Sustainable business growth through cashflow forecasting with Matt Gartland

Akua: If you are in need of a reset with your business finances, then this episode is for you. Matt Gartland, who is the CEO of Smart Passive Income, comes back on the show to talk about finance strategies we need to implement in order to create a more sustainable and successful business. And let me tell you, these strategies are not only going to make it easier for you to manage your finances, but also make it more enjoyable.

Now, when he said that, I was all ears. So this is an episode that you don’t want to miss. And not only do we have Matt for this amazing conversation, he’s also hosting a live webinar with our product evangelist, Matt Hughes, to learn how to financially prepare for the unexpected in your business. This live class is happening on October 22nd at 12 PM Eastern Standard Time.

After you listen to this conversation, I know you are going to be running.

Hey everyone, this is your host, Akua Kanadu, and you’re listening to the Independent Business Podcast. More people than ever are working for themselves and building profitable businesses in the process. So on this show, I get to sit down with some of the most influential authors, entrepreneurs, and creators to break down the science of self made success so that you can achieve it too.

Check it out.

Hello. Hello. Matt. Welcome back. How are we feeling?

Matt: Feeling really good. It’s a thrill to be back. This is a blast. Thanks so much for having me.

Akua: Yes. Thank you so much for coming back and celebrating with us with the launch of HoneyBook Finances. Like I mean, you are doing a lot with us to celebrate like an amazing webinar coming up with our product Evangelist Mac.

Doing this interview with me, this topic I think is so important as business owners. And you, you’ve seen so much incredible success, so I’m really excited that we get to tap into you and your expertise of like how your relationship with money has changed, what you’re doing now versus when you first started out in business and just important things for our independent business owners to know.

So thank you for being here.

Matt: Yeah, my pleasure. It’s, it’s fun to talk about this stuff and maybe that’s a decent segue cause like finance isn’t always fun, I think for small business owners, but I think if you can find the joy in it and kind of lean into it as an advantage, it can, it can really help you for the.

Akua: Okay, yeah, because when you say, I sweat when I hear finances, so I’m like, I don’t, I don’t feel joy. So I’m really hoping that I could feel joy after this episode. And so how are you planning for financial decisions in your business? So as you were like wanting to build a team or you’re launching a new initiative, how exactly are you laying out the financial roadmap as like, I just think of like business owners were like, okay, I’m getting this.

I’m like, I’m moving forward. Things are rocking and rolling. I’m noticing now I maybe need to like start scaling or, you know, I want to launch a new product or service or invest maybe more in ads, you know, just something that’s a little bit bigger than they’re used to. How do you determine what’s like the best decisions for you?

Matt: Before even making the decisions, uh, what, what I try to do either. Myself in my own business or in the startups, I’ve been a part of with partners. It’s, it’s really kind of aligning on what’s our definition of success. How, how big do we want to grow? And you know, those are very, um, like personal questions, right.

And there’s no wrong answer there, but that’ll inform different financial decisions and how maybe risky you may want to get with certain investment levels into staffing or paid ads or things. Right. But trying to potentially represent sort of like the awesome small business owner that, you know, Maybe isn’t operating with a slush fund of money, right?

Doesn’t sit on venture capital or a big nest egg of some kind. Then we’re probably, uh, at least in my experience and in the work across, uh, like creators, small business owners, independents online, you know, these are kind of profit first businesses, right? Like we’re, we’re trying to cashflow our way to increased levels of freedom and increased levels of confidence, right?

In terms of our income generation for ourselves, we’re not operating with tons of margin, you know, on the side. Uh, and that’s maybe not true for everyone listening, but I think represents sort of this awesome person that I love talking about, right. Which is a, like a company of one small business attitude.

Akua: So

Matt: from that place and thinking about growth and success, maybe through that lens, it’s like, okay, I want to think about measured growth. I want to think about sustained growth. That’s not to say like as entrepreneurs, we need to take bets. We need to be a little bit risky. Uh, you know, otherwise don’t become an entrepreneur, right.

Uh, or, or an independent business owner. So like. All roads in my mind kind of through that lens of like, what does managed success growth look like? Uh, at least a cashflow. So if I can map out really like, okay, what are my cashflow patterns, outflows, right? The revenue coming in, the expenses going out. And if I can see those trends and if I want to try to increase that, you know, at least increase, you know, the, the cashflow up into the right, even if it’s slow and steady, like that’s, that’s my barometer for like, okay, is this a wise decision to make, to bring on someone new, even if it’s a VA, you know, if someone is, is, Solo solo at the time, and many people are Mm-Hmm, , okay, can I afford to spend $500 a month, a thousand dollars a month, or whatever it is, right?

To bring on someone that can start to take on some of the, you know, $10 an hour, $50 an hour work so that I can spend more of my time on the a hundred dollars, $500 an hour work to generate. You know, business for myself and whatever capacity, right? So that kind of classic thinking. So, and then do I see that?

And can I can bring some level of confidence to that decision making by cashflow? And can I like look into the future with cashflow forecasting? That’s like the first big thing I would say.

Akua: Yes. Oh, I think that’s so helpful because I think again, Just really laying down that map of just having a realistic conversation with yourself of what your cashflow truly looks like and what are those patterns and data that you’re talking about, where it’s like, I always say this all the time that the data always tells a story.

So even if you’re never sure of what direction to go in your business, just literally go look at the data and it will tell you exactly what you can and can’t do. And so you just did an earlier cashflow forecasting. Can you kind of break that down a little bit more into what that is?

Matt: Yeah, absolutely.

It’s again, nerdy and gets into the weeds on some stuff, but I do, I love it. It’s fun. And in part why I think it’s fun. And then I’ll get into the specifics is, is this a confidence factor in yourself, this conviction that, you know, when I’m, when I’m building makes sense, when I’m building has increased levels of stability and longevity.

Uh, cause I, I think probably many of us know, uh, or have heard these kind of national statistics that after five years, you know, uh, the average small business is gone or there’s a 50 percent chance. I should say that after five years, you know, a small businesses is, has gone through its lifespan. Right. So it’s sort of like beating the odds.

Like, you know, I try to play the long game as much as I can and in the small businesses and startups I’ve been a part of. So yeah, that again is sort of like a, an orienting lens that I have. So to then make it calmer and more. You know, maybe confident oriented to, to make these decisions, try to reduce as many transactions as, uh, as I have on, uh, the cashflow side.

And that’s both on the, on the inflow. So, so the revenue side, as well as the outflow on the expenses. So a classic and very helpful, even tactic. Is to consolidate as many of your small business expenses as you can to like a credit card, use it wisely, always pay it off, standard disclaimers, right? But you know, that’s a way where then at least at your cashflow level, you have a single transaction hit hitting your account every month.

And if you’re putting largely fixed costs right onto that credit card, so software recur on a pretty predictable level, then you have a lot of confidence again, in knowing, okay, on the 13th of the month, when the credit card, you know, comes around for auto pay. That’s what it’s going to be. And I can actually put that on a calendar.

Like I can put that on a date on the 13th of every month. And I know what that outflow is going to be. You can do the same thing with, with inflows, you know, depending on what you sell, you know, whether it’s services or products or a combination of, of the two. Uh, most default kind of payment processors pay out daily.

And, uh, At scale, that’s obnoxious. That’s crazy. Now you may need to do that based on again, cashflow patterns, and you may need, you know, that, that revenue inflow coming in daily. But if you can get to a point as you grow and hopefully grow slowly and sustainably, I strongly suggest you change that. And you go from daily to weekly, maybe even weekly to bi weekly.

If you can, you, Even do that because then it’s more predictable, right? And you can forecast, especially even with services, if you’re selling coaching or consulting, or you’re running freelance projects, and you know, your milestone payments for a particular design project or copywriting project or something like that, then, you know, hopefully you have some confidence with like when the payment terms are, and people are going to hit their payment terms, you can map that also against the calendar basics.

It’s calendaring your, your cashflow. I visually do this and have done this for over a decade, uh, with my small businesses and it really helps. So yeah, that, that then you can almost literally see visually what that cashflow pattern looks like. And then that can come back around to like questions and, or I should say decisions, it’s like, okay, if I add a little bit more here in terms of the cost, you know, can I manage that with the cashflow and then I can spend more time to generate more business or try to do more marketing to try to sell my products, maybe that’ll increase next month.

Some of my, my sales.

Akua: I’m already like, Oh my gosh, that’s brilliant. And I need to do that today because I have heard other business owners, like I’ve heard that conversation of like, I didn’t know it was called cashflow forecasting, but I’ve heard been sort of like, they do it all on a credit card, all of that.

And I was like, yeah, yeah, I need to do it. I need to do it. But like, I never really knew why. I just always heard it. I don’t know. Business owners just did that. A lot of them do. And I’m like, that makes absolutely complete sense of like, because it really just makes you feel more in control of your finances.

And again, like makes it a lot more easier to plan and giving you that confidence of like, I know that this amount is coming out this day. So therefore I can, you know, again, like really just plan out your business, plan out your quarters based on this cashflow to do what’s right for you and your business.

So, um, I’m like, Oh my gosh, like now the wheels are already turned. Like I’m starting. Okay. I see where the joy comes from. I’m not going to lie. Like now just hearing a little bit of that, I’m like, Oh, okay. Okay. Like it just, it makes you feel a little bit more relieved and more manageable. Like, okay, I can do this.

I can control my finances. And especially just having that all in one place, like the honey book finance, it just really alleviate some of that stress.

Matt: Right. And I do think, and I maybe jumped to shark a little bit, like the, the joy is the, at the end of the road, the thing that comes first in terms of like an emotional gratification is, is that relief of knowing, okay, it’s not chaotic and it’s not unknown and disorganized.

So the opposite of that is organized is more predictable. And when you get there, it just feels better. Right. And then you might enjoy, at least my theory and my lived experience is you’ll enjoy the work again, a little bit more working for yourself, working for yourself can get obviously challenging and stressful, but by bringing more.

You know, simplicity and predictability into your finances, especially at this cashflow level where that is the everyday reality of, of work is it all leads to cashflow. Then it’s like, okay, cool. I can like kind of enjoy the work again, you know, whatever, you know, service or product you’re building and, and the customers and clients that you’re serving, you know, with that, I would hope that that kind of re elevates, you know,

Akua: Yeah, and I think it just leaves more room for being more creative and innovative.

I think we sometimes forget in business that there’s certain pieces that maybe just don’t look as sexy, such as money, and not realize when you have certain control of areas of your business, that it can really fuel creativity in ways that you just didn’t think of, you know what I mean? Just being able to create more of that space and that room for you to just stretch, and see what works and what doesn’t work, and experience.

So I really love that you, that you brought that up. And so I’m really curious to know as, you know, as you’re doing that, how are you really finding that balance between reinvesting in your business and then also building personal wealth?

Matt: Yeah, that’s a fantastic question. Um, what, what I like to talk about and what I do myself, Is to create a little rubric of knowing, okay, a certain thresholds of cash on hand, right?

At, at different, you know, uh, levels. And I think quarterly cadence is, is a measurable cadence trying to do it monthly kind of feels like a lot or, or often does in like the early days of a small business. It’s like, okay, here’s my rubric for how I’m going to use, you know, free cashflow, right? Which is just a fancy term for how much money do you have at the end of say a given reporting period, whether that’s monthly or quarterly.

Number one thing is actually. So like, are, are you on your game with either squirreling away, you know, uh, free cashflow, you know, to, to pay the tax bill, you know, are you paying estimated quarterly payments or not? Right. Just like, there’s some nuance to that, you know, but in terms of designing a rubric, it’s like, that’s kind of comes first is to understand like, okay, I just don’t want to get surprised with a tax bill later.

That’s going to cause a lot of stress. And then I haven’t prepared for that. And I’ve reallocated free cashflow to other forms of investments or whatever. And now I don’t have that to pay the tax bill. So that’s kind of big point number one in a rubric, but then have other points in that rubric around.

Okay. How much then do I want to think about reinvesting into the business? And what does that look like for you? And again, that’s a spectrum of thought, you know, in terms of investing into more marketing or, and, or products, depending on what sort of product that is, you know, you spoke about being creative again, which is fantastic.

And sometimes creativity will require, Uh, or be a pathway to like research and development are indeed doing something new to expand your offers, right? And that might take a little bit of that free cash flow, uh to reinvest in that Maybe you want to hire a graphic designer to come up with a new kind of brand and brand language for a new product right or something so So yeah, I think about designing that rubric so that You’re using more logic and consistent logic at every reporting period, which again, I’m suggesting quarterly kind of be the cadence to like, to put that thinking through.

And it just helps to have consistency, not only of thought, but decision making and you’re less subjected to maybe emotional whims or outside influences or seasonality, right? Like a little more. Uh, maybe eager to spend money, you know, in Q4, we get close to holidays, which should be personal finance anyway, versus business finance, a whole other thing we could go down in terms of a rabbit hole.

But yeah, so designing a rubric around like where, what sorts of buckets, right? Might I want to allocate free cashflow to also keep a reserve, I would say as a part of that rubric is something I do as well. So, so there’s always sort of like a minimum, level of cash that’s staying in the business and actually doesn’t get allocated anywhere else.

I call that a hard deck, uh, which is sort of actually from, uh, an aviation reference, which is kind of nerdy, but it’s like, you, you don’t, if you’re flying a plane, like you don’t want to get so close to the ground where you actually might hit the ground. So like you put like an altitude, it’s a hard deck in there and you, you don’t fly below that.

So in business, What I like to teach, uh, and it’s been quite helpful to community members and other things, uh, other pursuits I’ve been a part of, which is like, yeah, think about at least, at least one month of your little operating budget for your business as your hard deck. And you just keep that as cash in the business at all times and try to never go below that.

More is better probably, you know, two to three months of You know, runway is another term that, uh, you know, is used for this notion, at least like in the tech community. So, but even again, anyone that is running a business for him or herself, I think can and should operate with the same sort of thought.

Akua: Yeah. And one thing I will say is that even just your systems are very digestible for business owners. I think the rubric is just It’s just brilliant and so helpful. And even, like you said, having that reserve of cash just as like that cushion, I think is really great. And also to, I just want to put a shameless plug because I know that you and Max are going to be talking about how to really just prepare for emergencies, like what to put away for Exactly Taxes and all those things.

So I just want to put a shameless plug to make sure also to check out the webinar, because that’s going to be so, so helpful because I think I just remember first starting out my business. That was the biggest overwhelm for me was trying to figure out how much money to put away and where, and all of that.

And I mean, and once you get going, then it feels you’re like, okay, like you can breathe a little bit, but. It, I just remember that being like, Oh my gosh, am I still not putting anything right? And you know, and I definitely, I got bitten the butt by the IRS the first time and I was like, I’m not gonna lie.

But to your point of like that kind of surprise, um, yes, I have absolutely been there. And I just remember what that was like. And I think again, so if you were a business owner, that’s not sure, like, I really, really want to encourage you to attend that webinar as well. Um, and what I also love. Is that, like I said earlier, is that it’s just very digestible.

Like it’s very doable, that rubric as well. And I think you’re just really aligning it as well with your values. And I’m really curious to know for you, how have you kept your emotions in check when dealing with finances, especially like as you’ve grown over the years, you said that rubric really just kind of helps you think of things from a logical perspective.

And I do agree with you. I think a lot of us, we allow our heart to dictate our finances instead of logic. And so for you, how have you really just kind of stayed grounded throughout that?

Matt: Yeah. Brilliant question. Takes on, I think, a couple of different dimensions. One is just, you know, what are your core values even again, as a, as a human being, as a person?

Um, and then related to that, if you have a team or the beginnings of a small team, there’s, there’s good practice to actually establish core values as like a culture. Right. You know, within your team, but you know, core values is like, you know, for, I think a lot of us that pursue independent work, right, is in fact independence, right, or freedom, and, you know, I have unfortunately seen a number of my friends that are entrepreneurs and small business owners take on debt or have to do other things to kind of keep a business afloat and keep going, or don’t have certain, shall we say, like.

Um, mature financial systems and processes, you know, in place, and then they kind of get trapped by their own business. We, we, we run the risk of, of losing the freedom that we’re actually seeking in the first place. Right. So at least for me, and that’s, you know, just like my spicy opinion, perhaps, but, uh, I, I, I like to think that I championed for.

You know, the average small business owner is finding ways to not lose that. And it gets, you know, it’s, it ebbs and flows. It’s not a constant, but like deferring to the level of independence that you’re probably seeking in some regard, you know, from, from the beginning. And therefore, you know, even just on that one core value alone, like that informs like levels of debt that I might feel comfortable or not comfortable taking on decisions on how aggressive I, I might want to be with, you know.

Uh, I knew website project. That’s a big splash in terms of say a rebrand or something like that, but that’s a big investment kind of measuring that allowed is like, okay, how much, how much of this risks kind of taking away from a sense of freedom and purpose, you know, you know, for the business. So, so that’s all core values.

Second is, you know, some sort of a partner. It’s a lonely, of course, being an entrepreneur. Uh, most people are solopreneurs in some capacity, right. And I don’t think everyone should have like a business partner though. Happy to have that conversation a different day. Like I think it’s actually a superpower if you, if you pursue that, but just some sort of a support network, right?

Uh, whether that’s a spouse or significant other that you’re able to have these conversations with, or is a small group mastermind or something like that, where you know, there’s a sort of check and balance to the thinking and kind of be there almost as an accountability partner, if nothing else, right.

To the financial decisions that you make, you know, that takes, that Certainly a level of trust, uh, in a small amount, right. To be able to open up and be that transparent, you know, with any of those kind of people you may invite, you know, kind of into this conversation that you largely have with yourself.

So, uh, but yeah, finding a partner and accountability partner, spouse, significant other, something like that. I think it’s a very useful barometer as you go and as things grow along the way. I think third is then, uh, if you can, if you can muster it in terms of a budget, like actually do hire out and find a really credible financial professional, you know, to help you a CPA, if you can, right.

And then. Learn at least the 80, 20, right. I’d like on how to read your own PNL, which one of those things, again, might seem spooky and it is for most people, most business owners in the early days, like, Oh, this seems dry or I don’t understand this or this isn’t fun and I don’t want to learn what the PNL is actually telling me.

So yeah, you probably should at least a little bit. So that’d be the third thing is like, uh, if, and when you can get to the point where it makes sense. You know, good financial sense to add that expense right to your small business. I championed that massively. It’s such a good barometer to have a good person.

Akua: Yes. I loved all of that. I think again, number one, like what you said earlier of like your core values, those drive everything in your business, every single decision you make. And so that shouldn’t be no different as well for your finances. That’s just so, so key. And like, if that is your core value of wanting to have that freedom as a business owner, um, Then making sure that you’re setting up your business and your finances to do that.

And one thing that I love to is like hiring somebody out. And I just remember when I first started out, like I didn’t have the budget either, but I just remember I, Oh my gosh, I can’t, it was through a college. They had like a financial program where, and it was like free, like where like business owners could come in once a week and to ask financial questions with like a CPA.

And so also to just even encouraging of like, if you don’t have the budget just yet, like look locally of certain resources as you’re even, cause you know, like when you first started out, like you’re trying to grow community and do all the things and you’re wearing multiple hats. And I just remember like, that was the last thing I was thinking about was finances.

And now I love that I invested. I finally like was like, I screw it. I’m going to invest in a CPA, like, which made complete sense. But I just remember like before then I don’t have anything yet. And there were so many great, like free resources as business owners. So definitely like, I want to encourage everybody to like look locally.

Cause that’s what I did until I was ready to get a CPA. And I just love all three of those facts. And it’s just such a great way just to make sure that you stay level headed and logical throughout the whole process.

Matt: Yeah, yeah, I think that’s dead right.

Akua: Yeah, and so another question I’m really curious about is growth over profitability.

Matt: Hmm. Oh, this is always a juicy one.

Akua: I’m so curious about that. What are your thoughts on that? And where do you see business owners get caught up between that like in terms of finance mistakes? Oh sure. Yeah.

Matt: Oh my gosh. I mean we could just exhaust the rest of the time just on this. I know. I’m sure. Um, an old or former executive coach of mine once had a great phrase that has stuck with me, that unmanaged growth is as risky to a business as not enough growth.

So if you’re pursuing growth at all costs, right, or growth at, you know, to no end sort of a thing. And usually what that means is revenue, right? Trying to drive up top line, uh, as much as possible, as fast as possible, even when you’re not a venture capital back. You know, tech company as the primary reference point, right?

Is that can get to be too much, you know, depending on you or, you know, if it’s growing fast and you then are hiring people to help with delivery of whatever the project or services. Also a lot of small business owners don’t necessarily have strong initial leadership and management skills. Right. So those have to get learned along the way.

So kind of adding in that layer and therefore you, you, you run the risk or, or folks do run the risk of the condition of it, this is getting out of control, like the growth is happening. Yay. But then like, I can’t control this. I’m spending too much, or I don’t, the spending is not well calibrated. I don’t really have a strategic plan that has financial kind of guardrails in place, et cetera.

Right. And then all of a sudden, whoops, like I’ve spent too much, but the growth has been happening, but I overhired too fast. And now, and now my cashflow is zero, right? I’ve gone to zero cause I haven’t balanced that well. So I, so this all speaks to just chasing revenue because question mark, right. Or, or period.

I think it’s Mike Michalowicz from his profit first book has a, has a phrase that, you know, revenue is vanity, profit is sanity and cashflow is king. And I would say yes to that, right? Like, uh, or, or double down on that. So of course, as, as business owners, I do think growth is important. Uh, uh, I’m not gonna like, I’m not an anti growth guy.

I just think it has to be measured against those other two kind of predominant financial factors, which is profitability and then overall longevity of a business as measured by cashflow. So can you, can you define, as you think about the next six months, where do you want to be? On all three levels, not just one level, not just like the revenue side, but like on all three, I think doing those together is a great way to keep yourself in check.

And then again, surround yourself with other people, et cetera, from that, from the prior comment as like an added buffer to it all.

Akua: Yeah. Have you ever found yourself in that type of position? How did you, like, I

Matt: mean, most lessons are learned the hard way. Uh, yeah, yeah, for sure. Uh, yeah, I, one of my early startups was a direct to consumer e commerce agency business.

Uh, we were pretty upmarket. Did a lot of proprietary work with big brands on the Shopify platform specifically. So a lot of custom, um, website, you know, web dev solutions as well as proprietary software. And we have the privilege of being a, a top tier Shopify plus referral partner. So they were helping in terms of brand awareness, right?

Like in driving referrals to us, uh, and we came along, you know, cause luck plays a role. And almost everything on, on some levels. So we came around at a good time when Shopify plus it was just kind of starting and getting kicked off. So it’s like, wow, there was a point in time where we had just a massive amount of demand, right?

Coming in. So we did try to grow and scale quickly, hired big teams, moved into a bigger office, so more overhead costs, et cetera. Right. And, and we did that stuff too fast and not enough kind of operational and, and financial guardrails in place. So, yeah, uh, we ultimately got through that, but we had to take You know, some bridge loans at different points that, uh, I had a couple of business partners added tension and stress into, into that partnership in different moments.

We got through it. We ended up actually being able to sell the company, which is great. Uh, we were acquired, but it was some real hard moments, late nights, more stress than we probably should have allowed on ourselves. And that bleeds out into other relationships in life sometimes. So yeah, a hard pill to swallow, but one that ultimately didn’t kill us.

And, uh, of the mold of, you know, if it doesn’t kill you, it makes you stronger.

Akua: Yeah. Yeah. No, I just, you know, I loved hearing just that story. Cause I’m like, I think it just really paints a realistic picture of that. Doesn’t matter where you’ve been in business. It’s like, You’re going to get your ass kicked.

Matt: Yes.

Akua: Always. Always, always. But one thing, I just love that transparency. And for you, I think a lot of the times our relationships with money, I feel like there’s been society has told us a way to think about money. Our family generationally has told us to think about money, like so much noise about how we need to view money.

And it really does like, can have a negative effect on people. And I just like, just hearing you, like how you have had to navigate that, but like, When you’ve made a mistake that has costed you a lot of money in your business, how have you bounced back from that? Like, you know, cause I think it’s just inevitable to happen as business owners that we make mistakes in our finances and it’s not an easy thing, but how have you navigated that and bounced back?

Matt: Yeah. Usually it’s just thinking about, You know, what’s forms of, I’ll use the same phrase from earlier. Like what sort of a rubric can I put in place, kind of define that maybe did not preexist, right? So to create something new that didn’t exist before to challenge my own thinking and eventual decision making to narrow the scope of possibilities of like total wide spectrum, no guardrails to something more controlled and finite,

Akua: right?

Matt: So again, whether that’s in relation to, to cashflow or a big one here, uh, cause it. All roads lead to finance in my mind is hiring, right? So if you are in a position where you’re growing in demand is high, whether it’s again, for, for service or for product, and you start to bring other people into the picture, one of the biggest financial risks to a business is you hire the wrong person.

And I’ve lived that a few times over, right? Where you bring someone in, especially if you’re shooting for someone of a more senior level, right? So they’re going to command a higher compensation package, et cetera, right? And if, if you get that wrong, And you’re never going to bat a thousand as a sports reference.

Like you will have misses if you do this long enough, but like, it’s, it’s a real costly thing to a business. Cause one they’re, they’re underperforming what you need them to in a given role. And therefore that probably has stress on the financials of a company. Then you probably need to lay them off or some exit event happens, right?

Okay. That sucks. Now you’re without someone in that role performing and. Producing, you know, some sort of a result for the business. So now you’re, you know, overall business performance might be challenged or dip. Now I need to spend more time and maybe money to recruit and try to hire for another person.

Like it just, it’s like this crazy domino effect. Right. So yeah, hiring, hiring is a big deal if, and when you get to it, I am a proponent of that also. If it’s measured, if it’s calibrated the right way, if a financial plan makes sense and it’s, you know, it supports it. Yeah. I know the rabbit hole. I could go down probably pretty far, so I’ll try not to.

I

Akua: know there’s so many rabbit holes. I want to go down with you, but I’m like, Oh, we have time. And I only know I have you for a certain amount of time, but no, I think that’s great. And I just love that you, Re like brought up the rubric again of like, it’s just a reminder that rubric that you create for your business in regards to your finances is your anchor.

Like always go back to that. If something happens, like if it’s, that just lets you know, to add something in there before, to make sure to set you up for success the next time. It’s just, again, speaks to the fact that every single failure is a learning. It’s a lesson. It’s not tech, it’s not a failure. It’s just data that you’re just collecting to be able to move forward.

And so you have advised businesses, been a mentor for business owners. What would you say that all of all the business that you’ve mentored, what do they all have in common in terms of their financial success that you’re seeing?

Matt: That’s a great question. I’d say it’s a simple business model. Those that get too complex, especially too complex too early, you know, in the game run the risk of, you know, kind of spinning out or having an unmanageable amount of, yeah, just.

Operational complexity, you know, to them and for your, you know, average small business owner, like that’s a lot to handle if it’s just you, or even if you do have a, have a partner. So I think keeping the model simple, um, which then even helps with frankly, like the marketing of it. Which is like, you have a really clear story.

Uh, hopefully it’s well differentiated in terms of your positioning. So hopefully, you know, you have a really tight, you know, ICP, ideal customer persona, who, who are you serving right. And staying true to that as much as possible. I think that is, you know, that as evidence, you take all that and you kind of distill that into like, what does the P and L look like?

Like it’s like, Oh, this is really simple. It’s like, yeah, absolutely. Like the, the ones that have the greatest success and success, again, at least in the way that I’m defining it, isn’t just how much revenue are you making? I think again, personally, the better measure, the primary measure should be longevity.

You know, how, how long can you keep this thing going? What is its sustainability? Right. Um, So for that, I think, yeah, simplicity is the name of the game. That doesn’t mean that you should only have one offer ever, but just kind of go slow with expansion, you know, slow growth is something I’ll believe in probably always, especially as the internet gets harder.

To, to operate on, you know, insert reference to, I guess, all manner of chaos related to AI and its effects on SEO discovery and social media becoming increasingly fragmented and noisy, blah, blah, blah. So, and I know not everyone listening to this as say an online based, uh, you know, small business owner and entrepreneur, but probably leveraging, you know, the internet and media channels for discovery, right.

That to drive business. So the simpler you can be for all of those purposes is going to make it It’s easier, uh, to, to run in the short term and sustainable for the long term.

Akua: Yes. I love that. And I think one thing is that that seems to be like, no, if you’re a solopreneur or you have a small team or, you know, you’re scaling to a larger team, I think that just seems to be the foundational piece of always just keeping things simple and simple as best in order to have a sustainable business.

And I love that because it’s attainable no matter what level of business that you’re in. Like you can always make things simple in whatever season of business Yeah. That you are in 1000%.

Matt: Uh, as a, as a quick bolt into that, our systems, you know, what, what are the financial systems, you know, you’re using to keep things simple and to keep things, I’d, I’d even add then like mature, like are you using kind of grownup systems to, you know, generate the revenue like as a, you know, point of sale system, you know, so, so those are the inflows coming into the business.

Akua: You

Matt: know, what’s your banking stack, you know, you know, who’s your bank and your provider, um, you know, your credit card selection to go, going back to that point, you know, and then, you know, so many people run the risk of over complexifying, if you will, like their, their financial, Right of how it all works.

And it’s like, Oh, that that’s a fantastic way of like leading yourself into stress and chaos. So simple tech stacks, uh, that have bearing on finance, uh, finances, financial management, um, is a really important piece of this.

Akua: Yeah. And I, that’s why I’m really excited for HoneyBook Finance now being out because even for me, my finances have not been as organized as I would like it to be.

So now being able to have everything in one place that I can view at the same time and just being able to even know how much money I’m allotting of like how much to pay myself, how much to put away for taxes, like having those systems in place really does make all the difference. And it’s really positioning you to that next phase in your business, whatever that is.

And so like you’re preparing yourself for that next phase when it does hit and you hit a lot of success. and a lot of revenue growth. You’re already prepared. Like you’re not phased by it at all. And I think again, like systems, I always say to you, like systems aren’t sexy, but it’s always like sustainable.

If you want a sustainable business, if you want a business here tomorrow, systems are key. And so this conversation has been so great, Matt. Like I’m just, So excited. Like I feel relieved, excited. Like I feel like this was, is very attainable. And I hope if you’re listening to you feel the same way. And so I’m going to throw the same question as you at you, like we did the last time.

What do you think is the biggest differentiator between the businesses that succeed and the ones that fail?

Matt: I think you’re staying small for as long as possible, a slightly different answer, but it plays into simplicity. I think it plays into Um, even the joy factor, because sometimes when things get too large or larger, too fast again, it can become, and I know again, through personal lived experience and a lot of friends that have, you know, operated different versions of startups and, and, and small businesses is it can become a job.

And usually we’re not in this to have it only be a job. It’s. Sometimes, if not commonly, like a job replacement, right? We want to leave a nine to five job so that we have more time and freedom and, you know, creative fulfillment by doing our own thing, you know, for sure. But if it gets too big and too complex, especially too fast, then that’s the way factor begins to tarnish.

Right. So I think staying small with offer, staying small with like, well, like a precision to who you want to serve and not just chasing money to kind of even tie back to that point, which is. Also. You know, hard lessons learned the hard way is if someone’s thrown some big money at you, but it’s not like exactly like who you want to be serving, but it’s sort of like adjacent and like, Oh, maybe I should take it.

Cause man, that’s a lot of revenue. Things can start to warp in how you think about decisions and what you’re chasing. And so. All comes back to like staying small, um, grow slowly is just, it’s a, it’s a more of a proven recipe. It’s not a guarantee of success by any stretch, but if you’re trying to increase the odds of success and play the long game, uh, for a career as an independent, whether that’s solopreneur for life or building towards a small team at some point, then stay small for longer.

Akua: Yeah. Oh, that’s even, that’s just so encouraging to hear because I think, you know, we are constantly like, oh, you know, like, make multi six figures and, you know, have this big business and big team. And you don’t have to. And I think that just like offers that sense of relief too, for a lot of business owners of that’s even for me, sometimes I feel like I have to have this pressure and it’s like a cool, is that even what you want?

And I’m like, no, you know what I mean? Like really checking in with yourself to like ask, like is this truly what I really want? But I love that. Like stay small for as long as you can and it’s going to truly, uh, propel you forward. And just. Again, like how, where your business is here for tomorrow. So Matt, thank you.

Thank you so much for this conversation.

Matt: It was a pleasure. Thanks for having me back.

Akua: Yeah, we loved it. Come back anytime.

Matt: Yes, let’s do it.

Akua: Thank you. Thank you so much for being here and for everybody listening until next time.

so much for tuning in today’s episode. And if you are ready to take your finances to the next level, then make sure to register for our live class with Matt and Mac in our show notes. And I will see you next time. That ends our episode of the independent business podcast. Everything we’ve discussed today can be found at podcast.

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