From Panic to Profit: Demystifying Money with Carleen Dehaney

May 9

"You can be very profitable and have no money. And how that happens is, you make lots of sales. So you've got lots of revenue going in, maybe your expenses are not that high. So you come with a lot of profit, remember you will be taxed on that profit, even if for all the revenue, it's sitting at accounts receivable. So that's where your clients owe you money. And if people aren't paying me on time, then there's no money in the bank now to pay suppliers, to pay yourself." - Carleen Dehaney

From Panic to Profit: Demystifying Money with Carleen Dehaney

How can nonprofit consultants better manage their finances, cashflow, and profitability?

It's a common pain point that keeps many consultants up at night. You're not alone!

Tune into this conversation on Confessions with Jess and Cindy with Carleen Dehaney, Founder and Principal of FXO Consulting. With over a decade of experience guiding consultancies and nonprofits, she shares her proven framework for getting your numbers in order.

Learn how to calculate your gross and net profits to know where you stand each month. Discover easy-to-use budget forecasting models to plan for the future and make informed decisions about growth. Plus, strategies to improve cash flow management when working with nonprofits who (sadly) often pay late.

Carleen also tackles the mindsets and behaviours that hold many back from getting financially savvy. As she reminds us, "If you don't take care of the business, it won't survive and then you can't help anybody."

Key Highlights:

Learn how to calculate your gross and net profits
Discover easy budget forecasting models
Strategies to improve cashflow management
Mindset shifts to become more financially savvy
Actionable ways to start saving 3-6+ months of operating costs

00:00:00 Introduction to Nonprofit Coaching and Consulting Business

Cindy and Jess introduce the Confessions podcast focused on helping nonprofit coaches and consultants scale their businesses past six figures.

00:02:41 Financial Management and Growth Strategies for Nonprofits

Carleen from FXO Consulting discusses the importance of a dream team and compliance in financial management for nonprofit organizations.

00:06:52 Making Informed Financial Decisions

Carleen emphasizes the importance of understanding financials to make informed decisions for business growth and success.

00:08:58 Defining Growth in Nonprofit Businesses

The conversation explores different aspects of growth, including revenue, profitability, and business model adjustments for individual business goals.

00:09:58 The Cost of Hiring and Buying Back Time

Discussion on the cost and value of hiring employees who can bring new skills to the table, buying back time, and the growth it brings.

00:12:03 Modeling, Forecasting, and Cash Flow Management

The importance of understanding client personality types, making assumptions in forecasting, tracking cash flow, and being responsive to changes to maintain financial stability and confidence.

00:15:12 Cash Flow Challenges for Consultants

Exploration of cash flow challenges for consultants, separating profit from paying oneself, and managing cash flow effectively as a sole proprietor.

00:16:15 Treating the Business as Its Own Entity

Recommendation to treat the business as a separate entity, understanding profitability vs. cash flow, and simplifying cash flow management for better financial control.

00:19:27 Rapid Fire: Most Extravagant Business Expense

Carleen shares the most extravagant business expense of hiring a business coach to transition from a business owner to a CEO.

00:20:33 Embracing Creativity and Spontaneity

The guest shares how engaging in creative activities like paint night helps them relax and let go of structure and organization in life.

00:21:11 Managing Cash Flow and Forecasting

Discussion on adjusting payment terms to improve cash flow, importance of forecasting, and taking responsibility for financial decisions in business operations.

00:22:09 Shifting to a CEO Mindset

Encouragement for nonprofit consultants to transition from a service provider mindset to a CEO mindset, emphasizing the need to prioritize business sustainability and internal operations.

00:24:12 Outsourcing Information Framing for Strategic Decisions

Advice on outsourcing financial expertise to understand and make strategic decisions effectively in business operations.

00:25:18 Mindset Shift in Nonprofit Sector

Addressing mindset challenges in the nonprofit sector regarding profitability, sustainability, and aligning financial management with the organization's mission and long-term goals.

00:29:53 Recommendations for Financial Vehicles

Discussion on high yield savings accounts, GICs, and investment managers for client recommendations.

00:32:46 Steps for Building Financial Buffer

Advice on setting aside funds consistently, integrating into forecasts, and adjusting business models for profitability.

00:36:02 Utilizing Seasonality for Financial Planning

Using profitable months to set aside funds for leaner months, balancing cash flow and forecasting for sustainable financial management.

00:38:10 Confession: Thinking in Excel

Admission of being a "nerd" who plans everything, including holidays, groceries, and business strategies in Excel.

00:39:56 The Importance of Adaptability with Age and Experience

Adapting to unexpected situations with a calm demeanour, focusing on solutions rather than emotions, and growth in adaptability with age and experience.

00:40:47 Connect with Carleen Online

Carleen is active on LinkedIn and available for bookings on fxoconsulting.com, encouraging listeners to connect and start a conversation.

00:41:15 Ways to Support the Podcast

Encouraging listeners to support the Confessions podcast by sharing episodes, leaving reviews on Apple Podcasts, and subscribing for upcoming interviews.

00:00:00 Introduction to Nonprofit Coaching and Consulting Business

Cindy and Jess introduce the Confessions podcast focused on helping nonprofit coaches and consultants scale their businesses past six figures.

00:02:41 Financial Management and Growth Strategies for Nonprofits

Carleen from FXO Consulting discusses the importance of a dream team and compliance in financial management for nonprofit organizations.

00:06:52 Making Informed Financial Decisions

Carleen emphasizes the importance of understanding financials to make informed decisions for business growth and success.

00:08:58 Defining Growth in Nonprofit Businesses

The conversation explores different aspects of growth, including revenue, profitability, and business model adjustments for individual business goals.

00:09:58 The Cost of Hiring and Buying Back Time

Discussion on the cost and value of hiring employees who can bring new skills to the table, buying back time, and the growth it brings.

00:12:03 Modeling, Forecasting, and Cash Flow Management

The importance of understanding client personality types, making assumptions in forecasting, tracking cash flow, and being responsive to changes to maintain financial stability and confidence.

00:15:12 Cash Flow Challenges for Consultants

Exploration of cash flow challenges for consultants, separating profit from paying oneself, and managing cash flow effectively as a sole proprietor.

00:16:15 Treating the Business as Its Own Entity

Recommendation to treat the business as a separate entity, understanding profitability vs. cash flow, and simplifying cash flow management for better financial control.

00:19:27 Rapid Fire: Most Extravagant Business Expense

Carleen shares the most extravagant business expense of hiring a business coach to transition from a business owner to a CEO.

00:20:33 Embracing Creativity and Spontaneity

The guest shares how engaging in creative activities like paint night helps them relax and let go of structure and organization in life.

00:21:11 Managing Cash Flow and Forecasting

Discussion on adjusting payment terms to improve cash flow, importance of forecasting, and taking responsibility for financial decisions in business operations.

00:22:09 Shifting to a CEO Mindset

Encouragement for nonprofit consultants to transition from a service provider mindset to a CEO mindset, emphasizing the need to prioritize business sustainability and internal operations.

00:24:12 Outsourcing Information Framing for Strategic Decisions

Advice on outsourcing financial expertise to understand and make strategic decisions effectively in business operations.

00:25:18 Mindset Shift in Nonprofit Sector

Addressing mindset challenges in the nonprofit sector regarding profitability, sustainability, and aligning financial management with the organization's mission and long-term goals.

00:29:53 Recommendations for Financial Vehicles

Discussion on high yield savings accounts, GICs, and investment managers for client recommendations.

00:32:46 Steps for Building Financial Buffer

Advice on setting aside funds consistently, integrating into forecasts, and adjusting business models for profitability.

00:36:02 Utilizing Seasonality for Financial Planning

Using profitable months to set aside funds for leaner months, balancing cash flow and forecasting for sustainable financial management.

00:38:10 Confession: Thinking in Excel

Admission of being a "nerd" who plans everything, including holidays, groceries, and business strategies in Excel.

00:39:56 The Importance of Adaptability with Age and Experience

Adapting to unexpected situations with a calm demeanour, focusing on solutions rather than emotions, and growth in adaptability with age and experience.

00:40:47 Connect with Carleen Online

Carleen is active on LinkedIn and available for bookings on fxoconsulting.com, encouraging listeners to connect and start a conversation.

00:41:15 Ways to Support the Podcast

Encouraging listeners to support the Confessions podcast by sharing episodes, leaving reviews on Apple Podcasts, and subscribing for upcoming interviews.

Find Us Online: https://www.confessionswithjessandcindy.com

Connect with Carleen:

FXO Consulting (Website): https://fxoconsulting.com/

Carleen Dehaney (Linkedin): https://www.linkedin.com/in/carleendehaney/

Connect with Cindy:

Cindy Wagman Coaching https://cindywagman.com

Fractional Fundraising Network https://www.fractionalfundraising.co/

LinkedIn: https://ca.linkedin.com/in/cindywagman

Connect with Jess:

Out In the Boons: https://www.outintheboons.me

LinkedIn: https://www.linkedin.com/in/jess-campbell-outintheboons/

Transcript:

[00:00:00:00:00:01]

Welcome to the Confessions podcast.

[00:00:01:00:00:03]

I'm Cindy Wagman.

[00:00:03:00:00:11]

And I'm Jess Campbell. We're two former in house nonprofit pros turn coaches and consultants to purpose driven organizations.

[00:00:11:00:00:20]

After years of building up our separate six figure businesses from scratch, we've thrown a lot of spaghetti at the wall and have lived to see what sticks.

[00:00:20:00:00:30]

We're on a mission to help other nonprofit coaches and consultants looking to start or scale their own businesses past the six figure mark by pulling back the curtain.

[00:00:30:00:00:51]

Whether you're still working inside a nonprofit and thinking of one day going out on your own or you've been running your consulting business for years, you understand that working with nonprofits is just different. We're giving you access to the business leaders who serve nonprofits as their clients. You know, the people who truly get it.

[00:00:51:00:01:10]

No more gatekeeping, no more secrets. This podcast is going to give you an inside look at what running a successful nonprofit coaching and consulting business looks like. Basically, we're asking people how much money they make, how they get paid, and what has and hasn't worked in their businesses.

[00:01:11:00:01:27]

Listen in as these leaders share their insights, their numbers, and the good, the bad, and the ugly. When it comes to building a nonprofit coaching or consulting business, we're going to empower you to make the power moves that give you the income and freedom you set out to create from day one.

[00:01:28:00:01:30]

You ready? Let's go.

[00:01:31:00:01:32]

Hey, Jess.

[00:01:32:00:01:33]

Hello.

[00:01:33:00:01:35]

We're going to talk about money today.

[00:01:35:00:01:36]

Yay.

[00:01:39:00:01:44]

I love how Cindy and our guests are like, yay. And I'm like, panic.

[00:01:44:00:01:59]

This is Jess's, like, least favorite thing to talk about. But I, like most people, don't know this about me. When I plan my business, I do it in a budget. That's how I make decisions. So we're gonna have a lot of fun music.

[00:02:01:00:02:02]

Yeah.

[00:02:02:00:02:28]

But before we dive into our content and introduce our guest, I just want to give a disclaimer, because we are talking about things that are could borderline around, like legal, tax, accounting. And so for today's conversation, it is solely intended for educational purposes and should not be considered professional, legal, tax, or accounting advice.

[00:02:28:00:02:28]

Fair.

[00:02:28:00:02:41]

You got it, Jess. Got it. All right. It is my pleasure to invite Carleen de Haney to the podcast. Carleen from FXO Consulting, welcome and tell.

[00:02:41:00:02:42]

Us about what you do.

[00:02:42:00:03:02]

Oh, thank you. Thank you for having me on the podcast. So I'm like, you introduced. I'm the founder and principal of FXO Consulting. We focus on business consulting and coaching, particularly focusing on financial management and growth strategy. And I specialize in working with service based businesses and nonprofit organizations.

[00:03:03:00:03:30]

Amazing. So as small business owners, people as you, even just from what you heard in the introduction, people have various levels of comfort, let's call it, with money and budgeting in their business. So let's start with some basic things. Like if you are running a business, like what are the core? I want to call them tenants or.

[00:03:30:00:03:32]

Pieces of things that you need to.

[00:03:32:00:03:38]

Be aware of or considering when it comes to having a solid financial situation.

[00:03:38:00:05:20]

Absolutely. I kind of talk about, for me, like a framework, and that's the two parts of that I talk about having a dream team. So whether that's a bookkeeper, your public accountant, a lawyer, insurance, people to take care of the financial and operational and legal sides of your business, even if you're not going to be maybe incorporating from day one, I would always suggest go out, meet different professionals. So in the case that you do need somebody, you've already got a relationship with them. It's not, you know, in the, in the situation that something happens. Now you're panicking, trying to find a referral, find someone to work with. So always kind of having that dream team in place, and then on the day to day, it's thinking about that framework of compliance. So making sure, are you filing any taxes on time, do you have any reporting requirements? And then internally, if you can, if you've got bookkeeper or you're doing your own bookkeeping, looking at your financials once a month, what's your profitability this month when you look at gross profit? So that's what you derive from your revenue, less the cost of deriving that revenue, and then thinking about what's your net profit after all your overheads, whether that's renting an office space, pay for your it subscriptions, maybe utilizing an assistant, and then looking at the bottom line and making decisions from there. So I say on a day to day basis, it's who you're working with and what you need to do, and then just making sure you're working with your accounting professional, or if you're confident enough, doing it yourself and just making sure that you're up to date with any filings, payments, et cetera. So I think that those are the kind of the key fundamentals of a day to day kind of financial management.

[00:05:20:00:06:51]

Okay, I'm having a little bit of a giggle because in an episode we recorded earlier, Cindy was saying how she's organized but not prepared. And I would say when it comes to finances like that actually is not accurate. She's prepared and when you just said, like, you know, good practices are looking at your finances once a month, you would be horrified at, like, my practice. And so, like, given that we've got these two extremes on the call. Right. Like, what are some suggestions advice for, like, getting started? I was actually listening to a podcast yesterday, just about how humans love routine and habits, but forming them is quite difficult, and I find, as an adult, that only becomes more and more difficult. So, yeah, like, for the non-Cindys of the world, which, like, I, too. Like, I. In some ways, I'm just, like, so in awe of, like, the way that that, like, brings her comfort, because for me, it just feels like such a chore. Like, I get no joy from it, but I know that it's important. Right? I know this, and I have a lot of privilege in that I always have money in my bank account. Like, I always have a surplus. I always have incoming business. Like, I know how to turn it on. Like, I also know that that's probably not the most amazing way to run my business. So, like, what's step one? What's step two for the folks like me?

[00:06:52:00:08:17]

Oh, absolutely. So I'd say when I work with clients, I try to emphasize the goal and the why. So it's not necessarily I'm trying to make you an accountant or a bookkeeper overnight. You've got an area of expertise that you're really good at. If you get on top of this, you can then maybe get away from being in the day to day grind. You don't have to be in the business so much, because you're constantly trying to generate money and you can plan for the future. So how is this business going to grow? How is it going to succeed? How can I, when I talk about making informed decisions? So I'd really like to take on a new assistant. Can I do that? So you can make those decisions? So, it's not necessarily about, you know, getting in the weeds with KPI's and percentages and that kind of thing, but it's being able to utilize it in a way that you can make decisions that make huge, more successful. And that's the feedback I get from my clients. It's very much like, I'm actually really looking forward to our session because now I can make decisions. Before, I was scared of, you know, what if I don't calculate this correctly? Or what if, you know, just getting really caught in the weeds and you can utilize other people, whether it's your bookkeeper, can you calculate the variance month over month or year over year. Now you've got those numbers. Let's talk about those numbers and what they mean, what the implications are. So looking at from that lens, it allows you to make decisions as opposed to did I get the numbers correctly? Because you can work with somebody to do that.

[00:08:18:00:08:33]

Yeah, absolutely. I want to talk about what if there's people who don't want to grow? Like, in fact, I'm thinking of Cindy, who intentionally contracted her business to actually she.

[00:08:33:00:08:36]

Oh, my. I pay myself more!

[00:08:36:00:08:58]

I was just gonna say she contracted her. Yeah, but what I was gonna say is she contracted her overall revenue, but yeah, pays herself more. But like, gross. I think is actually this tell us we need to do. But like, do we, and like, what if you're someone like me? That actually doesn't, thats a really interesting.

[00:08:58:00:09:49]

Way of thinking about it. I appreciate that feedback. I think its thinking about what does growth mean to you? So is it looking at your business model and saying, okay, Im going to not necessarily grow in revenue, but Im going to grow in profitability. So Im able to pay myself more. So its looking at those different areas of growth. Do I need to continue to have this office that IM renting? Does that drive revenue? If not, then lets get rid of it. That grows your net profit at the bottom line. So it's really, I think it'd be good to kind of define what growth means to each user. I think that would be really important. And when I talk about those models, it's then making those decisions. Like, do I need that? Is it actually helping me bring in more money or is it just taking away from the money that I could pay myself and then growing that? So really, it's really thinking about making the model work for you.

[00:09:50:00:09:57]

And to be fair, Jess, like, you made a big investment this year in a staff person's like, that's a form of growth.

[00:09:57:00:09:58]

Yeah.

[00:09:58:00:10:42]

And I remember you, like, agonizing, like, can I afford this? What is like, how much do I need to be bringing in to support that, that position? I also, we were talking before, before we started recording, Carleen and I were talking like, I paid, I hired up for the first time where I hired someone who I don't have to teach, who can actually bring skills to the table and teach me things. But you have to, like, in some ways, I'm buying back my time and you're buying back your time. And that's like a form of growth, I think, which is like giving yourself more time back from, from doing the work. Um, but there's a cost to that. So I think we all, I was.

[00:10:42:00:12:03]

Just going to say that cost is a really important, um, I think, thing that I'm imagining. Carleen, you actually, like, almost coach people through. Because while maybe in, like, Cindy's world, she would win a. When maybe a big opportunity, like, fell in her lap, actually, I know Cindy. She, like, would do it too. But, like, if a big, unexpected opportunity fell in her lap, where I'm like, I'm just going to do it and figure it out later, that's kind of, and I have a more comfortability with that than a lot of my peers, where if that's maybe not your comfortability, you help people just like, always have a planned amount. I'm guessing, like, saved. Because, like, I'm even thinking if we were to be working together and I was sitting in your chair back in November, this would, this opportunity that fell in my life in January would not have even been, like, on my radar. Something I was thinking, it, like, literally plopped down from the skies and I was like, I gotta take it now. But I was okay with saying yes and figuring it out later where I know a lot of people don't like to operate in that world of stress and that too. So I think you have to weigh those things as well, probably, I'm guessing, yeah.

[00:12:03:00:15:12]

And it definitely does fall into basic fundamentals and then thinking about the personality type of the client that you're working with. So some people would like a really big buffer in cash, maybe sitting in a Gic or something, just in case it's earning interest. I know that I could operate my business for six months even if revenue didn't come in the door. Whereas others want to have more, a lot leaner, tighter type agility. So they want to use the cash to reinvest in the business. So maybe business development and it generates more revenue and they're more comfortable having a leaner, you kind of buffer there just in case anything happens. And definitely talking about, when we talk about modeling and forecasting, you can model, and it's a bit of an art, not necessarily a science. You're going to make assumptions, and those assumptions might change tomorrow, next week, at the end of the year. So when I work my clients, I always recommend that note all the assumptions that you're working with. So you remember, why did I plug that number in there? What was I thinking? What did I think was going to happen? And then when you look at it again a month later, six months later, oh, actually, yeah, that did happen. Or it happened better, or actually it didn't happen at all. So you could then have different versions of that forecast. And something else also suggests is once you have your baseline forecast, you can make another copy of it and play with it. So if something comes along and you might need to spend the money now, but you might not see the return in revenue for twelve months, plug that number in. What does that look like when it impacts my profitability? And what does it look like when it impacts my cash flow? Is this sensible or is it going to be tight or do I need to get more funding? Or whatever the decision is, it just allows you to talk about being more responsive than reactive. So, you know, okay, if this happens, or I'm looking at the trend of what's happening on my actuals, I could see six months down the line, things might get a bit tight if this continues the way it's going. So then you can make decisions and act accordingly. Reach out to whoever you need to reach out to, as opposed to you wait till the six months. Things have always been fine, kind of sort of, and then all of a sudden it isn't. And now, again, I talk about those relationships. If you haven't built up those relationships, whether they're professionals, whether it's funding, you know, you've given the bank a heads up or whoever you need to get funding from, you're doing it in kind of the short term, kind of panicky, then that confidence is less like, why didn't you know that was going to happen? Why weren't you more prepared? Those kinds of things. So it's always about both on the for-profit side and the not-profit side that I work with about confidence. So with all the stakeholders: who you work with, who you bank with, your clients, you know, your suppliers - if people have confidence in you, and even if it's not going to be positive, but you say, hey, there's a heads up, I typically pay you on time, but it's a bit tight. I will pay you in six weeks instead of four weeks. Most people are reasonable. Thank you for letting me know. I've had a good relationship with you. You know what, that's fine. I'll wait for the six weeks as opposed to: it's not paid on time. What's happened? You didn't let me know. Is something wrong? Should I be concerned? So it's always kind of having that in the back of your mind.

[00:15:12:00:15:48]

That is such an issue for nonprofit serving consultants in terms of cash flow. And I want to dig into this topic a little bit more because I do think cash flow becomes very, I don't want to say crisis. I have seen a lot of consultants who, who struggle significantly with cash flow, but also where they don't really understand or separate the idea of, like, profit versus paying yourself and then how to manage those things. Like they kind of think, okay, every.

[00:15:48:00:15:49]

Client is going to pay me as soon as I send an invoice, which we know isn't true. So how should we think about profit, net profit, and paying ourselves if we're sole proprietors? Assuming, like, I think most people are sole proprietors in the states, they call it slightly different, but it's basically the same thing. And then let's start with that, and then let's talk more about cash flow. But I feel like there's a lot of questions in there. So that's like a starting point.

[00:16:15:00:19:17]

No, absolutely. So, obviously, as a sole proprietor, you are the business, but I always recommend that you almost still treat the business as its own thing. It's not an entity legally, but it's its own organization. So separate bank accounts, separate documentation, just have it operating like it is incorporated, even if legally it isn't. And then when I talk about those two models, I think the key ones for me are the cash flow and the forecast. To look at profitability, because I've spoken about often that you could be very profitable and have no money. And how that happens is you make lots of sales, so you've got lots of revenue going in. Maybe your expenses are not that high, so you come with a lot of profit. Remember, you will be taxed on that profit, even if for all the revenue, it's sitting in accounts receivables. So that's where your clients owe you money. And if people aren't paying you on time, there's no money in the bank now to pay suppliers, to pay yourself. So they're almost two separate contexts and kind of keeping that in mind and then walking through that cash flow. So with my clients, we work on a very simple cash flow model. And, you know, you can get very complex with, like, things in excel, for example. But I found there's no value for that with my clients because they're not looking to come, like I said, finance professionals. They just want to be able to manage their business. So just looking at, taking a step back. So once you've done the forecast model, looking at what is the timing of the actual cash coming into the business, so that there might be a four week delay, there might be eight week delay between you booking something that's kind of revenue income coming into your business and you actually seeing that money come in and then think about other things. So maybe you take credit card payments, for example. There's a bit of a timing delay, and actually, you don't receive 100% of that income because of the fee that comes out of there. So just keeping those things in mind. So when we look at the cash flow, it's like the actual movement of cash in and out of the business. Not what you've invoiced somebody, not what you know, because the terms are four weeks. But typically, you know, this client always takes, like, three months to pay you, putting that in. And I think, coming from my background, you're always more kind of pessimistic. So, you know, if it's typically, you know, you've got four week terms on your invoices, that actually, this client always takes three months put in three months. You know, worst case, you could put three and a half months. If they pay you earlier, great. You don't have anything to worry about, but you're prepared if they always act the way they've always been acting. So, again, it's putting in those assumptions, you know, different types of revenue or different types of client. You know, this is why we've. I've moved this out for three months, because typically, that's. That's what the performance has been, because then you're more prepared if you need to have a cash injection. If it's positive and it happens earlier, great. Then you don't have to worry about it. So then you're prepared. So if you have to put money in yourself or get other external funding, you can do that in advance, and, you know, we can reach out rather than a panic at the last minute.

[00:19:22:00:19:26]

All right, Carleen, we're back with another round of rapid fire questions. You ready?

[00:19:27:00:19:28]

Yeah. Ready to go.

[00:19:28:00:19:34]

All right. What is the most extravagant thing you've ever spent on your business?

[00:19:35:00:19:58]

Oh, only business. I'd say business coach. I had a business coach last year, which really helped me change my mindset about going from a business owner to becoming a CEO. And it was a large expense, but it definitely helped drive me in kind of owning my own business.

[00:19:58:00:20:03]

Amazing. Are you comfortable sharing who that person was that you worked with?

[00:20:04:00:20:06]

I can't remember. Oh, my God.

[00:20:06:00:20:31]

This happens to us all the time on this podcast. We're like, sorry. No worries. She was someone. Okay. She was good. She was good, whoever she was. Okay. And then my last question is, we were just speaking about how you like to be kind of planned and organized, but is there anything in your life that you do to just kind of like, let wild and loose, kind of like free, spontaneous, anything.

[00:20:33:00:20:50]

I really, like, I think, like being creative and being artsy. Like for my birthday, I did, you know, you could do paint night because there's no, there's no formula, there's no structure, there's no, like, it's how you interpret it and just, I find it very relaxing.

[00:20:51:00:20:51]

Yeah.

[00:20:51:00:20:51]

Yeah.

[00:20:51:00:20:52]

Okay.

[00:20:52:00:20:56]

I get out of my head. I'm not thinking about, okay, how can I organize this?

[00:20:56:00:20:56]

It's just.

[00:20:57:00:20:58]

Oh, this is pretty.

[00:20:58:00:21:00]

Totally. I love that.

[00:21:00:00:21:00]

Sorry.

[00:21:01:00:21:02]

Thank you for playing.

[00:21:02:00:21:04]

Well, thank you.

[00:21:11:00:21:11]

[00:21:11:00:22:09]

Yeah I've even coached some clients through. If they have, they know that some of their clients are like, some of the nonprofits they work with are months late. I said, then you need to change the payment terms. And instead of invoicing every month and just waiting every three months to get the pay, have it that you invoice every three months but for a much bigger lump sum so that you can get ahead of it because it can feel really panicky to fall behind and not know when, when things are coming. And that's why the forecasting, I love that as well because like, I literally have my twelve-month forecast for my business. Um, and I look at cash flow from that. So, yeah. Um, I want to ask about mindset because a lot of what you do is in the coaching realm, right. You definitely can come in. Like, do you do fractional CFo type stuff?

[00:22:09:00:22:10]

No, I don't.

[00:22:10:00:22:35]

So you're just coming in and you're kind of like problem solving and coaching. So what are some of the more common mindsets that you find for small business owners that, um, show up in how they approach money and how do you, how do you help move them forward? Like, what are, if, you know, our listeners are, are less common or struggle with these things, what should they think about?

[00:22:35:00:24:11]

That's a really interesting one. I think something that I've definitely seen a lot recently is, and I think I've heard this from a lot of other kind of coaches as well. It's moving from that kind of business owner to CEO mindset, and it's not just delivering your services. You've got to think bigger than that. And something I've coached people recently is if you don't take care of the business, it won't survive and then you can't help anybody. So it's kind of talking about fixing your internal so you can deliver your services and be the expert you can be. But if the business isn't functional, isn't sustainable, then you don't get to show up and be the brilliant person you are. So you kind of have to figure that out, even though it's kind of maybe painful and maybe that's not your area of expertise, and it's just finding the right person to work with where you can ask the questions that perhaps you might be embarrassed or I should know this by now, or everybody else at my level seems to have figured this out. Why don't I know this? Just be comfortable to say, I don't know. Can you explain this? Because what's really important, I would say, with any professional that you work with is you ultimately own the business, whether it's a sole proprietorship that's incorporated any other kind of structure. So you are ultimately responsible. And no, you don't have to go back to school and learn whatever area of expertise, but you need to be able to work with someone who can explain it to you so that you understand and can take responsibility and make decisions. If you're kind of like, well, I hope they'll kind of make that decision for me. That's going to be difficult. No one's going to know your business as well as you do.

[00:24:12:00:24:20]

I love that is basically like outsourcing the framing of the information so that you can make strategic decisions.

[00:24:20:00:24:21]

Absolutely.

[00:24:21:00:25:18]

One of the things I hear from people a lot, especially in the nonprofit sector, is that they're not good with money. Like, I just had a call with a client and she was saying, she's not good with money, she's not good with numbers. She, like, has a tendency to spend when it comes in. Right. And then she went on and told me about how she saved up, like, a year's worth of tuition for her kids. And I was like, that's not spending when it comes in. Like, you, you're good with money. That's really responsible. But these stories come up for us. And again, I think there is something unique or extra about being in the nonprofit sector. How, like, are there people who genuinely are bad with numbers, or are these mostly just stories running through our heads and we don't have to know everything, but we have the capability. I don't know. What have you seen?

[00:25:18:00:26:41]

Interesting. So that's a mixture I think some people struggle with, especially working with nonprofits. They don't want to be too profitable because then they feel it's almost a bit of a conflict with the purpose piece. So I'll just have just enough. But going back to my early point, then you're struggling as a business owner, you may not be around to then help the nonprofits that you want to help. So it's kind of resolving that conflict. And then it is a bit of a mindset shift, I think, just going from, and I think, to the example that you gave. What's your, why? Why are you doing this? Are you just doing this to keep busy every day? And it's not necessarily you want to become a multi billion dollar organization, but what's your, why do you want to show up and be amazing for nonprofits? And you've got an area of expertise that you really think they can value from. Then at some point, then you'll have to get a handle on the business and the numbers. And as you grow, as you kind of evolve as a business owner, then maybe you can outsource some things or you can have people working for you internally that help you manage the day to day. But if your why is that you want to be around, whether it's small, large, medium organization, then I think it's just flipping that mindset. That's why you're looking at the numbers, not because you want to understand what percentages are in variance analysis.

[00:26:41:00:28:16]

I love that so much. And, you know, love them or not love them. Someone in the nonprofit sector that I think talks about this in a way that, like, really helped my brain was Scott Harrison of charity water. He's trying to, like, eradicate dirty water on the planet, which is going to take billions of dollars. And he talks about how when he, like, realized how big that goal was, he matched money to that. And so it really took him out of his kind of fear of asking for 50 or 100,000, and now he asks for 110, 100 million because he was like, that's what it's like going to take. So I love that you help people with that. I think that that's so important for people in the sector and then people who are supporting the sector. I'm kind of curious, like, rapid fire round, if you have any, and I'm sure it's specific to, like, literally every single organization in business, but if you have any recommendation thresholds, for example, like, and again, Cindy's threshold is going to be different than my threshold. Who's going to be different than your threshold is going to differ for a nonprofit's threshold? But I'm just, is there, like, a baseline recommendation of, like, having cash on hand, number of operational expenses, or, like, just anything for people who are like, I just don't know, like, what I should be doing?

[00:28:16:00:29:52]

Yeah, absolutely. I think, like I said, it does vary from individual to individual organization. Organization, I would say, as a baseline, very minimal is having at least three months of operating cash. So that's basically if money was not to come into the door, you could still, for three months, pay rent, pay your subscriptions, pay any kind of overhead costs. And if you're working with contractors, for example, and even cover it, if you're taking out maybe a salary from the business or an income from the business, you could cover that for three months. I think, again, we kind of, the way I operate, that would be my bare minimum. If you could stretch it up to six months, and then at that point, then that might be a large sum of money. It's thinking about a vehicle to put that in. So it's not just sitting in the bank. Whether it's invested in something, it's earning savings, or you've split it out into different amounts. So you put it into different vehicles, so you should access it at different points. It's just thinking about that. That would be an ideal. But it's also remembering, especially if you're here in Canada, you're thinking about is some of that money in your actual bank account, sales tax that you actually owe over. Have you put away some money for corporation tax if you're incorporated, or even employment tax or anything, you'll pay as a sole proprietor allocating that money as well, because not all of it's going to be operating cash. Some of it you do have to keep aside to ensure that you can pay all your financial obligations.

[00:29:53:00:30:21]

Okay, I have two part question. My first question is, what do you have any vehicle recommendations? Like, is there a favorite high yield savings account or is there a favorite, like, I don't know, Vanguard. Like, I don't know. Like, do you have any vehicles that you recommend to your clients that are, this is educational purposes only, that people can go research on their own. But, like, do you have any to be transparent?

[00:30:21:00:30:29]

No, I don't have a favorite one. What I typically see are particularly gics of different.

[00:30:29:00:30:30]

What does that stand for?

[00:30:31:00:30:35]

Gosh, put me on the spot now. I don't actually know what a Gic stands for.

[00:30:35:00:30:36]

Me neither.

[00:30:36:00:30:40]

I know it is a vehicle. Oh, my goodness.

[00:30:40:00:30:43]

No. Now I need to look that up. Gic.

[00:30:43:00:30:51]

Yeah, they're curious now, because you can have different vehicles. You can have something that's a 30 day, one, three month. So if you need to, like.

[00:30:53:00:30:58]

Guaranteed investment certificate. I was going to say guaranteed something like income, basically.

[00:30:58:00:31:50]

Yeah. Okay. So I typically see that, but then as organizations get better, whether it's a nonprofit, whether it's a service based business, they typically then get involved with the investment managers, and at that point they'll say, well, this would be the best vehicle. And again, having that forecast would be really helpful for is there a potential that we may need this money in six months? So there's no point tiling it up in a vehicle that you have to give two years notice to unwind. So having that forecast, you're able to say, okay, there's a potential we might need x amount this year. So that might go in a vehicle of its own. And then, you know, we're pretty good on the day to day. The balance of it can go in something else that has a higher rate of interest, and then it's locked away for a longer period of time. So, yeah, typically within larger amounts, they kind of use an investment manager.

[00:31:50:00:32:46]

That makes super sense. My second question is, when you were just talking about the thresholds and the recommendations, I'm wondering for the fine listeners if you have any logistical steps of saving. It sounds like setting aside three, six plus months of expenses, because I think we hear that, and then, like, you do the math and you're like, that's $60,000. Like, how do I even chip away? And, like, what would you say is a. And I'm sure it's different for every organization or company, but, like, should you expect that to take twelve months, 24 months, five years? Like, that's a lot of cash to just, like, stock aside? Or is your suggestion, like, if that's going to take you five years time to increase those prices, baby? Like, what? Like, what is step one, two, and three of, like, actually, actually making that happen?

[00:32:46:00:34:25]

That's a good, good question. I think when I see business owners, like, years one to three, typically, that that buffer doesn't exist. They're just trying to grow the business. They're just trying to make money, pay themselves, move forward. If you're able to do that from the beginning, that is great and amazing. I think it's building that into the forecast and the cash flow strategy. So even if it's $1,000 a month, just get squirreled away and you're able to do that and you still can cover all your expenses. And remember, it's not impacting profit, it's just moving cash, um, you know, out of the kind of operating bank account, then, you know, that would be amazing. I think it's almost, you know, when they talk about, um, impact, if you can do small and have it consistent, it's, it's easier than. So we're year three. We now need to figure out what three months is. We're not just going to yank that out of the bank account because that might be a bit of a shock to the business. You might need it. So, you know, it's almost like a bit of a, like, almost like a savings account. If you can from the beginning put a regular amount away into a separate account, you know, as almost an emergency fund. I think that makes it a bit easier. But to your point, you have to be able to be making enough profit in the business so there's enough cash to be able to put it away. So if it's, you know, if you're looking, you're doing your forecast or you're a couple of years in and that is not even possible, then maybe we need to look at, you need to look at the model. So, you know, what are the profitability margins? Is there enough room in there? When's the last time you either updated your prices or do you need to think about your model a bit differently? Or like Cindy mentioned, do you need to look at your terms?

[00:34:26:00:36:02]

Okay, super helpful. Um, I'm just going to give the listeners examples of what I do because I don't necessarily follow profit first, which Cindy's over here probably like. Well, if you follow both of hers, you wouldn't have to think about that. Um. Um, so I have what I call tent pole moments throughout the year where I kind of have like a steady stream of income, but then I have these ten pull moments probably like three or four times a year where I make like six, seven, eight times more with that, like standard is. And so what I do is like, most months I would call it like eight out of twelve. It's like a really small amount that I'm stocking away. But when I have these temple modes, I take that chunk and I really stock it away like a chipmunk with their acorns. And so I think to your point, like, if your cash flow and profitability is like minimal, like you don't have a lot of wiggle room, can you think of your business like by having a temp pull moment? And, and if you, you know, because I think, like, if I was to try and have like a tent pole moment like twelve times a year, that would be exhausting. So that, and that just works for me. I know Cindy has a different system, but I just wanted to share that example for people who are like maybe trying to wrap their head around like starting and I think to your point of just like looking through and monitoring, you know, is the more, you know.

[00:36:02:00:36:50]

I guess, yeah, I think it's definitely like until what you're kind of saying is like think about seasonality. So if it's not possible for most months of the year, the plan is when you have those more profitable busy months, that's when it comes out. So when you're looking at your forecast model and then how that translates now into your cash flow model, that's when it happens. So you know, by the end of the year I've got x amount put away. So it depends on how it works for you. If then those tent poll months help kind of maintain the other months where it's a bit leaner, then making sure that, okay, making sure that there's enough operating cash put away for those leaner months. And what we also do in those kind of more profitable months is put a bit of a lump sum away as well. So.

[00:36:50:00:36:50]

Great.

[00:36:50:00:38:09]

And just for transparency and to add to the conversation, I put fifteen cents of every dollar that comes into the business into a profit account. But then I also have what Jess calls those tentpole months or times of year and I put extra money aside into those as well. And then sometimes at the end of the, because my business is incorporated. So sometimes at the end of the fiscal year I'll pay myself out. So I, I haven't increased my based base pay in a number of years, but I give myself bonuses throughout the year when I want from that profit account. And if I want to minimize the corporate taxes, if I need the money personally I will pay myself out at the end of my fiscal year. I mean obviously that gets income taxed separately, but I will use that money. It's not like a savings vehicle. That is money I will use. Okay. I'm aware of the time and I want to make sure. Carleen, we ask you for a confession because you're a business owner too and you know the ins and outs. So share with us a confession, something you may be reluctant to admit out loud or haven't shared with anyone else.

[00:38:10:00:38:39]

So I was thinking about this and I think, I'm not ashamed to say I am a bit of a nerd. And I slightly do always think in excel. So if I'm planning a holiday, if I'm all convincing the groceries, it basically goes into excel. My mind thinks in frameworks. That's just how I think. So even if it's something personal or. Okay, I need to think about doing a strategy for my business. It will probably start in itself, so.

[00:38:39:00:38:40]

Oh, my God.

[00:38:40:00:38:45]

I love being friends with people like you. I want to start, are you an eldest sister?

[00:38:45:00:38:47]

Yeah, I am.

[00:38:48:00:39:01]

I mean, I am, too, but, like, my brain doesn't think like that. So I love being friends with both people like you and Lynn Cindy. I love it. Wait, so, like, tell me about, like, a trip excel. Like, what would that look like?

[00:39:01:00:39:36]

So we've got, like, a tab we'll have packing with the different family on the top, and you're thinking about, okay, sleepwear day to day, if you're doing any. Oh, my money. And then that might be in there. Like, so there may be a calculation. How many days are you going? How much cash might you need? And are there any, like, particular trips that you're going on? Yeah, and then there's, like, a to do list with, like, dates and timing. So, you know, a month before. Let me make sure, you know, I've got all the paperwork and any visas and then, you know, full. So, yeah, there's lots of tabs going on in there.

[00:39:36:00:39:38]

I love it.

[00:39:38:00:39:56]

So prepared. It makes me. I know this. We're supposed to wrap it. I know we got to wrap it up. But it does make me wonder, like, does that just mean that, like, you are prepared for everything, anything? Or, like, what is your reaction when things unexpected as they do come up?

[00:39:56:00:40:42]

I've definitely. I think with age grown with that. I think, you know, personality wise and career wise, it's all about planning and being very organized and just kind of, you know, as you get older, just realizing that sometimes you do just have to. You can plan to the last cent, and then something goes sideways. So just having that kind of calm demeanor and the ability to step back and say, okay, instead of just being in it, let me step back for a second and say, okay, this is what's happened. And think about it factually. Like, try not to get in the emotions of it. What needs to happen? Can I figure it out or do I need someone to help me figure it out and not get caught up in the emotions? But I think that comes with just, like, age and experience. Absolutely.

[00:40:43:00:40:46]

All right, Carleen, where can our listeners find you online and connect?

[00:40:47:00:41:08]

Well, thank you. So I'm typically on LinkedIn, trying to be more active on LinkedIn and show up there. So that's the big way you can find me. If you do want to book any time with me, you can go to my website, which is fxoconsulting.com, and book some time with me there, or feel free to connect with me on LinkedIn with a DM and start a conversation.

[00:41:09:00:41:10]

Thank you.

[00:41:11:00:41:12]

Thank you.

[00:41:15:00:41:26]

Thank you again for listening to the confessions podcast for nonprofit coaches and consultants. If you enjoyed today's episode, which I sure hope you did, you can show your support in one of three ways.

[00:41:26:00:41:34]

Number one, post the screenshot of this episode to your Instagram Stories or LinkedIn profile and Tag Cindy and I so we can repost you.

[00:41:34:00:41:38]

Number two, share this podcast with a fellow nonprofit coach or consultant.

[00:41:39:00:41:45]

And number three, leave a positive review on Apple Podcasts that we can continue to grow and reach new listeners.

[00:41:45:00:41:51]

And, of course, make sure you subscribe so you can get the latest and greatest interviews as they drop every Thursday.

[00:41:52:00:41:59]

And to our fellow nonprofit coaching and consulting friends. Remember, we're an open book, and here to answer your burning biz questions.

[00:41:59:00:42:00]

See you next time.

cindy wagman

From Panic to Profit: Demystifying Money with Carleen Dehaney

From Panic to Profit: Demystifying Money with Carleen Dehaney

Transcript:

Owning Ambition with Jenny Mitchell

Managing Risk (because consulting can be risky)with Rosalie Ennes