Practical Steps to Manage Small Business Finances with Linda Karressy

When managing the finances of a small business, precision and proactive planning are important to sustainability and growth.

Every dollar matters, and knowing how to manage your money can really help your business succeed.

In today's episode, we're thrilled to have Linda Karressy, a fractional CFO and trainer for service-based businesses and nonprofits, join us. Linda brings her expertise from founding and leading Insight Financial Group and Insight Business Academy. We cover essential financial practices, how to streamline accounting processes, and tips for financial planning. Linda shares invaluable insights that can help any small business owner better manage their finances and plan for future growth.

Tune into our full episode for more detailed guidance and start mastering your finances today!

Specifically, this episode highlights the following themes:

• Understanding the importance of cash flow in small businesses
• Tips for separating personal and business finances
• Practical steps for effective financial management

Other Mentioned Links & Resources

Learn more about Insight Financial Group:
https://insightfinancialindy.com

Learn more about Linda Karressy:
https://www.linkedin.com/in/linda-diakite-karressy-8b953b

Subscribe to Linda Karressy’s YouTube Channel
https://www.youtube.com/channel/UCagsc9OWR_HN4cI2MhgoUXQ

Learn More About Treefrog’s Small Business Marketing Resources & Services:
https://www.treefrogmarketing.com

Receive 50% Off Your First Year of HoneyBook:
https://www.treefrogmarketing.com/honeybook-coupon-code

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Follow or DM Kelly Rice on Instagram
https://www.instagram.com/treefrogkelly

Follow or DM Victoria on Instagram:
https://www.instagram.com/victorialrayburn

Transcript

Linda Karressy  [00:00:00]:
You have to separate the business and personal expenses and income. So you need to have a separate bank account. It needs to be very clear. So you need to have your own personal account and your own business account. You know, checking and savings. You can do transfers and you'll pay yourself and all that. But just make sure that it's just very clear. And it's important because of tax purposes, too.

Linda Karressy  [00:00:20]:
It will help your tax preparer, so you want to make sure that you're distinguishing the business and the personal.

Victoria Rayburn [00:00:31]:
Hey there, listening to the Priority Pursuit podcast, a podcast dedicated to helping small business owners and leaders define, maintain and pursue both their personal and business priorities so they can build lives and businesses they love. I'm your host, Victoria Rayburn, and if you are a regular priority pursuit listener, you know that Kelly and I regularly share that there are three keys to building a successful small business. Having a great product or service, offering an incredible customer experience, and using a marketing strategy that actually works well. Friend, there is a fourth key that, in all honesty, we do not discuss on the show nearly often enough. Managing your finances. That said, I am thrilled to have Linda Kerosene on the show today to discuss this critical aspect of building and running a successful business. Specifically, five steps to managing your finances and increasing your cash flow. Linda is a fractional CFO and trainer for service based businesses and nonprofits.

Victoria Rayburn [00:01:36]:
She is the founder and CEO of Insight Financial Group and Insight Business Academy. Linda uses her accounting mastery skills to foster a no judgment environment where individuals can be open and shameless about their business, finances and habits. Linda believes everyone deserves an accountant who will not talk down to them but break things down in a respectful manner. Linda strives to break down accounting to its lowest denominator so that everyone can grasp it. And fun fact, Linda is also also out of Indiana. While our office is in Lafayette. I'm based in Indianapolis, and so is Linda. So, ironically, we are recording today's episode, and we are probably just like a mile apart, actually, if I'm thinking correctly.

Victoria Rayburn [00:02:19]:
But Linda, it is an honor to have you on the show. Thank you so much for being here.

Linda Karressy  [00:02:24]:
Thank you. I'm excited to be here. Go Hoosiers.

Victoria Rayburn [00:02:27]:
Oh, yes. Amen. And boilers and all things. Yes, yes. Especially this week. I can't remember when this episode's coming out, but the pacers guys, they're killing it right now. But anyway, Linda, I know that was a very brief introduction of you. Would you mind just telling us a little bit more about yourself and your business and how you serve small businesses?

Linda Karressy  [00:02:47]:
Yeah, yeah. Thank you so much. I'm glad to be here. So inside financial group, my goal is to educate. I'm all about educating. As we know, with small business owners, many times we are operating our finances in what I call chaos. And a lot of times we don't know what to do. How do I get organized? How do I not feel this feeling of, I never have enough cash? So our goal is to first get systems in place so you know what you have on hand.

Linda Karressy  [00:03:17]:
And particularly when I say systems, it's really processes. It really is. And those are the things that most of us don't like to do, which I like to do, is processes, having things in place, such as record keeping and all that good stuff. So not only the accounting piece, and I would say a lot of times we get, particularly an accountant, we kind of commingle the words, I guess, accounting and bookkeeping and CFO. So really, the bookkeeping is the day to day. You're invoicing, you're paying the bills, someone is tracking inventory. So that's the day to day. That's the bookkeeping piece.

Linda Karressy  [00:03:54]:
The accounting piece is really, okay. How much cash am I bringing in? Am I making a profit? That's not what I call the higher level. I consider accounting has different levels. And so based on where you are, you may just need a bookkeeper. You may just, you know, and then you may need not only a bookkeeper, you may need an accountant. So accountant is that higher level where they can actually sit with you and help you understand your numbers.

Victoria Rayburn [00:04:19]:
Love that. Thank you for breaking all that down. And like you said, you know, so many of us as small business owners, this is not our favorite part of owning a small business. I mean, of course you want to be profitable, but I think it's safe to say so many of us, you know, whether we make a passion, our full time job, or you have a skill set, that it just makes sense to start a business with. You don't necessarily sign up for the accounting side of things.

Linda Karressy  [00:04:47]:
Yeah, yeah, you don't. And I consider it's almost like with the, you know, the marketing side of your business, even the it, like someone has to own it. So when we're first starting out, we're basically having to be the marketing team, the HR team, and the accounting team, which most people with the accounting function, we kind of just push aside. We know we have a bank account, the money's coming in, and that's okay. But then it gets to a point where it's like, I'm not making enough money myself. So that's where we, as accounting professionals, can come and help you understand what needs to be in place, what you should be looking at. So, like, I would say every. There always needs to be somebody.

Linda Karressy  [00:05:32]:
The process, even if you hire someone for social media, you still have to, like, oversee that. Like, someone has to oversee that process. And with accounting, like you said, that's usually not the fun part. The fun part, but it should be the fun part, because it's all about making money and having the life you desire. Because, you know, money, you know, allows us to have opportunities.

Victoria Rayburn [00:05:55]:
Absolutely. Well, Linus, speaking of having somebody to manage these processes, I know that you also serve as a fractional CFO. Could you tell us a little bit about what that looks like? Because I think a lot of small businesses don't even necessarily realize that they can hire a fractional CFO. So, you know, what do you do in that role? Why should small businesses hire a fractional CFO? And then I guess also I want to ask, when should they hire a fractional CFO? Like, how big does your business need to be to know this is the next hire we need to make?

Linda Karressy  [00:06:24]:
Yeah, that's a good question. So a fractional CFO, what that stands for is chief financial officer. So for those of us in Indiana, we're all familiar with Eli Lilly, they have a full time CFO and then, like a vice president of finance and all those things. So for a small business, what I do is really providing that financial oversight. I'm taking the financial oversight from the founder or the leadership team so they can focus on providing that customer service, creating new products. The financial oversight is where I'm coming in and helping the bookkeeper, or it could be the office manager managing the finances. So the bookkeeper or the office manager, they're doing the day to day. And I'm also making sure that that day to day is being taken care of.

Linda Karressy  [00:07:15]:
Also looking at the numbers, probably on a weekly basis. And when I say the numbers, looking at the cash flow, are we on track with cash flow? How is revenue looking? Is there anything that I need to let management know about? And particularly so, for instance, if we're, they're rolling out a new product or service, look at the cash flow. How's things going? I see that this particular bill hasn't came in. Oh, you signed this new contract. What's the payment terms? Let's put that in the cash flow. So that's where a CFO will come in, is where providing that set of eyes that is just dedicated to the finances and then going back to whether that's the business owner or to the overall leadership team and saying, okay, financially, here's an update. Where we are, particularly cash flow wise, with small businesses, cash flow is very, very key. And I would say with the accountants, and this is what I've learned, I came from corporate, and so in corporate, we're just so focused on profit and loss statement and balance sheet.

Linda Karressy  [00:08:16]:
But for small businesses, cash flow is key. Nothing wrong with looking at your p and l, but with the CFO, we're constantly, constantly looking at cash flow because that keeps the doors open. Cash flow is really, in what I could consider simple terms, the cash coming in, actually hitting the bank account, and cash going out, because a lot of times, we're looking at the profit and loss statement. So the profit and loss statement is recording revenue, it's recording that bills, but those, that revenue may not be actual cash, because every time we create an invoice that's not cash, that's just revenue. And so this is where the CFO can come in and help the organization understand that nuance. Also, too, with a CFO, can also assist you with tax planning, helping you get your tax records ready for your tax, whoever's going to prepare your taxes. We also assist with budgeting, also training. I do.

Linda Karressy  [00:09:18]:
I like to do a lot of training with the team, with the staff, so everyone knows they have a part in the accounting cycle. So, for instance, a lot of business owners tell me, well, you know, my team, they're coming to me, like, in the hallway saying, okay, can we purchase this? And I just say, yes. Then they go back weeks later, like, well, why don't we have any cash? I didn't know about that. So that's where I'm helping the team understand, okay, we have a purchase order process where you have to complete this form. You have to tell us what it's for, all that good stuff, estimates and quotes, and then it's signed off by the business owner or whoever they report to, and then it gets sent back to the accounting team. And so this is where it alleviates some of the stress and confusion, too, and things do not get dropped. So the fractional CFO is really that oversight, making sure the numbers look correctly. Just really, like I said, another set of eyes and ears for that business owner to say, okay, this is what I see.

Linda Karressy  [00:10:23]:
And then that business owner, too, says, okay, this is what is going. This is what I expect. And then we come to, you know, some, you know, some type of resolution. We're all on the same page. You know, that's what I think most business owners want. They want that peace of mind that is being taken care of. Someone is looking out for them and the business. So that's in a nutshell.

Linda Karressy  [00:10:45]:
That's what a CFO does. And you, a good question is, you know, when is the time for the CFO? I would say, you know, probably when you meet get to that probably that $1 million mark, because that's when you start to get, I don't want to say more complicated, but there's more layers, and you want someone to be tracking that revenue as a business owner. When you get to that 1 million mark, you're doing other things. You're really now probably focusing on staff, developing staff. And that's a lot. When you're trying to develop staff and then also try to do the invoicing, the billing, trying to manage the bookkeeper, and then trying to understand cash flow financial statements. Because a lot of times, most small businesses, they start off with a bookkeeper, which is fine. The bookkeeper updates the software, categorizes transactions, and then sends reports.

Linda Karressy  [00:11:39]:
They necessarily don't sit down with you and say, okay, this is what I see so far. You know, this is, I see that, you know, we're paying our bills on time, but we're still not, the cash is not increasing. So, you know, let's look at, to see what your products are. Let's see if there's a product that's not making enough money and we need to focus on products that are made, you know, that type of, you know, that critical thinking, those, I call those with my clients, we have a quarterly finance, you know, check in where we're reviewing those type of questions. So when you get to a point when you're that $1 million mark, and then you start to, you go home and you start to ask yourself those questions. Like, I didn't realize, I thought the numbers would say this. I don't understand why cash is still, you know, low or I don't understand why bills are not being paid because as you start to grow things, like I said, there's more layers. There's more layers.

Linda Karressy  [00:12:36]:
And so you may not have certain processes in place to handle that increase because people don't realize it's great to have increased revenue, but you probably have more bills, you have more staff, you have to review payroll. So that's where a fractional CFO can come in and help streamline some of those processes.

Victoria Rayburn [00:12:58]:
Oh, Linda, I appreciate so much about everything. You just said, and I want to dive into all of it, but I know we need to stay on track because I know you have really great stuff to share with us today, but you're absolutely right. And I mean, I think there are you, I already talked about this a little bit. Like, there are a lot of parallels for small businesses between marketing your business and then handling your finances. You just get to this point where you can't do all of it. There are so many tools out there. And I think that because of tools and AI and everything else, like small businesses, I mean, small business owners have always tried to handle a lot, but because of these tools, I think that they really think, like, oh, if I can just streamline this enough, it'll be fine. But you really do need that expert, especially when you have all those layers, to have that outside perspective.

Victoria Rayburn [00:13:46]:
I mean, I know we encounter this with marketing all the time, but we find that a lot of people are too close to their businesses to necessarily market it. Well to determine what their messaging is. And I don't want to assume, but I'm assuming that it's probably pretty similar with their finances.

Linda Karressy  [00:14:01]:
Yep, and you're right. And I like that term, you know, too close because sometimes people don't realize that it's not good business, a good business habit, certain things that you're doing. So, for instance, like, I go back, always go back to the whole, you know, staff coming to the business owner saying, can we order? Instead of going through a process, process of, you need to do your research. Where's the estimates? Where's the quotes? Is it in your budget? Those type of things. And so, and you're right. Sometimes you can be too close to it and not realize that. I didn't realize that, you know, we're not collecting our invoices in a timely manner. You know, that they just, because they go back to when they were doing it, you know, things just, you know, started to flow.

Linda Karressy  [00:14:52]:
And you're right. Sometimes you can be too close to it. And this is where I think, you know, like you and myself, we're from the outside, so we have a different point of view and we can see things differently since we're not, I don't want to say not in it, but we're not, you know, they're invested, particularly if they're the founders. You know, that's their, there's their baby.

Victoria Rayburn [00:15:15]:
Oh.

Linda Karressy  [00:15:15]:
And so, yes, they have a different, you know, different perspective. And I would even also say with finance, sometimes as business owners have this belief, like, well, I know I'm not doing it right. So I don't want anyone to know you didn't go to school for this. So there's no, you know, right in accounting? Yes, there are some best practices you should be doing, but I don't know, if you're not collecting your invoices on time, that's not the end of the world, because your to do list is probably 100 things in one day, you know? So I think sometimes, too, that creeps in with business owners, that feeling of, oh, I know I wasn't doing it correctly, or I just, I'm never going to understand, you know, math. And I always tell people I think accounting is not, it's more than just spreadsheets and math. It really, you know, it's, it's really about, is this business, is this, is this what I want to do? Is this business actually fulfilling what I set out to do? You know, it's so much more than just, okay, let's go get quickbooks and code. But you really have to sit down and say, okay, you set out to create this product and service. You want to solve this problem, you know, so let's, you know, handle the different pieces to running the business.

Linda Karressy  [00:16:42]:
And accounting is one of those pieces.

Victoria Rayburn [00:16:44]:
Yes. Well, Linda, that's actually a really great segue to the next question that I have for you because I think you're already very much hinting at this anxiety and fear that small businesses owners have. Because, I mean, to be blunt, like, they don't want to feel dumb.

Linda Karressy  [00:17:01]:
Yeah.

Victoria Rayburn [00:17:01]:
So, you know, a lot of small business owners and leaders have a lot of worries when it comes to managing their finances. You know, in your experience, what are some of the underlying reasons for this fear and how can they overcome it? I mean, we've already talked about this a little bit, but you're talking to these small business owners day in and day out. I'm sure you have a long list.

Linda Karressy  [00:17:23]:
I think the underlining issues, I think, number one, our personal finance habits flow into our business. So I would say if you don't have good personal finance habits, I'm not saying perfect, but work on your personal finance habits. And that even goes for me. You know, we're personal. When I talk about personal finance habits, I mean, okay, are you tracking your money? Are you, is it reasonable? Are you budgeting your own personal money? Are you trying to get deals, spending wisely? Are you also saving? And I know for small businesses, particularly when you're starting off, and even when you're in that, like seven year, ten year mark, you're still kind of still struggling, and you're probably paying yourself a lower salary than the rest of your staff. But really, look at your personal finance habits. Start to, I'm now reading a book about personal finance. Like, you know, now we have, you know, four kids, our family's getting larger.

Linda Karressy  [00:18:19]:
How can we now get a handle on our personal finances as the family's getting larger? So I would say, you know, look at your personal finance habits. And number two, what is your mindset about money? And particularly, I think in our culture, we're taught that, oh, you know, rich people are bad. They're this and that. And it's interesting because on one hand, we all want money and we all need it. So I just finished a book. I think everyone should check out the psychology of money. I forgot the author, but everyone should read that. Read that book.

Linda Karressy  [00:18:56]:
And really the, you have to have a well balanced mindset about money, you know, and also it's not about the mindset about what, what I think, but what do you think? Everyone is different. And that's what I like about the book. He said, not you don't. You have to, what's comfortable for you. So if a salary of 50,000 is comfortable, a salary of 100k, whatever, that's comfortable for you, and so just be comfortable with that. But really, I would say people have to have a, you know, we don't have a particularly small business owner. We don't have a good relationship with money because maybe the way that we grew up, it could be also that maybe we had some hardships, you know, particularly after college. You know, people have graduated with, you know, tons of student loans and other debt.

Linda Karressy  [00:19:45]:
So really think about what is your mindset with money? Like, what do you think about money? What's the purpose? What's money? What's the purpose of money in your life? And I think number three is that you have to tell yourself, you can learn this. You know, it's not like you're going to be an accountant, but I always go back to the show shark tank. On the show shark tank, they just ask them what I consider key matrix. That's all you need to know about your business. You don't need to know how to book depreciation, book accrual. You need to know, okay, what is my annual sales, what's, you know, my monthly expenses? So when you look at your cash account, you can kind of say, okay, I need this much in my account to cover expenses. What are my top products and services, those type of questions that's where you want, you know, you want to get to, you want to, you know, know that a profit and loss statement includes your revenue and expenses. You want to know that your balance sheet includes things that the business owns and the things that you owe.

Linda Karressy  [00:20:49]:
You know, though. And what I can, and I know I can say basic, but to me those are really basic things. You, the goal is not for you to be, you know, be an accountant, but get confident and believe in yourself that you can learn what I consider just basic accounting. So, you know, okay, when you look at your finances, you know, from whoever, you can say, okay, that seems reasonable or that doesn't look quite, you know, quite right, but really build up that confidence. And, you know, how you build that confidence is listening to podcasts, you know, like these webinars. I'm big on other, you know, podcasts also reading, too. Listening to business news is also, you know, very good. So I think those are some of the underlining, particularly how you grew up, what you were told about money, and then your personal finance habit.

Linda Karressy  [00:21:38]:
It's hard because these are things that I believe no one can come and fix but you.

Victoria Rayburn [00:21:45]:
Oh, thank you. So good.

Linda Karressy  [00:21:47]:
That is where I think it really, people are like, no one is going to come and save me. So it's going to be up to you to say, okay, you know, I made some bad decisions money wise in my personal life. I did it, you know, probably in the business. Now what, what am I going to do? And you're not going to be perfect all the time, and people have to understand you're not going to be perfect. So this is where you just have to say, okay, next time I'm going to learn, you know, what lesson did I learn and implement it?

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Victoria Rayburn [00:24:21]:
Yes. So we will definitely include a link to that book in the show notes. Everybody needs to check it out. But I feel like I've thought about it, but not really thought about it. But yeah, I'm so glad you bring up the side of your personal finances and I mean your relationship with money, because you're absolutely right. That is a mindset that you probably unknowingly bring into your business. And I think so many of us try to compartmentalize. This is my personal life and this is my business.

Victoria Rayburn [00:24:45]:
But when you are a small business owner, as we all know, so much of it overlaps. But money definitely overlaps. I mean, not to mention how much money you're making. Also, a few affects how much money your family has. I mean, yeah. Oh, what a twisted, twisted spot. But I'm glad that also that you said that it's okay just to know the basics. I feel like you probably said those words and all our listeners just took a very, very deep breath.

Linda Karressy  [00:25:11]:
Yeah, yeah, yeah. That's all you need to know, you know, just. And I tell people as you start to review it, and particularly if you can find an accounting professional who sits with you, you know, once a month, and they kind of explain things. Okay, this is how this works. Like, for instance, you know, a lot of business owners, like, when they get a business loan, when you start to pay that loan, that payment doesn't hit the profit and loss statement. It hits the balance sheet, because that loan is on the balance sheet. And every time you, you know, you make a payment, that loan balance should go down. Those are the things you want to know as a business owner when you look at a financial understanding.

Linda Karressy  [00:25:53]:
Okay. Oh, I'm looking at the balance sheet. I'm looking at the loan section. So if I'm making a payment, my loan balance should be going down. And so those are the things that, you know, as you get. As you start to what I call get more familiar with them, you start to have that relationship. I always kind of like it. Like, you start to date more.

Linda Karressy  [00:26:14]:
You start to know, like, okay, that's what that means. And so you're just building that muscle.

Victoria Rayburn [00:26:20]:
So many good points. This episode is already full of so much wisdom. Thank you. Thank you, Linda. Okay, so I feel like we just made everybody feel a lot better. However, for the sake of making sure people are not making financial mistakes, we're gonna make them feel maybe a little worse for just a second. So, if you don't mind me asking, what are some common financial mistakes that small businesses make, and how can they avoid them?

Linda Karressy  [00:26:45]:
Yeah, I would say number one, and this goes from the solo entrepreneurs, and then even those that are like, that 2 million, even 3 million mark, you have to separate the business and personal expenses and income. So you need to have a separate bank account. It needs to be very clear. So you need to have your own personal account and your own business account, you know, checking and savings. And so just make sure that's very clear. You, you know, you can do transfers, and, you know, you'll pay yourself and all that, but just make sure. That is just very clear. And it's important because of tax purposes, too.

Linda Karressy  [00:27:19]:
It will help your tax preparer. So you want to make sure that you're distinguishing the business and the personal. You know, regarding that, I would say that number two is record keeping. For me, that's big. You want to have some type of system where you're just keeping all your documents. I know we get things on email electronically now. We get things on our phone. I would say if you have to hire someone for a couple hours a week or a couple hours a month, just to say, okay, put these documents in these folders.

Linda Karressy  [00:27:51]:
I'll give you. So when Covid hit a lot of businesses, they weren't able to apply because they didn't have their documents. They didn't know where things were. And so this is where I say, you can use cloud. I mean, whether that's Google Drive, Onedrive, whatever it may be, have folders for all of your records, for all of your receipts, for all of your business loans. You can have a folder called business loans. Put all that information in there, copies of your financial statements. Even though you may use an accounting software, always recommend that you download and put it on your company drive.

Linda Karressy  [00:28:28]:
Even the payroll reports, put all of that on there, all of your contracts. If you have 1099, your all of those things, because one day you're going to need those, that information. So I think that's really the big thing is because, I mean, they don't know where anything is. They don't, their bylaws, their previous tax returns. Save all of those documents. I think that's another one. And then number three, I think another mistake. And I don't know if this is a mistake, but I think this, we haven't, we in accounting profession, we do not teach.

Linda Karressy  [00:29:02]:
This is cash flow like monitoring your bank account. So some business owners, they never look at their bank account because they're afraid. Look at your bank account once a week. I tell people sometimes twice a week. Even if you're making 2 million, look at your bank account. Okay, is this what you're expecting to come in? Look at it. You may have already have an accountant or bookkeeper, but I always tell business owners, ultimately, the accounting responsibility is your responsibility. So when something goes array or something's good happen, that's.

Linda Karressy  [00:29:42]:
It's up to you. So look at the bank account. Oh, this deposit came in this expenses, or it could be something like you didn't recognize. And so that's where you go back and say, why is this not, why was this paid? What is this? And so look at your bank account. That's how you can manage, particularly when you are probably that 1 million to 2 million that it's, to me, that's the most efficient way to manage your finances, is to look at your bank account. I would also say, look at your credit card. So unfortunately, we have a lot of fraud going on. So even with your bank account, you want to look at it once a week.

Linda Karressy  [00:30:21]:
Even if you say, well, I don't use the credit card often. Just go in there and look at it, see what's going on. So I think that. I think probably another mistake is not looking at what products and services are making you money. You know, we get. We're making, you know, we're in the business. We get up every day. We're, you know, producing the product or service and not really stepping back and saying, okay, is this product and service really, is it worth it? You know, is this something that people.

Linda Karressy  [00:30:53]:
You know, you know, people need? Because sometimes I think, as business owners, it comes where we build it out of a passion, but it's not necessarily what people want. So really look at your. I think that's probably a mistake, not looking at your products and services. I see businesses who had, like, ten or 15 different products, and I'm like, you're only been in existence, like, for five years. That's a lot.

Victoria Rayburn [00:31:18]:
Yes.

Linda Karressy  [00:31:21]:
That'S a lot. So I would say those are probably the common mistakes that I see.

Victoria Rayburn [00:31:26]:
Thank you for breaking that down. So, simply, I hope that people listening are either like, oh, my finances are in better shape than I thought, or they're thinking, okay, those are the things that I need to make some changes with. So, Linda, I'm really excited for this next portion of the episode, because I know that you've developed a framework of five steps to help small businesses effectively manage their finances and increase the cash flow that you were just talking about. Could you walk us through these steps and just explain the rationale behind each?

Linda Karressy  [00:31:59]:
Yeah, I came up with the. This framework because these are really goes back to common mistakes or things that just, when you start off, you just don't know. You know, you just don't know, like, what I need to do. You may go to a business workshop, and, you know, people will say, well, get it. You know, get quickbooks. People don't realize quickbooks doesn't do your accounting. You. It's just a software.

Linda Karressy  [00:32:24]:
And so I wanted something just to say, okay, just do these five steps. Just start off with these five steps. You know, I don't want to keep using the word simple, but these are steps everyone can do. So, number one, it goes back to record keeping. This is from your solo entrepreneur, even to those that are 2 million, 5 million right now, because I've worked with businesses, 5 million, and they have no folders, nothing is organized. So you want to organize your documents. So, for instance, receipts, if you want to apply for a loan, sometimes they want to see quotes, they want to see receipts. They want to see payroll reports start to have whatever record keeping system.

Linda Karressy  [00:33:11]:
And when I say record keeping, that means just basically storing and saving the documents, having different folders for these type of documents. I would say with receipt, this is small businesses struggle because everything is electronic now. So we order online and then we get the order confirmation, which is the receipt, you know, through email. I would still suggest you save that as a PDF and save it in a folder because emails, you know, who knows what emails it can be shut down one day. You may need that document for a particular reason. So you want to start with the record keeping. That's not the fun part. That that's really.

Victoria Rayburn [00:33:50]:
But you did say that is something that like a bookkeeper could take care of for you.

Linda Karressy  [00:33:54]:
Even an office manager, if you have an intern, and particularly if you have staff, you know, just train them on, okay, you know, if project manager is responsible for ordering, you know, okay, have them start saving the documents, you know, themselves. So that is really key. So yeah, if your bookkeeper, office manager, you know, they can help you with that record keeping piece. Number two goes back to the separating the business and personal. That is very key. And I forgot to mention, because taxes, you want to make sure that you, you're just, you're getting the benefit being a business owner, there's a tax benefit of being a business owner. So separate the business and personal, not only with the checking, you know, the checking accounts, but even like with the receipts, you know, speak with your tax preparer about. Because I know sometimes business owners end up putting things in their personal name, which sometimes they probably should have put it in the business name.

Linda Karressy  [00:34:57]:
So you want to talk to a professional about that, keeping, you know, the business and business and personal. Number three, I've talked a lot about this, keeping an eye on cash. A lot of small business workshops, we focus once again on profit and loss statement and balance sheet. We have to focus on cash. And I would say you have to be double minded because you have to know, like the audience and the purpose. So, like, for instance, if you're talking to a bank about a business loan, you're going to talk to them. You know, you're going to show them the profit and loss statement and the balance sheet. That's going to be more what we consider accrual basis.

Linda Karressy  [00:35:40]:
They may ask for a cash flow eventually, but then internally look at the cash, because if you're able to increase your cash, then you're increasing revenue, and then you're basically able to sustain your business. You're able to take that extra cash and maybe invest it in other products and services, maybe possibly, you know, purchase another business. So that's why it's so important to look at those, that bank account because that if you think about it, the bank account, that's where everything get, everything flows in and out. It flows in and out. So if you just focus on the bank account and for instance, say, you know, I don't know, monthly sales is 5000 and you know that your monthly expenses, let's just say it's 3000 then, you know, your balance should be around maybe 3500 just for a cushion. So if you're looking at your bank account and you see today that I only have 2000, let me see if there's an outstanding invoice that's going to be coming in. Maybe do I need to maybe delay a bill? So you're being more proactive. So if you can start to focus on that top line, you know, cash coming in and that way you're always in what I can say, that business is growing.

Linda Karressy  [00:37:09]:
When you're increasing cash, your business is growing. So always making sure you're always keeping an eye on cash because that's where small businesses feel because they, they don't have enough cash, they'll have enough cash.

Victoria Rayburn [00:37:21]:
I love the simplicity of that, Linda. I mean, and that's like you said, you need to know what your basic numbers are. You know, the basics. And yes, you can do a flash look at your bank account and make a very easy assessment. But I think so often people don't know the basics. They look at their bank accounts if they are brave enough to look at them and they just go with their gut. And that is not a strategy.

Linda Karressy  [00:37:42]:
Yeah, no, no, exactly. And so if you, right now, if you don't know what your monthly sales is or your monthly expenses, you know what, go to back to the previous month, look at the bank statement, total, everything for, say, you know, all the, what I consider cash coming in, all the deposits total, all of the expenses. So that, you know, some banks listed as Ach and checks total all of that up and just say, okay, you know what, I'm gonna just start from there. Then every month say, okay, like I said, you know, sales, I don't know, 5000, expenses, maybe 3000. But right now the balance is 2000. So, you know, you need to at least cover that 3000. And that's where, like I said, just using those steps that don't try to oversimplify it and, you know, go to Quickbooks and open up all these different reports and create, you know, different spreadsheets. You know, let.

Linda Karressy  [00:38:38]:
We accountants can do all of that. But for. And this even for. I would. Even for, um, if you're making 2 million, 3 million, do this for the same thing. Go open up that bank account and. And do that. Because, I mean, I've talked to one lady years ago, and she was, you know, making three to 4 million, and she, you know, lost it all because of cash flow.

Linda Karressy  [00:39:04]:
So you. That's where cash is. So it's so important because when. And I know now I'm kind of going into the accounting piece. Piece up, because when you use Quickbooks, you're looking at the p and l and the revenue. So, say if you in. If you're invoicing your customers, they're not paying you when you invoice them. So you.

Linda Karressy  [00:39:26]:
That's why, once again, going back to. And I'm using the framework. That framework is business made simple from Donald Miller, using the cat, the bank account, to manage your finances. And when I went through that training, I'm like, oh, my God, why did we. You know, they didn't teach that. That's in business school. It was all about profit and loss. Balance sheet.

Linda Karressy  [00:39:46]:
Record your revenue, record your expenses. But how the real world works with small businesses is cash.

Victoria Rayburn [00:39:54]:
Yes.

Linda Karressy  [00:39:55]:
You got to look at that bank account. You have to look at that bank account. And then the last two, I would say using accounting software, whether you're a solo entrepreneur or up to 5 million, there's different options. You know, wait, there's wave. A lot of people don't know about wave. Wave is a free accounting software. So if you're a solo entrepreneur, that may be a good option for you. There's Quickbooks.

Linda Karressy  [00:40:19]:
There's zero. If you did, once you decide on accounting software, get someone to train you on it, because a lot of times, people get, like, quickbooks, and they're like, oh, I haven't used it in three years, so we don't want that to happen. And then, lastly.

Victoria Rayburn [00:40:36]:
Helpful if you use it.

Linda Karressy  [00:40:37]:
Yeah, yeah, exactly. And lastly, even I had to learn this is planning for taxes. And what I mean is having a tax planning session quarterly with your tax preparer. And so, like with my CPA, we meet quarterly. They ask me, okay, what's estimated sales for the quarter, the next quarter, the expenses. And then what we call, they run the numbers to see if, you know, oh, am I going to be owing or refund? And so that's where, you know, tax planning comes into key, particularly for businesses. So if you're going to planning on purchasing a vehicle or getting a business loan, whatever it may be, that tax planner can help mitigate some of that risk. So definitely put that on your to do list to have a tax planning session quarterly.

Victoria Rayburn [00:41:27]:
Linda, this has all been so good. And I do just want to say I so, so appreciate that you've built a business where you specifically help small business owners, you know, not feel silly for asking, asking questions. They're really, really breaking it down. Because I think there is just a lot of shame around this. I mean, I will be the first to tell you that, well, I did pretty well in most areas of school. Math was not it for me. So that is by far the most stressful part of owning a small business, in my situation, at least. But you've made this so, so approachable.

Victoria Rayburn [00:42:02]:
And, Linda, I know people are going to want to hear more from you. So where can people find you, connect with you, and learn more about the many resources and what resources, most services that you offer small businesses?

Linda Karressy  [00:42:15]:
Yeah, definitely. I would say I'm on LinkedIn, Insight Financial group. My full name is. You can find me also on LinkedIn. Linda Dicketake heresy. Also check out my YouTube channel. I have tons of videos. I do weekly videos, just short videos on different topics.

Linda Karressy  [00:42:34]:
So the YouTube channel is insight GRP. Sorry, insight Financial GRP. So definitely check out my YouTube channel. Once again, they're short videos, 1 minute, two minute videos on the different topics. Once again, this is where you can just build up your confidence about learning about accounting terminology. But definitely check me out on LinkedIn. That's where you can reach out to me. Also my website if you want a free consultation.

Linda Karressy  [00:42:59]:
Insight Financial group, indie. So those are the three platforms.

Victoria Rayburn [00:43:03]:
Well, we will link to all of those places in the show notes as well as the many really helpful resources, Linda, that you have shared with us today. Thank you. Thank you again so much for coming on the show. It has really been a pleasure.

Linda Karressy  [00:43:17]:
Thank you so much. Thank you so much. You know, don't be overwhelmed. It's, you know, it's day to day. There's no silly question. And Victoria, you're right. You know, a lot of people think, oh, this is a dumb question. There's nothing.

Linda Karressy  [00:43:29]:
You know, once again, we accountants don't even know everything.

Victoria Rayburn [00:43:34]:
Okay? That makes me feel a lot. That makes me feel a lot better. That will be my mantra every season. And then for those of you listening, thank you for tuning into another episode of Priority Pursuit. If you enjoyed this episode, we hope you'll take a moment to share it with your small business friends and that you'll join us next week for even more marketing boundary and priority driven tactics you can use to build a life and small business that you love.