Business Plans | equitybydesign

Put Your Money Where Your Mouth Is

August 16, 2017 by Monique Lusse Leave a Comment

Oh. Hell. No.

No to neo-Nazis.

No to white supremacists.

No to the KKK.

I will not take the same tack my German grandparents did in Hamburg, Germany during the rise of Hitler and the takeover by the Nazis. My Oma and Opa kept their heads down and their mouths shut.

They were the “right” kind of German: Aryan, white, blue-eyed, Lutheran, native-born, German speaking, hard working, compliant, heterosexual, married with two young children. One of them my father.

They made it through, but not unscathed.

So many people didn’t want to believe that Hitler was a threat; they thought that Germans loved democracy so much that Nazism couldn’t really take hold. And they paid for that denial with their lives.

Trump is dangerous. He is a threat. He has unleashed the white supremacists.

His speech and choice of words grants license to the torch-bearing. He has gone from using a dog whistle to a bull horn.

Will we have a presidential election in 2020? Will they be suspended or will we have sham elections?

Will “The Handmaid’s Tale” go from speculative fiction to documentary? I don’t know.

What I do know is that I can no longer keep my head down and my mouth shut.

This country was built on the backs of Native and African peoples. They were tortured and terrorized into compliance. Native peoples were legally exterminated. African peoples were legally enslaved. The inter-generational trauma affects us all. All of us. To. this. day.

I pledge to do what I can, to put my faith into action, to heal myself and to be a voice for healing.

So here’s me asking questions and getting answers.

What’s it gonna take to legally remove Trump from office? Here’s a long-term goal.

In order for a president to be impeached, a resolution for impeachment must pass the House by a simple majority. In and of itself, that’s a steep hurdle, especially when the president’s own party has control, as Republicans do now.

But in order to actually be removed from office, a president must be convicted by a two-thirds majority in the Senate — something that has never happened before.

Is the Klan active in my state, California? Oh. Yes.

William Hagen is the “Grand Dragon,” or state leader, of the Loyal White Knights faction of the Klan in California, according to Carla Hill, an investigative researcher with the Anti-Defamation League’s Center on Extremism, which tracks members of hate groups.

Democracy dies in darkness, says The Washington Post. So here’s me lighting a candle.

And what does this have to do with business? Plenty.

Every since I founded Equity By Design in 2011, I have been guided by this core principle: “I believe that business has the responsibility to be in service to social, environmental and economic justice – one way to do that is to design equity into the financial systems up front so that they create the space for thrival, not just survival.”

What you can do today is vote with your dollar.

Trump disbanded two economic councils today, the Manufacturing Jobs Initiative and the Strategic and Policy Forum, after 9 of the original 28 CEOs on the MJI resigned in the past few days.

Take a look at the chart mentioned above. See who resigned. See who didn’t.

Make decisions about how you are going to spend your consumer dollar. Invest your retirement funds in companies that support diversity and take a vocal stand against neo-Nazis, white supremacists, and the KKK.

Do you want to design equity into your financial systems? Schedule a free Financial Clarity Call today and let’s get a conversation started about how to make that happen. I can support and guide you to incorporating your values into your business, to put your money where your mouth is.

In the light,

Monique

Image: “Christmas Candle” by Alice Birken is licensed under CC0 Public Domain

Share this item with a friend

What are CFO services exactly?

July 26, 2017 by Monique Lusse Leave a Comment

There’s a concept in yoga called “neti neti.” Neither this nor that.

Sometimes it’s helpful when you’re trying to figure out what something is to define first what it isn’t.

What are CFO services exactly? What is financial operations management? What exactly is it that you do Monique?

Here’s what I don’t do.

I’m not a bookkeeper. They keep the books. They track and record the day-to-day transactions in QuickBooks or Zero or some such accounting software. They make sure the bills get paid and the customers pay up. As a virtual CFO, I use the financial statements that bookkeepers produce to analyze past performance and provide assumptions for future planning.

I’m not a CPA (Certified Public Accountant) or an EA (Enrolled Agent). These folks are tax preparers and know how to produce income tax returns and to give tax advice. I shudder to think of the continuing education CPAs and EAs need to go through to stay on top of the IRS and its changing regulations. I work with tax professionals to structure the business to the owners best advantage.

I’m not a financial planner. Those folks are great for giving you advice on what to do with the money–that I help you make–that you want to invest for your retirement, kids college and such. I help the business owner make the money to invest in their future.

I’m not a business coach. They provides positive support, feedback and advice to improve personal effectiveness in the business setting, according to Wikipedia. I work with business coaches to help the business owner move forward.

I’m not a financial therapist. Bari Tessler, financial therapist par excellance says: “I describe this work as integrating deep psychotherapeutic training with practical skills, tools, and financial training.” I work with financial therapists to support the business owner put the insights they gain into practice.

If you think of all these different roles as being players in an orchestra, then I am the conductor. These different roles are all connected to each other and the business owner. If they aren’t overseen and synced, then the left hand doesn’t know what the right hand is doing. Some functions can get done twice and others not at all.

Financial operations management and CFO services makes sure that the books are being kept in a format that provides the owner with information on which to base decisions, and gives the tax preparer accurate information to file the tax returns and give advice. It means preparing budgets and forecasts and business plans. It means securing loans and line of equity from banks. It means helping struggling companies turn themselves around.

Money flows to every part of your business. Every part. And having a virtual CFO on your team ensures that the entire picture is being looked after. Seen and overseen and responded to.

If you feel like it’s impossible to hit the mark when it comes to your financial operations, then it’s time to make some changes. It’s not impossible, it just requires a thoughtful, customized approach. That’s where I come in.

Equity By Design offers you expertise equal to a full time CFO at a fraction of the cost. Let’s have a chat about how I can turn your business around, even out your cash flow, and double your profits. Guaranteed.

Share this item with a friend

What It Takes to Get Your Business “Investor Ready,” Part 2

July 19, 2017 by Monique Lusse Leave a Comment

Image: “Horse Show in Scotland” by Edward McCabe is licensed under CC BY 2.0

This episode is all about what investors are looking for.

Not banks or credit unions, that was last week, but investors.

And which type of investor you will be pitching your company to depends on your exit strategy.

If you’re looking to sell your company lock, stock and barrel, that’s one type of exit. This could be a sale to your kids because you want to keep the business in the family, to another company who wants to expand their market share, or to an individual who wants to buy a mature, proven business.

If you’re looking to “go public” in an IPO (initial public offering), that’s another. This is where angel investors and venture capitalists come in. These guys, and they are mostly guys, are accredited investors–high rollers looking to gamble and win big.

And if you’re not looking to go public but want long-term investors to grow, that’s yet another. DPOs, or direct public offerings, involve unaccredited investors who are aligned with the mission of the company, kinda like crowdfunding but different.

The good news is that no matter what type of investor you’re engaging with, or what your exit strategy, as I mentioned in last week’s post, getting “investor ready” involves the same elements:

Good financial records.
Complete business plan.
Financial projections.
Solid management team.

Whether you are pitching to an angel, a VC, a family member, or a buyer, it pays to know what all they are looking for. Because different types of investors are focused on different aspects. The bank is interested in past performance and collateral. An investor is interested in the future and who you are: the jockey, not the horse. Both are interested in past and future; however, each places their emphasis on different parts of the picture.

Your CFO can prepare the information they want in the way they expect to see it. Investors want to see the numbers, and they want to see how you are going to reach those numbers. They want to see how they are going to get a big return on their money. And it gives investors comfort to know that you are working with a financial professional; it demonstrates to them that you know enough of what you don’t know to get the right support.

They want to see your financial history, so this means you have to have up-t0-date financial records.

They want to see your written plan on how you expect to get where you want to go, so this means you have to have a business plan that details every aspect of how you run your company: marketing, management team, financial projections, and production.

No matter what your exit strategy, working with a CFO is essential to your business health and growth. What to know more about how CFO services might help your business? Take the first step and schedule a time to talk with me about how I can help you get your business “investor ready.”

Share this item with a friend

What It Takes to Get Your Business “Investor Ready,” Part 1

July 12, 2017 by Monique Lusse Leave a Comment

I’m guessing that if you’re interested in getting your company “investor ready” it’s because you are looking for outside cash.

There are many reasons a viable company needs outside cash:

You need to purchase equipment to expand your business.
Your business is profitable, but you need to even out periodic negative cash flow.
You want to sell the company.
You want to attract top-notch key employees.
You’re a start up and need to raise capital.

While these reasons are different, they all have one thing in common: your company needs something from the outside. It’s your job, with the help of your CFO, to provide those potential sources of cash with the information they need in the way that they want it. You have to show them that you know what you’re doing. It helps to talk their language.

What you need to have in place to call yourself “investor ready:”

a solid finance and accounting team
1. full charge bookkeeper to handle the day-to-day operations and record-keeping in a complete, accurate and timely way
2. a tax preparer (CPA or EA) to file accurate tax returns in a timely fashion and to give you tax advice
3. a CFO to oversee all the financial operations and coordinate between the bookkeeper, the CPA/EA, you, and the bank or investors
documented business processes in the form of an Operations Manual
1. job descriptions
2. processes
3. procedures
a solid accounting system
1. pick a system you can grow into so that you have your financial and accounting history in one system.
a vision for the future, i.e., business plan
1. Marketing plan
2. Financial projections
income and payroll taxes filed on time
current, complete, and accurate financial reports
key management positions filled with experienced people, either as staff or consultants.

In fact, these best practices apply to all businesses, no matter what their exit strategy, how long they’ve been in business, or how many employees they have. However, not all business put in the effort to put these in place. That’s why some businesses fail in the first five years, some struggle, and some fail to thrive. But if your business wants to grow and needs cash from an external source, then these are essential for success.

There are two ways to get the cash you need to scale your business: debt or equity.

Debt financing: This is about borrowing money and repaying it with interest.

Equity financing: This is about selling shares of your business, thereby cutting investors in on the ownership of the business, and sharing the profits.

There are pros and cons to each. What it all comes down to is what’s the best deal you can negotiate at the time you need the money and with whom. As the fabulous Annie Savoy said in Bull Durham, “…it’s all a question of quantum physics, molecular attraction, and timin’.”

Types of investors:

Friends & family
Partners
Banks and credit unions
Angel investors & venture capitalists
Philanthropic foundations
Community investment funds
Accelerators & incubators

Let’s talk here about #3, banks and credit unions. I’ll cover the others later in other posts.

Banks, where your debt financing will come from, are more risk-averse than investors. And they rely more on your history of past performance and what assets you have to put up as collateral. This is also cheaper money than compared with what you’d get from an angel or VC; those types of investors want an ownership interest and a large return on their money. This is a good solution when you have collateral and a profitable business.

Banks want collateral up the wazoo. And if you don’t have collateral in the business, like equipment or real estate, they want a personal guarantee from the owner(s) using their personal assets, like the house.

Banks and credit unions are the best source of cash when you have collateral. Investors serve a different purpose and I’ll talk about them next week.

What your CFO does is provide the financial information the bank needs in the format the bank wants it in. For starters, they will want to see your tax returns and financial statements for the prior 2-3 years, budget and cash flow projections for the next 2-3 years, and a bunch of other supporting data (previous job history, personal assets, spouse’s income and assets, etc.)

In order for you to provide them with your tax returns, you have to have filed them, which means you have to have prepared them, which means you have to have an accounting system in place and a bookkeeper to have tracked the data. Your CFO is the best person to coordinate and direct this process.

When you’re looking to get your business “investor ready” I can help. Got questions? Pop ’em into the comments below and we’ll get ‘her done! And remember: there are no stupid questions. Never.

Share this item with a friend

Let’s Talk Cash Flow, Part 2

July 5, 2017 by Monique Lusse Leave a Comment

You’ll never find a company with positive cash flow and profitability in bankruptcy court.

Just won’t happen.

Let’s start with profitability. Whatever it is that you are selling, you have to be selling it for a/ more than what it costs to make and b/ more than what your overhead is. In other words, you have to have a bottom line that is in the black.

If you don’t, then that’s the first thing to fix by some combination of:

raising your prices
lowering your costs
increasing your sales volume.

There are two major break points in your business model: the gross profit (your sales minus your costs of goods) and the net profit (the gross profit minus the overhead expenses.)

The gross profit has to be in the black, otherwise you’re not in business but running a charity. And your gross profit has to be enough to cover your overhead expenses to get you to a net profit that also has to be in the black.

So say you are profitable, but you find yourself in a negative cash flow situation from time to time. Let’s look at some possible reasons for this happening and what the fixes are:

You manufacture a product or provide a service that require costs that you have to cover before you get paid by your customers.
- This is the easiest fix of all. Get some financing from a bank or from investors. More on what all you need to get “investor ready” in next week’s blog post.

You have customers that are slow payers, so you’re making the sales, but the cash is slow in coming in.
- get deposits from your customers
- get serious about collections.

You have a seasonal business and most of your cash comes in all at once.
- set aside a reserve account to carry you over the dry months.
- defer expenses and capital expenditures into months more flush with cash.

You show a profit on paper, on your Profit & Loss, but you’re making lease payments on equipment or financing a line of credit.
- this is a marketing fix…you just have to get more sales volume, either more customers or sell more to the customers you have.

When it comes to maintaining a sustainable business, there are two things you need to have in place: profitability and cash flow.

When you’re wanting to increase your profits and balance out your cash flow, I can help you get there. It’s just a question of honing in on the particular area specific to your situation and applying the appropriate remedy.

Would love to hear about your current challenges in the comments below.

Share this item with a friend

The Big Picture Perspective on Running The Money Side of Your Small Business

June 21, 2017 by Monique Lusse Leave a Comment

June, a recent client, told me that she wasn’t sure that she was doing things right when it came to the financial side of her business. When I first told her what I did for small business owners, help them get more profitable through accounting and finance, her eyes glazed over. Here’s exactly what she said to me, “I don’t know what I don’t know. Numbers scare the shit out of me.”

But here’s the thing, she already knew A LOT! She knew that there were things about financial operations and management that she really needed to know in order to grow her business profitably, and that she wanted to know what those things were, then understand them.

So here’s how I broke it down for her.

Think of your financial operations as a pie divided into three slices, like this:

photo by Monique Lusse, 2017

Anything you do in your business falls into one of those three categories: strategy, execution, analysis. Of course, each has sub-categories, and they have sub-categories, and those are covered in other posts; for right now, let’s just think about the meta view.

Here they are defined:

Strategy – how to think about what you want to do. This is about your ideas; it’s where you do research, examine your options, then pick one.

Execution – how to do what you strategized about doing. This is about hands-on implementation of that one option, making the idea a reality.

Analysis – how to interpret the results of the execution of the strategy. This is where you crunch the numbers and turn the data into information.

And then you do it over again in another round based on output from the first round. That’s right: rinse and repeat. The cycle never ends as long as you’re in business. It’s a constant iterative process.

When I laid out these three concepts to June, she let out a deep breath and smiled. “Oh, that’s so simple. I get that. I thought it would be much more complicated and I’d need an MBA to understand it.” she said. “It’s not so scary after all.”

Remember, anything you do in your business is either strategizing, executing, or analyzing. The trick is to do them in sequence. Strategize first, then execute, then analyze. And depending on the project at hand, this process can take 10 minutes, 10 hours, or 10 months.

Let me ask you…what area are you stuck in or confused about right now in your business? Ask me in the comment section below and I’ll be happy to unpack it for you.

Share this item with a friend

Breakeven Point: When What Comes In Equals What Goes Out

May 31, 2017 by Monique Lusse Leave a Comment

The “breakeven point” is that point when your revenues equal exactly your expenses. It’s the still point between profit and loss. When your bottom line = $0.00. When what comes in is what goes out. No profit. No loss. When the scales balance.

Here’s why the breakeven point is such a useful metric. It tells you how many units of whatever it is that your sell you need to move in order to cover your costs. It’s a predictive metric; you use it when you want strategize future activities.

You need to know three things in order to calculate the breakeven point: the sales price of the product, the cost to make the product, and your overhead expenses.

Say your make soap and your sell each bar for $8.00.

You know that it costs you $3.00 in raw materials and labor to make each bar.

That leaves you with $5.00 per bar of soap left over. This is your Gross Profit, btw.

Then you need to know what your operating expenses are for one year. Let’s say that’s $75,000 for twelve months of rent, salaries, website, depreciation, and sales and marketing.

Here’s the formula: operating expenses ÷ gross profit/unit = # units to breakeven

$75.000 ÷ $5 = 15,000 bars of soap

If you sell 15,000 soap bars at $8 each, you bring in $120,000 in Gross Revenue.

Your Cost of Goods Sold is $3 x 15,000 for $45,000.

Your Operating Expenses are $75,000.

$120,000 – $45,000 = $75,000 – $75,000 = $0.00

This metric is a great metric to use when you are constructing your budget. Start with estimating your expenses, you then use that number to determine how many units you need to sell in order to cover your costs. If you feel that unit number is too high, then figure out how to lower your costs to get to a number that you are comfortable with.

It’s also a great metric to use when you want to figure out how many units above the breakeven point you need to sell to make a certain amount of profit. But that’s another post.

When does breakeven analysis come in handy?

When you are want to scale up your business and need to figure out how much more overhead you’ll need to take on in order to be able to support the increased sales volume.
When you’re thinking about a new hire, say an Operations Manager, and you want to figure out how many more units you will have to sell in order to justify their salary.
When you’re thinking about buying some new equipment or moving to a larger location this analysis will help you see how many units you’ll need to sell in order to make that worth your while.
When you’re thinking about starting a new product line and want to see if the numbers work or not.

There’s so much to talk about with breakeven point…let me know what’s on your mind about this in your business and I’ll be happy to help. Just hit me up in the comments below with your questions.

Share this item with a friend

Crunching the Numbers: Look Behind to Look Forward

May 24, 2017 by Monique Lusse Leave a Comment

There are two types of metrics: evaluative and predictive. In other words, metrics can either look back to quantify past performance OR they can look forward to help you make guesses about future results based on past activity.

When setting up a budget for the next year, it helps to look at actual numbers from the past. In this case, we’ll be using the percentages of Owner’s Draw against Income.

Here’s the math: divide the actual Draw into the actual Income for each of the past three years. This gives us a percentage of Draw to Income for each year. Then apply that percentage to the projected 2017 income of $625,000 to get the high and low ends of a range of possible Draw for this coming year.. The actuals are in green and the projections are in purple.


			projected 2017 income	$625,000

<—	——-	rear view	———–>	<– windshield –>
Year	Income	Draw	% Draw to Income	range for 2017 draws
2014	$500,000	$265,000	53%	$331,000
2015	$390,000	$137,000	35%	$220,000
2016	$370,000	$110,000	30%	$186,000

So what this is telling us is that the range for the Owner’s Draw is from $186k-$331k.

If you find these strategies helpful and want to know more, then hit me up in the comments below with your questions and I’ll be happy to answer them.

Share this item with a friend

Why Hiring a CFO is Good for Business

March 3, 2015 by Monique Lusse Leave a Comment

cash_is_king

I talk to a lot of entrepreneurs about their financial systems and structures.

By the time they finally approach me they usually feel desperate for help.

Sometimes they’re not able to get a bank loan or line of credit because their financial statements aren’t up to snuff.

Or they feel stretched too thin and overwhelmed, and they aren’t even sure their bookkeepers are giving them correct statements and financial reports.
Or, they’re simply exhausted. They’ve stayed up late and worked more weekends than they care to admit, trying to learn QuickBooks; they feel like failures.

Do these situations ring a bell?

First, I want to assure you that you are not alone. And second, it doesn’t have to be this hard.

I’m a Virtual CFO, and I serve people just like you—smart, savvy business owners who are experts in their fields, yet they need support with their accounting and financial systems.

What is a virtual CFO? A virtual CFO, Chief Financial Officer, provides professional accounting and finance assistance to growing businesses that require a high level of expertise, but don’t yet have the growth or revenue to bring that role in-house. How does it work? I offer either an on-going partnership relationship or specific project-based assistance and support. I meet many of my clients via telephone, Skype, or on GoToMeeting; however, my local clients and meet in person, depending on their needs and locations.

The beauty of working with a virtual CFO is that you can work as much or as little with them as you’re needs and budget dictate. What kinds of things does a virtual CFO do?
My business is unique. I don’t offer cookie-cutter solutions to my clients. I understand that each business and business owner has individualized needs.

My services include, but aren’t limited to:
• Oversight of your bookkeeper ensuring you get accurate, timely and complete information
• Vetting and hiring your bookkeeper (if needed)
• Close collaboration with your CPA
• Vetting and hiring of your CPA (if needed)
• Ensuring you fully understand everything your CPA tells you
• Preparation of cash flow projections
• Working and problem-solving with your bank
• Determining pricing structures
• Reading, understanding, interpreting your financial statement
What can you accomplish with all this support?
Your Virtual CFO is your trusted ally. With her support, you can finally focus on your genius work—the work you love doing and feel called to do. You will be happier, have more time, and get better results.
Rather than throwing your hands up in frustration over QuickBooks, you’ll have more time for client work, idea generation, content creation, and networking—the stuff that actually brings you more money. In other words, you will be working on your business, not your books.

Isn’t it time you delegate the tasks that don’t bring you joy, clients or income? Isn’t that why you got into business in the first place?

If you have questions about how I work and the results I deliver to my one-on-one, private clients, please click here to set up time for a Financial Clarity Call. The call is free, and there’s no obligation.

Share this item with a friend

Habits & Practices, Part 2

June 6, 2012 by Monique Lusse 1 Comment

You may have noticed that my last post was over three months ago (March 1, 2012, to be exact, but who’s counting?) I’ve noticed, but that’s because I’ve been so busy not writing it. This is only a problem because, well, back at the beginning of the year, I had set the intention of writing one blog post a week. So that means that for the ensuing 13 weeks, I fell off–and stayed off–the proverbial horse.

And what was the title of that long-ago post, you ask? Habits & Practices. Holy cow. Richard Bach wasn’t kidding when he said, “You teach best what you most need to learn.” Illusions: The Adventures of a Reluctant Messiah (1977).

So, here I am, back in the saddle. And I want to tell you how I did it: I took action. But I’m getting ahead of myself.

What are habits and practices anyway? What’s the difference between them? Sometimes not much, it turns out. You can say, “It’s my practice to read the paper every morning.” Or you can just as easily say, “It’s my habit to read the paper every morning.” In this case, they both mean the same thing.

But here’s how they differ. A good habit is a regular action that you take, like balancing your checkbook every month on a specific day, or flossing your teeth (just the ones you want to keep) every night. A best practice is a documented process that will bring about the highest quality and excellent results, like a checklist specifying the necessary steps for how to balance your checkbook.

You can develop a habit to get a practice done, like scheduling a regular time on your calender to write your weekly blog post. You can also develop a practice to adopt new habits or strengthen existing ones. That’s the beauty and fluidity and inter-relationship between good habits and best practices.

But, and here’s the thing that got me out of the 13-week doldrums, I think that habits and practices are only two legs of the three-legged stool of getting things done. The third leg is what has been eluding me these past three months: take action!

It’s not like I didn’t have the time to write, it’s not like I didn’t have a fabulous technical VA to push it out to my list for me, it’s not like I didn’t know how to put a post together. No, there was an intangible, yet essential piece missing and now I know what it was: just do it! (Do I owe Nike anything for using that?)

What got in the way was this idea in my head that if I couldn’t do it perfectly, then I couldn’t do it at all. And here’s the kicker: I don’t even know, couldn’t tell you if you held a gun to my cat’s head, what “perfect” even looks like! So talk about a double-bind.

So here’s wishing you a comfortable seat on the stool as you move forward in your life and in your business. All the best.

Share this item with a friend