The Mind 🧠 of a CFO

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Welcome to The Mind of a CFO newsletter. The newsletter is designed to help entrepreneurs grow in business 📈, mind 🧠, body 💪, and spirit🧘.

Each quarter we will give our CFO's take on a topic to grow your business profitably.

In addition, each month, we will provide you with two to three things we are listening to 👂, reading📚, or watching 👀 that we believe will help grow an entrepreneur.

♻ CFO’s Retake: Re-Engineering Your Financials to Tell a Story

You might be asking yourself, why does re-engineering the chart of accounts matter? Well, let's look at the following example. 

Before restructuring the chart of accounts: 

• Sales = $1,500,000

• COGS = $600,000

• GP = $900,000

• GP % = 60%

• Payroll = $500,000

• Other OPEX = $100,000

In the above example, it’s unclear what service line you should focus on or cut. Plus, gross profit looks solid.

After restructuring the chart of accounts:

• Service #1

  • Sales = $500,000

  • COGS – DL = $200,000

  • GP = $300,000

  • GP % = 60%

     

• Service #2

  • Sales = $250,000

  • COGS – DL = $150,000

  • COGS – DM = $90,000

  • GP = $240,000

  • GP % = 4%

     

• Service #3

  • Sales = $700,000

  • COGS – DM = $200,000

  • COGS – Subs = $300,000

  • GP = $200,000

  • GP % = 29%

     

• Service #0.25

  • Sales = $50,000

  • COGS – Subs = $5,000

  • COGS – Software = $5,000

  • GP = $40,000

  • GP % = 80%

     

• Payroll = $150,000

• Other OPEX = $100,000

In the above example, Service #2 is not profitable, so the leadership teams need to justify whether to keep the service. They also should discuss the following:

• Whether Service #3 is holding back the expansion of Service #1 and/or Service #0.25.

   

• How do they expand Service #0.25?

Click here to continue reading.

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Brain 🧠 Food

📈🧠💪🧘👂 Tim Ferris's mash-up of podcasts came recommended by one of my coaches. This is probably one of the best podcast episodes that I have heard.

It includes a bit of everything: dopamine with Dr. Andrew Huberman, prioritizing with Greg McKeown, never quitting with Jocko Willink, self-esteem with Brene Brown, and a bit of everything with Naval Ravikant. Click here to listen.

🧘‍♂️📚 Building a business purely for profit typically leads to burnout. On the other hand, creating a company based on purpose leads to amazing things.

Read how the founder of Patagonia gave away his multi-billion dollar company to his passion, mother earth, by clicking here.

Thanks for reading, Luke Templin!

P.S. There are two ways to work with Luke to grow your business profitably.

1. Virtual CFO Cohort for service-based entrepreneurs with $250k - $1 million revenue.

2. Fractional CFO for service-based entrepreneurs with over $1M in revenue.