it's like, you know, you've got a crush on a on a on a person, and, you would kind of, like, overdo it in what you would, you know, do to try and win this person over. So a simp is somebody who's like, you know, they're they're going they're they're putting in two hundred percent effort for, you know, negative ten percent return type thing in a relationship.

That was that was her license plate?

Did she know that?

She didn't know it. She didn't know it. And one of the one of our friends on, one of the kids' soccer teams pulled me aside, and he's like, yeah. You know what a simp is. Right? I don't know your license plate.

Yeah. Pretty funny. Anyways, I'll I'll definitely check out that that book, Dave, and would love to have a couple conversations around that. I'll link to it in the show notes too, in case anyone else wants to check it out. But any other big words of wisdom, Harry, Corbin, Dave, anything just to leave people with something actionable that they can take away from this and kind of implement into their business. I'll obviously link out, Corbin to the SMB strategy group.

Harry will obviously have links into, a few of the resources that we've got here at Mag. But any other big words of wisdom to leave people with if they're looking to get onto, you know, a financial, operational, vision alignment path themselves?

Oh, just a quick one from me.

Many many, business owners and and and businesses see accounting as a as a back office function, and kinda necessary evil just to to be in the clear with the IRS. But you shouldn't see it like that. Taxes done. Yeah.

Just just to get the taxes done. Right? Yeah. But, if you've got a good, financial person at your company, empower them to to pull the reports for you.

The financial reports that they can create should help you with your decision making. And that's the the the real value with with, all of the activities that we do on a on a daily and and monthly basis. It it's it's that link between the vision and the the operations, and it should empower and drive strategy and decision making in a business.

So, yeah, see it see it as as that.

Love it.

I think for me is to that, you know, a lot of folks and when they're running a business, whether they're in a creative agency or if they're just, you know, a plumber or whoever, like, they tend to put off getting their financial and their their business healthy because they just need to get through this. I'm just gonna pay myself this much now because I'm gonna get to that end. And there's a lot of this when it happens.

I will do this. Right? But people don't realize is that that goes on for a long time. And if they don't they don't know what a pathway looks like to get healthy, they don't have it mapped out, they're not heading anywhere.

You you need the goal is to map it out, you know, have your destination in mind, and then go after it. But when people say, I've just got it or this won't be this way forever, It might be. And so you really need to to find that pathway to get healthy now and design it. Even if this year is that year to get to a place where it's sustainable going forward, don't wait to get healthy.

You know? Harry and I always you know, we we go back and forth on on when do we hire, when do we have to let people go. And it's because that's that's that salary cap. You know, we can only function within a certain salary cap and still maintain, a healthy business so that we can still be there for our clients in the future, so that we can provide the jobs and provide the family support for our wonderful employees.

But if you're not if you don't know what it looks like, you need to find out now.

Yeah. Things don't change if things don't change. Right?

That's right.

Yeah. Well well, I think it was ATN that, coined the term internally here at Mags. Start by starting. And we've got a a blog post that we wrote a long time ago, and it's more it's more designed for or, more catering towards, people that are looking to start a business or, start a new business.

And a lot of times, it's it's the same thing that we're talking about here. You can get to a point where you're like, it's so easy for me to prioritize what's right in front of me, the work that needs to get done, the client that's on the phone, the emails that are in the inbox. So easy to prioritize those things over things like financials. But if you start by starting and just get started, make that first outreach, make that first, make that first move, things start falling into place, and you, you know, find yourself in a rhythm of consistency.

And I think that's where that's where the empowerment comes from. That's where the safety net and the and the trust and the, authority comes from within a business so that you can be making really smart decisions and, and make that alignment between your vision for the company and and what's actually happening within the company. So super cool. I appreciate you guys taking the time today.

I think we could probably carry this conversation through the next week or two, nonstop, but really hope there was some value that's, captured here for everyone that's watching. If you've got any questions, feel free to reach out, shoot us a DM, shoot us an email.

I'll put contact information in the show notes so that everybody has a place to reach out no matter which channel you're on.

And, yeah, we'll look forward to doing this again soon. I think there's a lot of really cool, like, micro pieces that we can unpack here as well.

But for today, Dave, Corbin, Harry, I really appreciate the time. Appreciate all of the the work that goes into this, and I'm really hoping that there's some value that comes out for business owners out there. So, we'll sign off with that. You guys have a good one, and we'll see you on the next episode.

Peace out, guys. Have a great one.

Thanks, Matt. Thanks, guys. Nice, guys.