Managing Your Finances as a Service Provider with Melissa Houston

Are you confident in how you have your business financials set up? Are you set up for long term success, or are you simply just getting the basics done?

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Today we have a very special guest, a mentor to me, Melissa Houston. She has a very interesting perspective on finances. She is here to have a conversation about your (the service provider’s) finances.

Meet Melissa

Melissa Houston is founder of The Fractional CFO Agency, a columnist at Forbes.com, and the host of The Business Society podcast. A licensed Chartered Professional Accountant (CPA), she’s a Financial Strategist for CEOs and she helps successful business owners increase their profit margins without having to increase revenue so that they keep more money in their pocket while increasing their personal wealth. Melissa’s seen the bottom and climbed her way back up, she personally and financially bounced back from concealing $100k in personal debt from her husband. She shares her story to remind people that your mistakes don’t define you, and as humans, we all make mistakes and can recover from them. Now she uses that to teach entrepreneurs to become financially literate in order to create profit in their businesses. She has over 20 years of business experience with large and small corporations, government, and not-for-profit industries while specializing in Internal Controls, corporate accounting, budgets, financial reporting, corporate & personal tax, audit, and SR&ED. Melissa enjoys helping business owners build their businesses by increasing their financial management skills. Your numbers are telling you a story – make sure you are listening to it. Melissa’s passion is helping business owners go from 6-figure to 7-figure businesses and achieving their personal financial dreams. When Melissa isn’t helping entrepreneurs become better CEO’s of their business, she can be found at the cottage with her husband Jamie, two teen children, and three dogs.

“When you learn how to focus on the right numbers, then it makes your business so much easier to manage and control.” – Melissa Houston

What are some tips to get your finances in order when getting started with your business?

The first thing you need to do is keep your personal finances separate from your business finances, so you can provide an audit trail
Set up your accounting system to support you as you grow
Have a consultation with an accountant to structure your business]

“Your tax accountant is there to help you set up your corporation in the way that is going to benefit you personally.” – Melissa Houston

How do you move from a new business to an established business when you start bringing in more money?

What are the financial goals of your business?
Create a 12 month operating forecast
- Plan out your financial goals month by month

“Your business is a unique financial asset that is going to help you achieve your goals.”

How do you handle the budget?

It depends on the individual
- If you feel confident, go for it
- If you want critical thinking, consult a coach or expert
Cash management strategy
- It’s all about timing so you don’t have cash shortages when the big bills come in
- If you have expensive projects you can work with financial professionals to go through strategic formulas and see if the decisions you are making are profitable

Once we start hitting higher revenue numbers, what other financial concerns should we plan for?

When you plan for expenses, it helps you prepare for the expenses that creep into your budget
What are your plans for this business when you step away from it?

“Financial planning is about … knowing that no matter what you decide, financially you will be ok.” -Melissa Houston

What happens after I’m gone? What is the business continuation plan?

It’s never too early to plan for it, preparation is key
It makes you take a look at your salary and the business organizational structure and evaluate if it is fair and realistic