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.
What did you think of this month's issue?
🔥🔥🔥Fire
🔥Meh
Thanks for reading, The Virtual CFO!
P.S. There are 2 ways to work with us to grow your business profitably.