EP343 Create A Simple Plan for Financial Growth

EP 343 Blog Feature

If you want to increase the odds of survival of your jewelry business, you need to learn how to manage your business finances.

In today's episode, I interviewed Melissa Houston, a Chartered Professional Accountant (CPA) of over 20 years and founder of the Fractional CFO Agency. 

She helps successful business owners increase profit margins so they can keep more money for themselves and increase net worth.

Melissa has done some training for our community, and we're excited to bring her on as a coach for our top-tier Momentum Program to help our students grow their jewelry or product-based business from $100K and beyond.

It's her passion to help entrepreneurs and business owners understand their business numbers. 

So, if you want to increase your business profit and put more cash into your pocket, listen to the full episode below.

Download the show notes here

Here are some tips Melissa mentioned to help you with your jewelry or product-based business:

Start With A Solid Money Mindset

Everybody has a money story, and money is probably the most emotionally charged topic that could be holding you back in your business.

If you have reservations or issues with money, you will resist growth. This could manifest in many ways. It could be a fear of looking at the numbers, seeing it as a failure, and an overall roadblock to your goals. 

Have a Financial Plan

Make it simple. Look at revenue and at every product being sold. Break it down per product, cost of goods sold, and the overhead of your business. Then look at your business's overall profit margin. 

Most importantly, include how much taxes you'll pay on that profit. 

A financial plan is essentially a 12-month forecast for your business, so you'll get to create the process to arrive at your desired operating revenue. 

Break Down How Much Profit Each of Your Product is Making 

Many product-based entrepreneurs have no idea what their profit margin per product is. They think they're making money because the products are best sellers. But when they look at the numbers, they realize they're not making money at all. 

Keep your Profit Margins Tight Before Growing Your Business 

Not all growth is created equal. When your jewelry business is experiencing fast growth, many expenses are on the front end, so you don't get the money back into the company until the sale is complete. 

If you get caught in sudden economic shifts like a pandemic or recessions where commodities (gold, silver, etc.) shoot up, you could go bankrupt.

Remember that expenses also come with your sales growth, so keep your profit margins consistent as you're growing your business. 

Beware of Costs that Comes With Expansion

If you're growing your business and you're heading into large numbers, chances are you're either going to have to invest in some manufacturing, get your own space or expand your team. Bring all these factors together. Understand how much you need to sell to break even and at what point you'll reach profit. And then you'll know how much money is required to do these expansions. 

Pay Yourself First

When creating that financial plan for your business, make sure you include yourself. You cannot survive without paying yourself.

That said, you do not make do with what's leftover, nor should you consider yourself as an hourly wage earner. 

You are the CEO of your company. So, only after you've paid yourself do you get to calculate profits. 

Build A Cash Reserve

You need to keep some of your profit in your business for rainy days because whether you like it or not, business is cyclical. Your cash reserves could be your lifeline in tough situations like recessions or pandemics. 

Finally, when the time comes that you've found your sweet spot and you no longer need to reinvest to grow, you need to start building your wealth.

Melissa further added, “Everybody can make a lot of money, but not everybody will be wealthy… Take the extra money… and reinvest it.”

And of course, it's important to get involved with your company numbers. 

“Nobody will care about your business as much as you do, so never give that financial power away,” says Melissa. 

So if you want to grow your business into a multiple 6 or 7 figure business, listen to my full interview with Melissa Houston above.
You can also register for my Masterclass: An Inside Look at A 7+ Figure Jewelry Brand. I’ll talk about what 7-figure jewelry businesses do to grow big profit margins and how you can implement the same practices (for immediate results).

xo, Tracy

Links:

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Melissa Houston CPA

Masterclass: An Inside Look at A 7+ Figure Jewelry Brand

Momentum Program

More Resources for Jewelry Designers

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