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Are you struggling to make informed financial decisions when it comes to hiring for your small business? Tune in to this episode of The Impact Ripple Podcast where we demystify the financial numbers and share expert tips on how to be intentional with your hiring process and paying yourself as a business owner.

In this episode, I spoke with Carla Titus, the owner of Wealth and Worth Within, where she and I broke down the financial numbers all business owners want and need to know when hiring employees.

Carla shared the four main numbers that you need to pay attention to and how to plan for the cost of hiring. She emphasized the importance of being intentional about your finances and education to help you make more informed financial decisions.

One key takeaway from our conversation was the importance of having a hiring plan and how defining the role and performance metrics before hiring will help you avoid making a poor hire decision for your small business.

We also discuss the importance of aligning your people plan with your business plan so you can be strategic, mindful, and intentional in your hiring process. 

Having a hiring plan and understanding the costs associated with hiring employees takes the guesswork out of it and allows you to make more informed and successful hiring decisions.

We also talked about how to pay yourself as a business owner. Many business owners don't pay themselves or don't pay themselves enough. Carla suggested starting with a small amount like $100 per week and increasing that as the business grows. She also explained that it’s essential to prioritize profit over revenue and reassess pay rates as you bring on new team members.

If you’ve been looking for a conversation on the financial ins and outs of hiring employees, this is the episode for you! 

In this episode, you’ll learn:

• The four main financial numbers all small business owners need to pay attention to.

• The importance of being intentional and having a hiring plan to avoid disappointment and unexpected costs.

• Ways to build a team in a small business, including hiring temporary contractors and having cash reserves.

• How business owners can pay themselves a salary and prioritize profit over revenue.

This episode is part of our Money Month Series. You can find all the episodes in this series here:

• Ep22 - How to Shift Your Money Mindset and Start Hiring Your Dream Team with Christine Walsh

• Ep23 - Breaking the Money Taboo: Overcoming Emotional Barriers to Building Wealth with Keina Newell

Mentioned in This Episode: 

• TIR Episode 13: Growing Your Team with Intention - https://www.sprouthr.co/13  

• Carla’s Website -  https://www.wealthworthwithin.com  

• Carla’s Projections & Forecasting Services - https://www.wealthworthwithin.com/projections

• You can also find Carla on Facebook, Instagram, LinkedIn and TikTok!

Transcription for Episode 24 - Why Hiring Right is Critical for Your Small Business Success with Carla Titus

Ashley Cox  0:05  

Welcome to The Impact Ripple podcast, the go to source for hiring and leadership made simple, doable and fun for visionary female business owners. I'm your host, Ashley Cox, author, certified HR expert and founder of Sprout HR. And I believe that you don't have to change who you are to be a great leader because you already are one. Join me as we kiss uncertainty and overwhelm goodbye, and say hello to the tools and support you need to grow a profitable, sustainable, impactful team with more confidence and ease. 

Ashley Cox  0:44  

On today's episode, I have Carla Titus joining me as part of our main money month series, which you can find all the episodes in the series linked in our show notes. Carla is the owner of wealth and worth within, where she is a finance expert with over 15 years of combined corporate financial planning, analysis strategy and online business experience. She provides fractional CFO services and financial consulting to business owners looking to grow their businesses profitably. And you know, we love that around here. Carla is on an absolute mission to empower business owners to achieve financial clarity and peace of mind. So they can get back to doing what they love, and experience more of the freedom they set out to have when starting their business. In this episode, Karla shares about what it means to demystify your numbers so that you can make more informed financial decisions, especially when hiring. She also talks about the four main numbers you need to be looking at in your business so that it doesn't feel so overwhelming. Carla, and I also have some great conversation around planning for the cost of hiring, and all of the things that you need to consider, including starting small when hiring your team. But my favorite part of the conversation is where we talk about paying yourself as the business owner, because we're usually the last team ever to be paid. And we're paid the least. And we're paid the least frequently. So you're definitely not going to want to miss that part of today's conversation. Now, here's my conversation with Carla Titus. Hey there, and welcome to the impact ripple. Carla, I'm so excited to have you joining me today as part of our money month series. So thank you for being here.

Carla Titus  2:44  

Thanks for having me.

Ashley Cox  2:45  

As we've been talking about in our money month series so far, finances are a huge part of hiring a team. And often the scariest part. And one of the questions or one of the concerns that tends to come up a lot with business owners that I've seen is around how to protect their business financially when they're thinking about hiring that first person or when they're growing their teams substantially. So that's exactly what Carla and I are here to talk about today. And let me tell you what, we have a jam packed episode for you. I can't wait. So let's just go ahead and jump right in. So I've already introduced you, as you know, Carla in the intro. So I want you to just tell us a little bit about your journey and how you came to be the financial expert that you are today.

Carla Titus  3:37  

Yes, actually started. My mom was an accountant. So it just kind of runs in the family. I knew I didn't want to be an accountant, though. So I decided to go for a something in business, right. And what attracted me to finance was that I really liked money. I don't know about you, but I like to make it I like to keep it I like to see. Fun thing. And I was really good at math. So it almost felt like it just fit. And I decided to go off to a finance degree. So I have an undergrad in finance. And then I did 10 years of corporate finance as well. And then I started consulting, honestly out of curiosity, like it happened that I had a friend that was connected me to a business owner locally that needed some support at the time. And it was a women owned business. They didn't really have the financial education or knowledge or expertise, but they were running a business for a while. And they were feeling like it wasn't going as well as it could be. So they asked me if I could, you know, volunteer some time. So I did and I learned so much about how little business owners know about finances, which is crazy to think about because it is such an important aspect of doing this as well. But you know, not everybody dedicates the time to be an expert in it or even know enough. We go into business to do what we love not to manage money per se though, we need to be able to do so and have enough knowledge to defend ourselves and ask the right questions. And so in helping with that I realized that not everybody knew what I knew, and that it was It's probably helpful for me to educate other business owners and help guide them through what are the aspects of finances that they should be paying attention to focusing on, and being intentional about. And that's when I started to offer my services, and people were absolutely crazy about it signing up for and I was like, Oh, this is something we can do. And this is great because I get to, you know, meet my passion with the need of a business owner offer some value. And but we always start with education first, like we love to lead with education, you know, I'm happy to tell you all the things and all the ways that you can do this yourself, you don't necessarily have to hire us. But one day, maybe you will need a CFO, or maybe you'll need a finance expert in your corner. And you'll think of us because we were able to help you meet you where your knee was odd through education that was free and accessible. And so we're really big on that as a core value. And making sure that business owners, you know, our mentors are out on their financial needs.

Ashley Cox  5:55  

I love all of this. And I love you know, before we hit record on this episode, Carla and I were talking about values and how it was really important that we or couldn't, kind of really, you know, related or associated with a similar values standpoint, and when she shared that one of the values was leading with education, I felt that in my soul. And so, you know, I feel like that's something that a lot of businesses don't lead with. So what are the ways that you lead with education? Give me some examples of things or resources that people could say, go to your website, or go to your social media and things that they could find there and start kind of DIY it until they're ready and able to work with someone like you.

Carla Titus  6:42  

Yeah, we have a blog post with several resources to talk about different topics around aspects of managing your business finances, you know, where to get started, how to do the bare basics, separate your personal and business bank accounts, all the way to how do you do financial planning and projections. And, you know, start thinking about hiring a team and planning for that a lot around forecasting and forward looking, because what I find a lot is business owners are stuck in the present in the past. And a lot of the work they're doing is in the present in the past, but they're not really thinking how can I change the trajectory of my business to cause a different result going forward by being intentional about my decisions and how I make them. And that's where we really play our role as finance experts to help guide that business to the new outcome we want to see. So the blog is one of the great resources we have available. We have a newsletter, where we send out interviews like this, where we've been in, you know, other podcasts, and we share resources and financial knowledge, for free. Our social media presence is all about free education and content, we love to have people just follow us and make sure that they're staying connected to videos and conversations that we're doing around topics that are relevant, around, you know, tax time, bookkeeping, a CFO services, and like just overall planning of your business finances on how to become more proactive and intentional about it. And then we also do a lot of workshops for other people's audiences. So if people are looking for someone to come speak about finances, for their community, we love to do those, we want to make it accessible. And then, you know, let people come to us for that content for free first, and then decide if we're the right time. And the the right reasons to hire a CFO, they will think of us and you know, maybe retain SS or CFO at some point.

Ashley Cox  8:24  

So many wonderful places to find the tools and the resources that businesses need, honestly, to, to understand their numbers. And I know something that you and I talked about was, you know the importance of demystifying numbers in business to make informed financial decisions. So I'd love for us to talk a little bit about that. Tell me, what do you mean, when you say that, you know, demystifying your numbers to make informed financial decisions? And why is that important, especially when it comes to hiring employees.

Carla Titus  8:55  

So I find that a lot of business owners don't even start by looking at their numbers, because they're scared of it, or they want to shy away from it, or they just really don't enjoy it, which is totally okay, right? We don't want you to spend hours and hours looking at your numbers and not really understanding what's happening. But you need to know enough about what's going on in your business financially in order to be able to make those informed decisions. And by creating a baseline starting where you're at no judgment, this is not about judging whether your business is good or bad, profitable or not. It's just a starting point. And I want you to see it as such. And it does not mean that you're a failure as a business owner, if it doesn't look great, like you expect it, but we can't set goals to improve on it. But we can improve on something if we don't know where we're starting. So first looking at the core set of numbers, and they're really only four areas of your business, you should be managing and operating consistently on a monthly basis. And that is what are your revenues, income or sales, they're all the same terminology right? So top line, what's coming in, what money is coming into our bank account? How many sales do you make in a given month? What are your cost of goods? If you You have businesses that are not service based or they have products or goods that you're selling, then you would have some manufacturing costs or materials that you're purchasing. So those cost of goods sold. And then if you're a service based business, you'll just have operating expenses. Sometimes you'll have direct labor to offer the services that you're providing by hiring more team and that will be categorized as cost of service. And the reason we make a distinction from operating expenses is because cost of service is directly related to being able to generate that revenue. So without those people without you paying those people in your team, you wouldn't be able to collect that revenue. Therefore, we want to understand what are the margins on our offers, after we pay those people, not before we pay those people. And sometimes people business are not very clear, clear on that. So we want to make sure that you have that breakdown. And then open expenses, just everything that it takes to run a business from buying a microphone to do a podcast from like subscriptions monthly from, you know, hiring an HR consultant, from, you know, hiring costs, like the platform where you post a job post or where you're consulting with an HR consultant to go through a hiring process, right, the time it takes you to review resumes, for candidates, all the things that go into hiring all the way through onboarding, ideally, an employee, you need to make sure they are accounted for in the cost of running the business. And at the end of the day, there's going to be something left, right, hopefully, you're paying yourself in that line. Because that's an important value of ours, like we want our business owners to get paid from their business. So they don't resent their business and end up quitting because it's so hard. And it's not, they're not getting paid. And then also, there should be allocating for your taxes, of course, because you know, the certain things in life, right death and taxes, unfortunately, make sure we're not like overlooking our tax bill quarterly. And then there should be something left at the end of the day, a profit that you have available to reinvest back in the business or to pay yourself a draw, and be able to benefit more from the business and create some personal wealth. And so I want to make sure that business owners are not making this complicated. I don't want you to spend hours upon hours trying to figure out what's going on in your business, just look at revenue, cost of goods sold or services, operating expenses, and your net profit, and just clearly understand what's happening there.

Ashley Cox  12:06  

Yeah, ah, so much value. I took like a million notes while you were talking, Carla. And I think the thing that I really want to zero in on because all of that was brilliant. And it was super simple. I think, you know, that's, that's the part we like to make things overly complicated sometimes. And really, at the end of the day, it gets to be simple, right? But the thing I would really love to zero in on and talk a little bit more about are all of those costs that are associated with hiring, and, and the work that the people do once they are hired and how that factors into the way that you, you know, set yourself up for financial success. So can you talk to us a little bit more about that cost of services and how to look at the work that's being done, even if it's not a direct revenue generating role. So thinking about, you know, if I hire a salesperson, their job is literally to bring more money into the business. But if I hired an administrative assistant, or somebody that's working behind the scenes, so to say on kind of the operation side of the business, that's not necessarily a revenue generating role, but it can be a revenue contributing role. Can you talk to us a little bit about the differences in those and what people can be thinking about as they're starting to hire these types of individuals into their businesses?

Carla Titus  13:24  

Yeah, so before you go off and just hire, which is what a lot of people just do, right? They're like, yes, plus a job post. And and let's just hope and pray we find the right person, and then maybe they'll, you need to define what their role is going to be doing. What are performance metrics? How are they going to contribute to the bottom line of the business, either directly or indirectly. And what I mean by that is, like sales roles that have contributed directly to generating revenue, that's a clear path on ROI, return on investment. But for those administrative roles, what you're getting back is actually time and sometimes even energy back because they're dealing with the administrative burden of your business, and you no longer have to deplete your energy or your time to respond to the customers that maybe are unhappy or that are having an issue, they can handle that on your behalf. But if you're not clear what the rule is, first, and how do you measure performance, or return on investment, the benefit you'll get from hiring that employee, then you're doing yourself a disservice. And then you're gonna be very unhappy when the person does not perform to your expectations, because you never told them what they were. And they're also not contributing to the bottom line of the business in direct or indirect ways. And so measuring that what, how many hours safe is this? Okay? Now, actually, it's not going to be responding to customer emails anymore. That's a 10 hours of a week that you were saving in time. And it's very easy to track, right? Because you can monitor and see, okay, what work went away because we hired this person and delegate it out. And then it's also going to allow you to start thinking about how and what are the rules that you need in order to grow to the next level in business. And I think that people don't take enough time to plan out when and how they're going to bring this people the timeline on when this people in roles are going to show up. And they tried to just hire for everything all at once. And they don't realize that that's actually gonna hinder their profitability in the short term, maybe they'll make it up in the long term, if they're lucky that every single hire was a good hire. And this is something that we do not talk enough about. There's people that you hired that just were not the right fit. And a month later, you're going to have to get rid of them, right? Or you have to, you know, part ways, because it's just not the right fit for the company, or for the role that you were hiring. And you don't get to know that until they start working. And it's a cost of the business. And I don't think we properly planned for that, because we think every hire is going to work out, and that we are going to bring five more people and we're gonna all of a sudden I hit a million dollars in revenue, right? Because we hired those five people. And that is not the reality of doing business.

Ashley Cox  15:51  

Yeah, no, there's so much more that goes into it. Right? There's strategy, there's forecasting, there's planning ahead. There's, you know, something I talk about a lot, and that we did a previous podcast episode on was aligning your people plan with your business plan? Who do you need? When do you need them? And how do we grow in a really strategic mindful and intentional way. And I know you mentioned intentional, earlier, you know, in the beginning of our conversation, and so to kind of bring it back around to that, that's what we're talking about here, right? We're talking about being really intentional, thinking through what this person is going to add to the business, what it's going to give to you as the business owner. And something I think is so important is when you hire this admin onto your team, and you get those 10 hours back a week of not having to respond to emails, what are you business owner going to do with those 10 hours to make them profitable for you, right?

Carla Titus  16:48  

Unfortunately, I've seen times where that happens. And then they're back to 10 hours of replace admin work elsewhere. And that's just not a great ROI. On your business, and using those 10 hours more effectively to tackle the things that only you see you you can do no one else can in the company, like setting the vision and planning and intentionally looking forward strategically. And having that hiring plan takes the guessing work out of it. Because you should allow outline the cost of every hire, and know when you're going to have to afford it. And remember, every hire needs some time to get up to speed and be able to provide results unless it can take one, two, sometimes even three months, depending on Harada might be on complexity. So allowing for you to save up in advance, knowing that you will have someone that needs some time to get up to speed. Now, if they're up to speed in a month, awesome. Now you just save yourself some money because he didn't have to use those reserves. And at the end of the day, when we're hiring someone, we need to make sure we have enough runway and that we're not being surprised by the cost of hiring someone that we've properly planned into our budget and allocation that we will be supporting one more person and that that person in turn will give us back the time the energy or the money in some way as the benefit for hiring them.

Ashley Cox  18:03  

Yeah. So I think this would be a perfect place to kind of talk about that financial planning that the the projections that we need to be thinking about how do we know how much it costs to hire? How do we plan for that? How do we make sure that we've got that runway and those reserves that are going to protect the momentum that we've built in business, because I think that's one of the things that's most scary is I don't want to just throw money at this and then waste a bunch of money and time and energy and not get a return on it and not see that return, whether it's financial time, energy, mental space, a time to take a nap when you know, whatever that ROI looks like for each individual business. So talk to us about financial planning and projections, what do we need to know?

Carla Titus  18:49  

So what we're trying to do is make an informed guess, on what we think the future might look like. And listen, I don't have a crystal ball. I'm not like great at this. I'm not perfect at it, right. But I might be better at it because I've done it a few more times than most people. So I know what to look for when we're trying to set goals in the future. And we say, Oh, we're gonna hire within five days, I might say, it might take you a little longer to find the right person and go through the process. So I'm testing for what we think might be reality. And maybe we say we will allocate 30 days out because by that time we go through the hiring process, and we bet all the candidates and we go through interviews, we might be 30 days out from starting day. And that's more realistic to budget and allocate that way and forecast in the future than a five day time period. And you know, maybe you do hire within five days because you got lucky and you're really good at hiring. And that's okay, we just going to have to dip into our cash reserves and hopefully you have some if you don't, we just start building some because those opportunities will show up. We want to make sure we're ready take advantage of those even if we haven't budget or allocated for that and we had to pull in the data higher. You're okay to do so because you know you're covered. But as you're working your plan things We'll change sometimes you'll hire later, maybe you will find a person for 90 days. And that's okay, you just have two months of savings that you had planned for to bring on someone, maybe you found someone that was part time instead of full time and you decided to allocate half of your budget to that now, you still have the other half that you can reallocate to a different role. So it's not about being perfect, but it's about aligning, what is the steps and the path we're going to take in the next few months, as we're building out the team and make sure that financially, we're able to afford it. And what I mean by afford it is you saved up maybe two, three months of your salary. Maybe you have enough profitability that you know, you have room in the profit to be able to bring in an additional person that, in turn will help you grow revenue, then bring you back that profitability in a few months. And that's the thing that people are not thinking about how it connects to the overall picture on your financial plan for the business. Understanding what were those roles going to contribute and how they're going to contribute? And just write it down. Because I think a lot of time we have it in our heads, we know it's gonna happen. We're like, Yeah, we're clear on our hiring plan, and then we go execute it. And we're, like, completely lost. We're like, forgot what we thought about three months ago, we have no idea how many we brought it, we brought in a role that we thought we're gonna hire in September, we brought it in April, like all these things are going to happen, because that's how businesses, right, the reality of business is not linear. And I want you to know that if in your plan, you put September for hiring the roll, and now you're moving into April, now you need to push out an April hire to September to compensate for that change. But if we didn't have it in writing, and we don't know what our plan is, how will we reconcile that. And that's the whole point of practice financial planning is to ensure that you know, what is your GPS map telling you take a right turn, take a left turn stop for gas, instead of us just being like, there's a destination good luck and like, make sure you don't get into a wreck or like crash into something because you weren't paying attention. And that's the whole point of financial planning. Think of it as your GPS is riding you towards a goal.

Ashley Cox  21:54  

Yes, exactly. And, you know, the the businesses that we serve, you know, and I know, we talked about this before the show, multi six figure seven figure and beyond businesses, we you know, we know that you have been doing a lot of these things along the way, with your marketing budget with your ad spend with your, you know, if you have cost of goods sold, you've you've been looking at how do I get the the most the best deal or the best, you know, opportunity for our business and, and so you're not novices, right, or, you know, the listeners are definitely not new to this. But hiring is a whole different ballgame. And it requires looking at things a little bit differently than in the past. And some of that is a really sort of nebulous, look at things that I don't even know, what am I supposed to be looking at. So that's why I really love this conversation today. Because getting down into like the nuts and bolts and the nitty gritty details of the GPS, you know, the the map instructions here to say, Hey, this is the left turn, this is the right turn, there's a fork in the road up ahead, you could go this way or that way, which would you like to choose gives us the opportunity to, you know, make those informed decisions, like you talked about, be more proactive, be more strategic in the way that we approach our hiring, instead of, you know, trying to put a bullet or a band aid on a bullet hole, right, we talked about that a little bit before the show as well was, you know, sometimes we get to that point of, you know, desperation, I've waited too long to hire. Now I really need just a warm body, and I'm going to hire the first person that applies and plug them into this job that I kind of sort of don't really know what it's supposed to be. And we're gonna make it up as we go along. I promise you that as a surefire way for disaster, you're going to be derailed off the road, out of the map, you're not even going to be you're not even going to be going on this trip, right? You're going to be in the hospital with like a broken leg and an arm and you know, bandage over your head, right? 

Carla Titus  23:50  

It's so distracting. And it really disrupts the business that you're currently running because it's taking your way stake in that mental bandwidth and energy that we talked about. But also like why not bring in an expert if you need some support to help guide the way to make it less overwhelming? And yes, it's going to cost you money. But at the end, you're going to get a plan outlined for you on how to do this best instead of trying to guess your way through fixing the issue. Especially if you struggle with hiring in the past, I always recommend that maybe sometimes, you know, some people are better at hiring than others and are have a more robust process and don't shy away from again, some additional help as needed consulting hours, like it doesn't have to be anything huge, like retaining services, but just reaching out for support and expertise. And maybe that one conversation will save you 20 hours of work on the back end because now you know how to do a right and how to target the right people to bring the right people to your business. And then you're not having to be in a situation where you hire desperately and a month later you're having to move on from that person because they weren't the right fit that cost the business even more money and headaches and then just not hiring you know, then waiting to hire the right person.

Ashley Cox  25:00  

Yeah, right now the Society for Human Resource Management SHRM, which is an organization that I'm certified through, and that I do a lot of subject matter expert, volunteer work and things for, they are saying that right now in 2023, and when we're when you're listening to this, and 2023, that it is costing on average, between six and nine months of an employee's annual salary, when you have to replace them. So that's a big chunk of money, right?

Carla Titus  25:31  

It is. Can you  just imagine how much you could have done with your money to repurpose into your business growth and make sure you have, again, hiring just take your time, I know it's painful, like listen, we're not here telling you just wait it's fine. Everything you still doing like a million things and you're still having to keep the business running, we get a you're wearing like 10 hats that you do not want or you know, care to. Yeah, it's, it's okay to take your time. And if you need to maybe resource to a contractor in the meantime, like, that's the thing I think a lot of people overlook, is you could grow with contractors. In the meantime, temporarily, while you're searching for your you know, absolute hire, that's a perfect fit, that will be with you for years to come. So don't rush into just trying to solve the problem by hiring the wrong person, like bringing the contractor, you know, temporarily part time, whatever hours needed, and then replace them with a full time hire. And to make that clear in your, you know, collaboration with them that it's going to be only a temporary role. And most contractors are happy, because that's what they're looking for is temporary work or sometimes just being part of the team. Maybe you decide to give them money, in addition to the hire you've made, check your financial plan first, right and making sure that you have you know, enough runway to have enough for them to do both in both of the roles. But don't overlook that temporary, because they think that at times we get so fixated on we have to have employees and we have to have this and this is how it needs to look. There's so many different ways to make it work. 

Ashley Cox  27:00  

Ah, so many different ways. And actually, in Episode 13, this this season, we talked about growing your team with intention, and that that can look so different. For every different type of business that can look like contractors, it can look like temporary workers, part time full time employees, there's just so many beautiful different ways that we can grow our business so that you can get the support that you need. In smaller amounts, if you can't just go straight out and hire a full time employee or a team of 10 full time employees right out of the gate, which trust me is not realistic for most businesses, right? Most businesses cannot go out and just hire a full team of employees, which would be nice if we could because then we can delegate a whole bunch of stuff. But it's okay to start small. It's okay to start slow. It's okay to take your time. And I would much rather you hire one person for 10 hours a week much sooner than wait until you're at that point of desperation and trying to hire a full time employee because that's a much bigger commitment.

Carla Titus  28:01  

Absolutely. And that's exactly why we offer services as a fractional CFO firm is because we understand that there is not a need yet to have a full time CFO in your executive leadership team. And that one day that will come but in the meantime, you still need access to expertise at that level that is guiding and directing the finances of the business. So we make it affordable. But also, you know, tapping into the high level and quality support that you're looking for, for a fraction of the cost. And so something that we want people to start considering is you don't have to hire full time in order to still get the benefits of having the support that you're needing.

Ashley Cox  28:37  

Absolutely. Absolutely. Something you mentioned earlier, Carla, that I want to revisit a little bit is you mentioned cash reserves. And I know that this is something that comes up a lot with our clients. As far as you know, how much should I be paying myself? How much should it be paying my team? How much should I have in savings to support all of these things? So let's talk a little bit about cash reserves. And I'd love to hear your philosophy on that and your thoughts and suggestions for our listeners.

Carla Titus  29:05  

Yeah, so we're really big on having cash in the bank, paying yourself and always having profit, like those are like our main things that we want business, we're here for it. And if you haven't started yet, because I think we're all on the journey, right? So don't beat yourself up. Again, this is not about judging. You know where you're at. It's really like understanding where you are, so you can then make a change to where you're going. And cash reserves is a hard one for those people that especially like to spend. And so I find that it comes naturally for those savers out there. Those of you who know and appreciate having money just sitting around for the sake of peace of mind. And you know, we always get asked like how much and my answer is always it depends on how much do you need to sleep at night and feel comfortable running your business from that peace of mind that you want to have for yourself as a business owner, and that amount is going to vary. Some people are more risk takers, the one I have only Two weeks, you know, and kind of just waiting it out and hoping that everything clears out. And some people are like, No, I need a year or three months. So you know. So if I start with what do you as a business owner first need to feel confident, comfortable and have the peace of mind to operate from a position of power and feel confident in your decision making. So to start with that, second, like cash runway allows you to tap into any opportunities that come your way that you might not have thought of. But because you have that cash reserves, now you're able to invest in those things that come up, that you know, will give you ROI that you know, will help you accelerate the growth of your business. But without that cash reserve, maybe you won't be able to tap into those opportunities, because we don't want to leverage that unless we absolutely have to. And there should be a plan for that leveraging as well. So you know, if you're gonna go that route, absolutely, we believe in leveraging that, we just have to make sure there's a plan because I see too many times, we just spend for the sake of spending and never pay it off or like end up more in debt and didn't get the outcomes we expected. And then we're just farther behind. So make sure you're clear on what your you know, risk tolerance is from a cash or debt perspective. And then we always say if you have people on payroll, we will love for you to know that you can afford your team for maybe one or two months it remember what happened during COVID, people were surprised they had to shift their business, it was completely unexpected. Who would have known that in our lifetime, we were going to have to deal with something like that. That will not be the last time this happens. And I just want to make it really clear, just because it happened once doesn't mean it won't happen again. And it's not to operate out of fear. It's just to operate out of being prepare. And make sure that you have enough runway for one or two months of your team salary, including yourself because you know, you should be able to pay yourself as well. And ensure that you give yourself time to respond to whatever is happening. It's not about whether or not the business is going to make it or we're going to go under it's really to give you time to think about okay, now what what do we do? How do we do it and gives you time to not only employ the strategy, but allow for the strategy to work before you run out of cash? Because businesses don't go out of business because they're bad businesses, they go to business because they run out of money. And we don't want you to be in that situation. 

Ashley Cox  32:12  

Yes, such such brilliant points. Carla, I think, you know, the, the pandemic really just taught us a lot about unexpected situations. And being prepared as small business owners are not being prepared. And I think one of the things that, you know, buddy, even fortune 25 companies, you know, the people that have hordes and hordes of people that are doing financial planning and projections and contingency planning, nobody had a worldwide pandemic on their contingency plan.

Carla Titus  32:44  

Trust me, I did not get that one I wasn't that good at forecasting,

Ashley Cox  32:48  

did not have that on our bingo card. Okay. So if you're still beating yourself up, because you weren't planned or prepared for that, please don't. Nobody was nobody knew that was going to happen. And now we can take that experience. And we can learn from it. And we can say, what would have been helpful in that situation and exactly like Carla sharing, you know, having one two, I prefer three months, I'm a little less risk adverse, I'm like, ooh, I'd really like to have six months but but you know, like having that cash reserve, making sure that you've got your payroll covered your owner's pay covered your bills, you know, what are the things that if, you know, if everything fell apart, you could cover these these particular, you know, financial responsibilities. And to me, My people are always first I will get rid of services, I will get rid of systems, I will get rid of, you know, tools and online things. But I want to take care of my people first.

Carla Titus  33:44  

Yeah. And you think something that business owners don't do often is like scenario planning. And what we like to do is like, what is your barebone budgets that if everything else have to go away, and you only had the minimum to operate and run your business, what is the budget look like? And that allocation, because you realize it's actually a lot less than what you're currently spending, I'm pretty sure. And you will have a lot of nice to haves and want to have, especially during an economic downturn you want to be assessing are, am I getting the value from all the things that I'm paying for. And if you're not, it's time to go do that right now. And you do not need to pull the trigger on anything. If things are good businesses, Grunt is great, but you need to be prepared that if you want to go to that verb on budget, you're not caught by surprise that you've actually done the work already to think about that. And you would know here's the 10 things I would go because we do not need them. They're nice to have. And then we can survive and thrive to then turn things around and wait enough time for us to pick up business again. And then you can add them back. People don't realize how many things can they pause, delay, or cancel? And those are things that we always work with clients on. It's like it's not an all or nothing, you could pause for two months. You can delay hiring for two weeks if you need to, right if the cash reserves are not there. And then you could also just get rid of things and bring them back later when they actually need to serve you a purpose again and we We're not being critical enough with our allocation. And we're just really spending our times because we're in the day to day and we forget to check that sometimes just going through that exercise is helpful. And you'll see how much money you save that you didn't even realize was coming out of your bank account until someone mentioned that. And so it's a good exercise to go through on your own because you know, what your business needs. And you know, what are things that you're paying for that you're probably not using, like a lot of those subscriptions, I see that often. And that you could always restart at a later time when you actually going to use them and need them. So just make sure that you're going through that, especially during this time, because we want to preserve as much cash as possible. We're big advocates of applying for a line of credit when you do not need it. Because guess what, when you're in trouble financially, and you need access to leverage that, things don't like that. So don't wait until then do it from a position of strength during now, when your business is thriving, and is financially stable and secure. Go access those have them on the sidelines, you don't have to use them just because you have them. There might be a maintenance fee a year that you have to pay for having it but it's worth it for the peace of mind. So you don't have to have as much cash reserves, if that's something that you would want to, you know, incorporate into your business plan.

Ashley Cox  36:12  

Absolutely, yes. I love that. That's such great advice. And it's so it's so simple. And it's practical. And it's something that's available to everyone, you know, especially I love the idea of what can you pause? What can you delay? What can you cancel? That just is such such a good practice to probably get into two or three times a year honestly, like, Am I just bleeding money in places where I'm not using the service? I'm not using the subscription. I mean, even just thinking about your personal life, you know, how many subscriptions do we have, that we actually aren't using, or aren't adding value to our life in meaningful way.

Carla Titus  36:48  

And we're really good at justifying those, right? Like, unfortunately, we have like all the streaming services, we're like, we can't get rid of one because we have one show here. And once we're there and, and the kids watch this, and you know, it's always something right? Like you can make those hard trade offs, especially in a time where financially maybe you don't feel very secure, and you want to build up those cash reserves, maybe it is a time to assess. And you know, we're really big on business owners should be leveraging their business to generate personal wealth. My thought is the business takes so much out of you, you're working so hard, you need to get something that's better than just working a job honestly, like that's my take on it. Like you can disagree with me if you like but to me, it's like it's gotta be worth it. Not only pay your salary, but also allow you and your family to create some personal wealth to be able to save for retirement and be able to purchase whatever you know, size home you want. And whatever extracurricular activities you need for the children, vacations and fun things that maybe it's on your financial plan personally, and your business should be able to contribute to those goals as well. Because we work so hard already, like we do not we need to be able to reward ourselves for the hard work.

Ashley Cox  37:52  

I do not disagree with any of that at all.

Carla Titus  37:56  

Unfortunately, you know, a lot of business owners don't even pay themselves, right. So we can even start there and start to address the fact that that becomes an issue because it's not talked about this. Nobody sharing strategies on how, and I'm going to tell you it's really straightforward. It might not be easy, but it's straightforward. Meaning you can start paying yourself $100 A week, if your business is just starting to generate small amounts, and maybe 100 is too much. Maybe it's 10, maybe it's 50, you pick the number, right? We're not here to judge again. But that's your starting point. And what I want you to to set a goal to maybe double that, or 50% increase in the next month or two, what can you do to generate more sales and business owners are spending so much time on things that are not generating them revenue, we call them revenue generating activities. And they're not doing enough of that, that moves the needle in the business to grow their revenue, so they can have space and room to pay themselves. So back to paying yourself you start with 100 A week or 100 a month, it doesn't matter the amount. It's more about the discipline to have it and the behavior that we're trying to stay that your business has to provide for you. And then you grow it over time. And then you know, maybe it takes you two years to get to pay yourself 5000 A month and replace you know what your income used to be in the past or maybe 10,000 or whatever the number is for you. But you got to set those goals intentionally. And you got to keep moving towards making progress to getting to those goals as your business grows.

Ashley Cox  39:18  

Yes. And if you think, wow, okay, this show is geared toward business owners who are making multiple six figures, seven figures and beyond. Why are we still talking about paying ourselves? It's because it is an it's a problem. And it's a problem that we're seeing with our clients. It's a problem that I know, you know, it feels uncomfortable to talk about, it feels scary to talk about. And when you think oh my gosh, somebody has a seven figure eight figure nine figure business. You don't think that they're not paying themselves but the reality can be that that is it's a real slippery slope, the more money you make, a lot of times the more money you're spending, the more team you're adding, the more benefits the more you know Time off. And, and all of these things cost money. And so we have to be really smart. We have to, you know, forecast and plan and project for those things. So that way we can protect that owners pay so that you're getting value out of the business that you've built with your blood, sweat and tears, right, Carla? 

Carla Titus  40:16  

Yeah, you should be your first priority. And don't get yourself thinking that because you make a million dollars a year you pay yourself, they call me all the time to come fix it for them, right, because they never prioritize themselves in the first place. And now it's harder to do so because they built their business with all these expenses that are taking away from it. And so it takes a drastic reshuffle to be able to get make room for the owner to now be able to pay themselves in that size of business. But it doesn't matter the size of business, if it really is about what you're keeping at the end of the day and profits after paying your taxes and paying yourself. And we don't talk enough about that we're all over here and revenue line, like how 16 Hot sales are a million dollar business. And I see million dollar business that are also losing a million dollars a year in expenses. So their breakeven, I don't care to have that business. I rather have a business that makes 200,000 a year and I get to keep you know, 150 of that. It's a much better business for me, even though smaller, you would think oh, that business is not that good. That business is 10 times better than the million dollar businesses breaking even. 

Ashley Cox  41:17  

Yes! So if you're thinking, my goal is a million dollar business, let's maybe readjust our priorities and talk about what your profit goal is instead, right? Like that's much sexier.

Carla Titus  41:29  

Yeah, we want to make sure you understand what are you paying yourself? What is your tax liability? And then what is the profit left, that your business can support and sustain before you start adding all the other stuff that is, you know, again, nice to have or like that you maybe don't necessarily need. And as you're bringing team on, you gotta keep reassessing that, because it's going to shift.

Ashley Cox  41:48  

Yes, yes. And it's going to, it's going to also be something that we want to think about from how we're paying our team. You know, the the the thing right now that's really stuck in my craw is how abominable, the pay rates are for people who are doing full time jobs. They're having to cobble together two and three jobs just to make ends meet. And so if I'm bringing somebody onto my team, and if we're helping clients bring people into their teams, we're always making sure what is a fair livable wage, not as not what is minimum wage, because minimum wages with a week, I can go down a whole rabbit hole there. But you know, what's a fair livable wage for this role for these responsibilities for the number of hours that we're asking this person to work. And so we need to build in that healthy Salary for each of those team members. And it may not be $10 or $15 an hour like You're like you're thinking.

Carla Titus  42:44  

Also, we don't have to forget or overlook the fact that with the type of businesses we have, we're able to give people a lot of freedom and flexibility and remote benefits that other big companies are not able to. And so we need to account for that sometimes that maybe the pay is not exactly what they would have gotten like a six figure salary, maybe it's half as much, but they get to have freedom on controlling their schedule, they get to work remotely, they get to, you know, work with a team that knows how to work remotely. And some of the other aspects of working in a smaller business, that is an advantage that we completely overlook, as small business owners, and need to be able to communicate that to the candidates and say, Hey, if you're working at a big company, you probably be putting in 40 hours minimum. And here, we're giving you the flexibility to work 15 or 20. So you could fit your life around your work instead of the other way around. So things that we need to highlight and not forget that our small business owners were able to do,

Ashley Cox  43:42  

yes, 100%, like we only work four days at Sprout HR, right, we take Friday's off, it's a 32 ish hour work week, some weeks, it's less, some weeks, it might be a little more, you might work an extended Wednesday, or you know something, but for the most part, I mean, it's right around an average of 32 hours a week. And it's a full time salary. So that's an opportunity. Like you said, maybe maybe you could go to a corporate job and make six figures, maybe you could make you know, 80,000 and this job might pay 60, or it might pay 40 Or it might pay, you know, whatever your range is, but like you said, the benefits, the perks, the freedom, the flexibility, the opportunities that you have, can look so different. And I think that that is something like you said, you know, we've just don't talk about this enough. We need to have these conversations more. And I'm so glad that we got to have that conversation together today because you and I are on the same wavelength, my friend. Love it. So we are at the end of our episode, and it is time for everyone's favorite segment. I'm just gonna go ahead and say now everyone's favorite segment called Imagine the impact. And this is where I'm going to ask you, Carla to help paint the vision for the kind of impact our listeners could create through one final thought Get a takeaway and action item from our conversation today or something new that you're like, Hey, listen, we didn't get to talk about this, and I want to talk about it.

Carla Titus  45:08  

Yeah, I thought about this question, because that ripple effect or impact that we can make is really started, especially women business owners, I don't think we get enough education around finances just in general in life. And I want to have more women, business owners just have a little bit of knowledge and a little bit more understanding of what their money can do for them, give them opportunities, freedom and control of what they can do with their time, how they want to show up, and where do they want to work. And we can't do that unless we start learning more about money. And it might feel scary at first. And with the right person in the right guidance, I think it can feel really fun and empowering. And I would love to have more women, business owners feel empowered by their money, what they've created in their business, and how they can make an impact not just for their lives, but for the community around them by giving back more because we do know that when women have money, they give back more, they impact positively. And we just need to have more women business owners doing that type of work so that we can show what's possible and hire other people that need the flexibility in their life that need those remote jobs, especially working mothers and others who just want to be part of their child's life. And they don't get to if they work a normal job, but they do when you create jobs in your business. So we need you to thrive and grow your businesses so that others can also thrive and give back to their families and their communities.

Ashley Cox  46:29  

And that is today's mic drop moment. I love it. We are 100% aligned there, Carla, it's absolutely what we're here on this earth to do is to help women create thriving, sustainable, profitable businesses so that we can create opportunities for others who maybe aren't interested in starting a business but still want that radically different experience than what most have had in corporate. Oh my gosh. So imagine the impact listeners that you could have on your business, on the community and in the world with a little financial empowerment. So Carla, tell us where is the best place for folks to connect with you. Because I know they're going to want to connect with you after this amazing conversation. And how can they learn more and about your services?

Carla Titus  47:13  

Yeah, so they can go to our website wealth worth within.com. We have a blog section with free resources that we make available to everyone. So if you want to just get a little bit of knowledge, start educating yourself and empower, you know, go read through our blog, make sure to sign up for our newsletter, we send out you know, some of this interviews and some resources available for business owners to take advantage of. There's also a free budgeting video that you can access through that. So like I would love to get started on your money journey. If you've been shying away or felt scared or overwhelmed. Let us help you. We're happy to, you know, guide the way and just be an accessible resource. And if nothing else, follow us on social media, at wealth and worth within we're very active on Facebook and Instagram. And we have a lot of videos and free content that we put out there for business owners to start to dive into it. Don't be shy ask a question in the comments. We love to interact with our audience. And if you're ready to hire a CFO, you can book a call with us on our website at wealth within.com/contact and just set up a free call for us to have a conversation or how we can best support you. Otherwise, we're currently booking annual budget planning and about to switch over to mid year review. So you can find that on our website, wealth and worth within.com/projections If you're interested,

Ashley Cox  48:31  

Perfect. And we will put all of those links down in the show notes for you so that you can find them. Super easy. Oh my gosh, Carla, this has been absolutely fantastic. What a joy, just to have you on the show today. What a great conversation. I know that our listeners are just going to have so much value in so many takeaways. So thank you for being here. Thank you for sharing your brilliance. Thanks so much for having me. And thank you, dear leader for tuning into our conversation today. I hope that you found it inspiring. I hope that you found it comforting because money can be a little scary. And I think that Carla's approach is so beautiful and so comforting. And as always, it is an honor and a privilege to be here with and for you on your leadership journey.