August 27, 2024 • 26 mins
In this episode, we're diving into financial stability in the beauty industry with our insightful chat featuring Randi Rose, co-founder of Thrive Business Services. Discover why relying solely on increased sales won't cure your financial woes, and learn how meticulous bookkeeping can transform your business. Randi shares indispensable advice on managing costs, understanding proper pricing strategies, and tracking income and expenses to stay within budget. This episode is packed with essential tips on achieving financial clarity and making informed decisions that align with your business goals.
Thrive Business Services website: https://thrivebusinessservices.net/
Conversation highlights:
3:12 The most common financial challenges faced by beauty business leaders
6:53 How a bookkeeper enhances your current financial processes
12:10 The downfalls of using Excel to manage your finances
15:50 What you should expect from your bookkeeper
18:10 The most common inaccuracies on your balance sheet
Watch the video version of this episode here: https://youtu.be/-0bwa07lhRE
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The Beauty Business Strategies Podcast is designed to give salon, spa, medspa, barbershop, and lash studio owners, just like you, quick tips to make more money, inspire your team, and create world-class client experiences.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Michael Yost (00:00):
Welcome to the Beauty Business Strategies
podcast.
Happy to be with all of youagain.
My name is Michael Yost.
I will be your host for todayand once again, as we do in
every podcast, we try and have afantastic guest that's gonna
bring you great information andgreat insights and just great
conversation.
And today we are joined byRandy Rose.
(00:22):
Randy, how are you?
Randi Rose (00:24):
I am fantastic.
Thanks for having me, Michael.
Randy, how are you?
I am fantastic.
Thanks for having me, Michael.
Michael Yost (00:28):
Man, it's great to have you here.
So before we get into it, randy, why don't you give a little
bit of introduction around againwho you are, your business and
give the listeners and viewersan overview?
Randi Rose (00:44):
Sure, I can do that.
So, like you said, my name isRandy Rose.
I am a co-founder of ThriveBusiness Services.
We provide accounting and weprovide bookkeeping and client
accounting services for small tomid-sized businesses.
Small to mid-sized businesses.
(01:10):
We have a niche in the the.
We I talk about is myself andmy business partner, who's also
my best friend.
Her name's Gail Goldman, andThrive's been around August we
celebrate our 10 yearanniversary, but we've been
doing this a lot longer than 10years.
But we've been doing this a lotlonger than 10 years.
About 40 to 45% of our clienteleis the beauty industry.
So we do bookkeeping and clientaccounting services for other
(01:34):
industries as well.
But we do have a plethora ofexperience with the beauty
industry and really why wecreated Thrive was because we
saw that there was such a needfor good record keeping in the
(01:55):
beauty industry, because theindustry wasn't getting that.
But that's actually why Thrivewas formed.
We just because we getreferrals from other CPAs for
other businesses.
We also do other businesses.
So our vision, like who we areas a company, is we champion
small businesses.
So we really exist to createthriving wealth, creating
(02:22):
businesses and thriving doesn'tnecessarily just mean monetarily
thriving is your lifeexperience needs to be as
consistent with your yourbusiness being profitable.
You know like if you're working80 hours a week and grinding
yourself to a bone, then you'renot thriving, even if your
(02:43):
business is making a profit.
What's the point?
Michael Yost (02:46):
Yep exactly, Exactly.
Randi Rose (02:48):
I love it.
Michael Yost (02:49):
So I love the fact that you know not only just
overall it's services.
You know bookkeeping servicesare something every business
needs to be at its best, and Ilove the fact that you've got a
great amount of experiencewithin the beauty industry,
which we primarily focus on,obviously as well.
And so let's kind of start withthe first question.
(03:10):
You know around that idea.
What do you see is probably inyour encounters.
What do you see as the mostcommon mistakes or challenges
Maybe the better word to use ischallenges?
What do you see as most commonchallenges that beauty industry
leaders face?
Randi Rose (03:28):
From a financial perspective.
The most common challenge thatbeauty industry professionals
owners face is, to be honest, nodifferent than any other
industry.
Your widget just happens to behair nails, extensions, etc.
Widget just happens to be hairnails, extensions, et cetera.
(03:49):
It's thinking that if you justsell more, everything's going to
be okay.
I just need to sell more.
And that is one of the biggestmisnomers, because if what
you're selling is not profitable, if it's not priced right and
you don't have a handle on thepricing of it and the cost of
producing it, you could just becreating a bigger hole for
(04:12):
yourself.
Michael Yost (04:13):
Gotcha.
So again, I love that you bringthat up.
It's just the attitude of, if Isell more, that's going to fix
everything, but, as you said, no, you got to make sure that all
these things are lining up.
So how do some of the thingsthat you, with the services that
you provide, and just again,and not just talking about for
(04:34):
yourself, let's just talk aboutit from a bookkeeping standpoint
.
How can a bookkeeper help withthose types of areas?
Randi Rose (04:41):
Well, the first.
So that's a great question.
And when I talk or I educate,it's not just about Thrive.
Like you know, we're not theright fit for everybody.
The same way, everybody's notthe right fit for us.
But either way, I want peopleto be educated so that they know
how to assess what they needand the best place to get it.
(05:04):
So bookkeeping makes adifference in the sense that the
POS systems that people use torun their business whether it be
Mevo or Forest or Boulevard orVegaro or whichever program it
is that they're using is goingto track their day-to-day
operations of their business,but the bookkeeping piece none
(05:28):
of that tracks the money out.
It does provide information forcalculating compensation and
payroll, but it's not going todeal with the money out that's
on your credit card or thatyou're paying your subscriptions
or anything else.
So you need to look at yourfinancial statements, or whether
(05:50):
you're doing it in QuickBooksor Xero or in Excel, which is
not what I recommend.
However, excel is a phenomenaltool for assessing things.
You need to be able to see notjust the money in.
You need to see that money outand see is it being put to the
right place?
How do you know if you're in.
(06:14):
Uh, if you're in budget withyour compensation or with your
inventory purchases, or withyour back bar or your supplies,
or your telephone or youradvertising, you need that
bookkeeping piece to track howyou're spending the money.
Or with your back bar or yoursupplies, or your telephone or
your advertising.
You need that bookkeeping pieceto track how you're spending
the money, to be able to see amI in budget?
Michael Yost (06:33):
So again, you're speaking, obviously, our
language, which is again whywe've been great friends over
the course of years as things weadvocate at Strategies.
But I think it's interesting,as you well know, because you've
been in a number of our classesand we've been, like I said,
you know what we're advocate atStrategies.
But I think it's interesting,as you well know, because you've
been in a number of our classesand we've been, like I said,
you know what we're about atStrategies with our coaching and
things of that nature.
Let me ask this question howcan a bookkeeper enhance what?
(06:58):
Maybe someone isn't coachingright now, or things of that
nature?
Maybe they're not, but let'ssay they are.
How can a bookkeeper helpenhance the process?
Because maybe there are somepeople out there going oh well,
you know what, Like we advocate,hey, we advocate you use a cash
flow plan and you build yourexpenses and we have a cost per
hour calculator and we've gotall those things that you're
referencing and that's all greatand great tools, but still, how
(07:21):
does a bookkeeper help enhanceand add to some of the things
maybe people are already using?
And I have another questionthat's kind of a two-parter.
You mentioned the fact.
I think it's very interesting.
You mentioned the fact that youknow you talked about Excel.
While Excel is a great tool,why is that something that's not
always necessarily maybe thetool you want to be using,
(07:42):
Because there might be peoplelistening in.
I I know that have created lotsof spreadsheets for themselves
in Excel and what are some ofthe downfalls there, so I'm
giving you kind of a two-parterhere for you, Randy.
Randi Rose (07:53):
That's great.
So let me address that.
I'm not sure I may beaddressing them together at the
same time.
Your bookkeeping, same time.
Your bookkeeping, the first andforemost job of your CPA.
And, like you said, we've had arelationship for years.
We consider ourselves coachagnostic and software agnostic.
(08:15):
So we work with you, we workwith Inspiring Champions, we've
worked with Summit, we've workedwith Salon Cadence, you know,
with lots of different coachingcompanies, because you all have
a different flavor and focus andthere's not any one that's
right, like lots of hair salonsout there.
(08:36):
So why this one versus that one?
Right?
Same thing goes for software.
We work with Forrest and Vigaroand Mevo and Boulevard, et
cetera, et cetera.
Your CPA, your tax person, theirnumber one, like bare minimum
job is for you to be IRScompliant, to be able to do
(09:00):
taxes Right.
So, like I asked that aquestion, right, yes, raise your
hand.
So that's like your CPA, likethat's the very first fair
minimum.
However, a lot of people onlymeet with their CPA once a year
and so that doesn't give themthe opportunity to pivot or to
(09:20):
look timely and use thatinformation to be able to make
assessments and to makedecisions.
Your bookkeeping, yourfinancial statements, should be
able to be used by three people.
It needs to be used by the IRSfor your CPA, for your IRS tax
compliance.
They need to be able to look atyour profit and loss and your
balance sheet and do your taxesgive you your tax planning
(09:46):
balance sheet and do your taxesgive you your tax planning.
You need to use thatinformation.
If you need to go into a bankfor financing, the bank is going
to want to see your balancesheet.
They're going to want to knowwhat are you a good risk?
How much can you afford?
How much can we lend to youthat we're going to get paid
back, or all of those pieces.
And then you've got yourmanagement tools, the people who
are managing the business.
(10:07):
Not about taxes, but aboutmanaging the business, your CPA.
As a general rule because COPSAOD is definitely the outlier
here you know they're notlooking at your business to see
how much of your money that wasdeposited was from service sales
or retail sales or sales tax ortips payable or gift cards sold
(10:29):
.
A lot of CPAs are just lookingat here's the money in, here's
the money out, but that doesn'tgive you the picture that you
need to strategize what isprofitable.
What's keeping my doors open?
Where am I making my money?
Where am I bleeding?
What can I control?
And that's where bookkeepingcomes into play.
(11:00):
No-transcript that, even ifyou're interested in preemptive,
you want to either be lookingat your books more frequently or
you may need an additional tool, like your cash flow planner or
whatever any other coachingcompany is going to create like
that to see the more specificmetrics that when you turn the
(11:27):
knobs and the dials, I can movethe ship this way or I can move
the ship this way.
If you're waiting until the endof the month, you don't have
that opportunity to pivot.
So it's really important foryour financials to give you
information that answer thequestions that you have, which
(11:48):
is how do I be more profitable?
What does my strategy need tobe?
No pun intended, the name ofyour company is Strategies,
right, just like we say we wantpeople to thrive.
No pun intended.
The name of the company isThrive.
Did that answer your questions?
Did that answer your questions?
Michael Yost (12:03):
It did, it did.
And actually the second partwas the idea of Excel and you
talked about, like I said,having right software and, again
, a lot of people use Excel and,as you said, it is a fantastic
tool.
But what are the downfalls?
Because you kind of made thatreference.
It's like, hey, listen, it's agreat tool, but you know, then
(12:25):
there's a kind of like that dotdot dot.
So what's your thoughts on that?
Randi Rose (12:31):
One of the biggest, probably one of the biggest
downfalls.
Ooh, I just heard my New Yorkaccent.
I said flaw Doesn't come upvery often.
Michael Yost (12:41):
But when it does, there it is.
Randi Rose (12:43):
Catch me there.
One of the biggest downfalls isthe duplication of entry, which
is certainly I mean, I was anincubator in January and I've
heard this complaint not just atstrategies like it's like an
owner's biggest complaint why amI having to track this
(13:06):
information if my bookkeeper isalready doing it?
So as much as possible we dolike to connect the two, but
Excel is.
Any program is only as good asthe person interpreting the
information from the data orbuilding the data.
So you know what I'm saying.
Michael Yost (13:27):
Yeah, it's a little bit of garbage in garbage
out.
Randi Rose (13:30):
Absolutely.
I mean, one of the biggest.
One of the reasons why thereare certain tools we use in
Excel is has to do with therevenue recognition and the
expense recognition in the sameperiod.
A great example of that is theDecember January.
You may have your biggest salesin December.
However, your payroll is notuntil January.
(13:51):
So if you're just going likethat CPA example I gave before,
if your CPA is just going basedoff of money in, money out, you
got lots of money in in Decemberand your money out is happening
in January.
So your January is going tolook negative on the bottom line
and your December may lookinflated.
(14:15):
Okay, what's the realinformation you need to know?
That may require additionalsteps for you to have.
That may require additionalsteps for you to have.
That.
It may require things like okay, money comes out in January but
we need to show it in December.
That makes your bookkeepingmore complicated not impossible
(14:36):
by any stretch of theimagination, but you want your
books are going to be set up togive you the answers to the
questions that you need to makeeffective business decisions and
running your business.
Otherwise, why do it?
Michael Yost (14:49):
Right when you think about, like people that
might be listening in or thingsof that nature.
Maybe they're considering abookkeeper, or maybe they
already have one.
What would be some of the whatwould be some traits that they
should be looking for?
When it comes to a bookkeeper,that you would say, hey, listen,
make sure you know, this iswhat a bookkeeper should be
looking for.
When it comes to a bookkeeperthat you would say, hey, listen,
make sure you know, this iswhat a bookkeeper should be
(15:10):
providing to you.
This is how a bookkeeper shouldbe working with you.
This is how a bookkeeper shouldbe communicating with you.
Because I think oftentimes atleast my experience has been in
talking with people it feelslike there's a lack of
communication.
It feels like there's notenough questions being asked or
answered.
It feels like there's adisconnect and, in some ways, it
(15:32):
almost feels for lack of abetter way.
Not trying to put accountantsin a bad way, but you set it up
exactly right, randy.
Typically, with an accountant,you're meeting with them, maybe
quarterly, at best biannually oreven maybe only annually.
So that's a differentrelationship.
In many cases, a bookkeeper isa much more personal
relationship.
So give us a little bit aboutwhat should someone expect?
Randi Rose (15:57):
It's a great question.
So they should expect timelyresponses to your inquiries.
First and foremost.
If you are feeling, if you arefeeling like you have to chase
them down to get them to respondto you, you need to look
elsewhere If they're notdelivering what they say, just
like anybody else.
(16:17):
This next one is if they saythey're going to do something by
a certain time and they don'tfollow through, it's okay to
fire them, right?
You don't have to tolerate that.
You wouldn't do that to anybodywho comes into your business
and serve them that way.
So you should expect to beserved the same way that you
(16:38):
serve other people.
They should understand yourbusiness, and what I mean by
that is they don't necessarilyhave to have the same depth and
breadth of knowledge that wehave.
They don't need you know, likeall of your industry, kpis and
metrics, but they shouldunderstand that the money that
hits your bank deposits, thathits your bank account, isn't
(16:59):
necessarily revenue to you,isn't necessarily income to you,
and you're probably, first andforemost your balance sheet is
probably more important thanyour P&L, and when I say P&L, I
mean profit and loss, and mostpeople just go let me look at my
(17:20):
profit and loss.
Let me look at my profit andloss, and when I look at
someone's books, I start withthe balance sheet, because what
I can tell you is, if thebalance sheet's not accurate,
neither is your profit and loss,and it's usually on the balance
sheet that it gets you.
They should understand giftcards.
They should understand tips.
(17:41):
They should understand thedifference between back bar,
like your professional and yourretail.
They should be asking youquestions what is it that you
need to know, or what's theanswers you need, and then go
figure out how to provide youwith those answers, whether
(18:02):
that's from QuickBooks, fromXero, from Excel, from your POS
system or some combination.
Michael Yost (18:09):
Ok, so let me jump in and ask you this question,
because you mentioned this about.
You look at the balance sheetand you're looking to see.
Is it accurate?
What are the most commoninaccuracies that you might see
that shows up it?
What are the most commoninaccuracies that you might see
that shows up Because maybesomeone's again is going well,
I'm going to take a look at mybalance sheet and I'm going to
(18:30):
see or can you, can you maybegive any red flags that you
commonly see that makes itinaccurate, which, in turn,
again all the dominoes start tofall.
Randi Rose (18:41):
Absolutely so.
When I look at someone's books,the first thing that you that I
look for and that you want tolook for is inventory.
Do you have inventory on yourbalance sheet?
Because that's one of theplaces inventory is technically
(19:02):
not.
An is technically not yourinventory is technically not
your inventory.
Your retail is not really anexpense to you, right?
Until you sell it.
So do you have too much of yourcash tied up in inventory?
If your inventory is not onyour balance sheet, it's going
to be a little hard to figurethat out.
You're going to have to jumpthrough a couple of other hoops.
(19:25):
Your tips, if you're a business.
There are some businesses thatdon't take tips.
They're not the norm, but theydo exist.
So if you're a business thattakes tips, that money should
not be showing up anywhere onyour profit and loss.
It should be on your balancesheet.
There should be some type of atips payable.
(19:46):
If there isn't, then I want toknow why?
Gift cards Many businesses.
If you do accept money for giftcards, why is your money in
your gift Like okay, your bankaccount may say you have $40,000
, but it says that you have a$200,000 gift liability balance,
(20:08):
right, okay.
So basically, if you were tosell your business, you have
$200,000 of liabilityoutstanding that someone's going
to absorb because you'vealready spent that money.
We need to take a look at that.
Michael Yost (20:23):
Right.
Randi Rose (20:23):
Right.
So those are like some of thosekey pieces On the P&L.
I don't want to just see sales,I want to see how much of your
sales is service, how much of itis retail.
If you are getting more nuancedand you are seeing, you know,
maybe you have a spa, maybe youhave.
You want to see the breakout ofyour hair, your nails and your
(20:46):
spa.
Okay, great, but at the bareminimum we should be able to see
here's my service revenue,here's my retail revenue and see
the difference between the two.
Because understanding yourretail to service whether you
are team-based pay or you arehourly or you are commission,
either way you need to knowbecause that's going to tell you
your strategy on what needs tobe adjusted and how you need to
(21:09):
tackle it.
And then cost of goods.
So, I can't tell you how manybooks I look at that someone's
profit and loss goes right fromincome to expenses and there's
no cost of service or cost oflabor.
And the reality is is that'sthe direct cause?
That's the piece that's goingto be able to tell you am I
(21:31):
priced accurately?
Because that's the cost of youproviding that service or that
product, not your rent.
Your rent is something that youneed to know about, don't get
me wrong.
It's its own metric.
However, if you don't have cogson your books, you should be
asking some questions why not?
Michael Yost (21:51):
Gotcha.
Randi Rose (21:53):
Those are like the biggest.
Then the last one to that isfrom a compensation perspective.
You've got your incomeproducing people and then you've
got your non-income producingpeople or your administrative.
Are those broken out?
It is important overall for youto know the number, but it's
also important for you to knowthe difference between the two,
(22:14):
because that goes back into isyour compensation accurate?
Michael Yost (22:17):
This is great stuff, randy, that you're
sharing, and I've got a list ofquestions that are much longer
than the ones I even got achance to get to, so I have to
do this again.
But for anyone that's lookingto connect with you and get more
information on Thrive itself,where do they find you?
Randi Rose (22:40):
They can find us on the website.
So we have a website.
Do you want me to spell it out?
Absolutely, dot thrive.
T-h-r-i-v-e businessB-U-S-I-N-E-S-S services,
s-e-r-v-i-c-e-s dot net.
(23:01):
All right, awesome Not a dotcom You're not going to find us.
Michael Yost (23:05):
There you go, it's a dot net.
Randi Rose (23:06):
Dot net and if you forward slash and hit salon,
you'll actually go.
We're in the process of redoingthe website, so if you look at
the main page, you're going tobe like I thought you said you
work with salons.
So if you go to the forwardslash salon, you'll get.
Here are some of the people wework with.
Here are the results we'veproduced.
Here's how to reach out to usand here are some questions
(23:28):
specifically for that.
Um, my telephone number, thebusiness number, is 619-688-9248
.
I'm extension zero.
So if you just hit zero you'llgo to me and then I'll be able
to just respond to you and thenthe best, the next best way,
honestly, is via email.
(23:48):
Um, and my name's Randy Rose.
My email is randi R-A-N-D-I atthrivebusinessservicesnet.
Michael Yost (23:59):
Perfect.
Randi Rose (23:59):
So those are the ways to reach out to us.
Michael Yost (24:02):
Awesome and, again , we'll make sure that we put
those in the descriptor and getall that information for anyone
that's looking for it.
So, randy, I just want to saythank you so much for hanging
out with us today.
Thanks for the greatinformation.
I love some of the tips.
Again, what should people belooking for?
I love the fact that you gaveus some things that we should be
(24:22):
aware of, that we do and don'twant to see when we're looking
at our own financial statements.
And again, just in general, howa bookkeeper can be an
extension and an addition in apositive way, to the health of
your business.
So thank you so much.
Randi Rose (24:36):
Yeah, you're very welcome.
By the way, I forgot to mentionwe do have an Insta.
Michael Yost (24:43):
Perfect, everyone loves Insta.
Randi Rose (24:45):
After, for you know we'll put that on the the your
descriptor.
Yeah, so you know we do have anInsta, we do have a LinkedIn,
we do have a Facebook, so I'llgive you all of those.
Listen, we thank you for theopportunity.
We love what you guys are up to.
We love the commitment that youhave to business owners really
(25:08):
being successful.
I think that you guys arephenomenal.
The majority of the clients weinteracted with during COVID I
don't know of any strategiesclient that I work with that
went out of business.
They were all so prepared andso connected to their financials
that it was just not that itwasn't extraordinarily painful,
(25:33):
because it was, but they wereprepared to be able to pivot and
really that's hats off to youguys.
Michael Yost (25:41):
Well, thank you for that.
We really appreciate thosewords and it means a lot because
, again, at the core, that'swhat we're about, and I know
that's what you're about isbuilding healthy, strong, again
flourishing companies.
So, thank you for those wordswe appreciate it.
Randi Rose (25:57):
You're very welcome.
I look forward to doing thisanytime with you and I can't
wait to see you in October.
Michael Yost (26:01):
I will see you in October.
Thanks, Randy have a great day.
Randi Rose (26:05):
Bye, bye, thanks.
Michael Yost (26:06):
All right, and thank you to everyone that tuned
in.
We appreciate all of you and wewill see you at our next
podcast.
Thanks.
Welcome to the Beauty Business Strategies
podcast.
Happy to be with all of youagain.
My name is Michael Yost.
I will be your host for todayand once again, as we do in
every podcast, we try and have afantastic guest that's gonna
bring you great information andgreat insights and just great
conversation.
And today we are joined byRandy Rose.
(00:22):
Randy, how are you?
Randi Rose (00:24):
I am fantastic.
Thanks for having me, Michael.
Randy, how are you?
I am fantastic.
Thanks for having me, Michael.
Michael Yost (00:28):
Man, it's great to have you here.
So before we get into it, randy, why don't you give a little
bit of introduction around againwho you are, your business and
give the listeners and viewersan overview?
Randi Rose (00:44):
Sure, I can do that.
So, like you said, my name isRandy Rose.
I am a co-founder of ThriveBusiness Services.
We provide accounting and weprovide bookkeeping and client
accounting services for small tomid-sized businesses.
Small to mid-sized businesses.
(01:10):
We have a niche in the the.
We I talk about is myself andmy business partner, who's also
my best friend.
Her name's Gail Goldman, andThrive's been around August we
celebrate our 10 yearanniversary, but we've been
doing this a lot longer than 10years.
But we've been doing this a lotlonger than 10 years.
About 40 to 45% of our clienteleis the beauty industry.
So we do bookkeeping and clientaccounting services for other
(01:34):
industries as well.
But we do have a plethora ofexperience with the beauty
industry and really why wecreated Thrive was because we
saw that there was such a needfor good record keeping in the
(01:55):
beauty industry, because theindustry wasn't getting that.
But that's actually why Thrivewas formed.
We just because we getreferrals from other CPAs for
other businesses.
We also do other businesses.
So our vision, like who we areas a company, is we champion
small businesses.
So we really exist to createthriving wealth, creating
(02:22):
businesses and thriving doesn'tnecessarily just mean monetarily
thriving is your lifeexperience needs to be as
consistent with your yourbusiness being profitable.
You know like if you're working80 hours a week and grinding
yourself to a bone, then you'renot thriving, even if your
(02:43):
business is making a profit.
What's the point?
Michael Yost (02:46):
Yep exactly, Exactly.
Randi Rose (02:48):
I love it.
Michael Yost (02:49):
So I love the fact that you know not only just
overall it's services.
You know bookkeeping servicesare something every business
needs to be at its best, and Ilove the fact that you've got a
great amount of experiencewithin the beauty industry,
which we primarily focus on,obviously as well.
And so let's kind of start withthe first question.
(03:10):
You know around that idea.
What do you see is probably inyour encounters.
What do you see as the mostcommon mistakes or challenges
Maybe the better word to use ischallenges?
What do you see as most commonchallenges that beauty industry
leaders face?
Randi Rose (03:28):
From a financial perspective.
The most common challenge thatbeauty industry professionals
owners face is, to be honest, nodifferent than any other
industry.
Your widget just happens to behair nails, extensions, etc.
Widget just happens to be hairnails, extensions, et cetera.
(03:49):
It's thinking that if you justsell more, everything's going to
be okay.
I just need to sell more.
And that is one of the biggestmisnomers, because if what
you're selling is not profitable, if it's not priced right and
you don't have a handle on thepricing of it and the cost of
producing it, you could just becreating a bigger hole for
(04:12):
yourself.
Michael Yost (04:13):
Gotcha.
So again, I love that you bringthat up.
It's just the attitude of, if Isell more, that's going to fix
everything, but, as you said, no, you got to make sure that all
these things are lining up.
So how do some of the thingsthat you, with the services that
you provide, and just again,and not just talking about for
(04:34):
yourself, let's just talk aboutit from a bookkeeping standpoint
.
How can a bookkeeper help withthose types of areas?
Randi Rose (04:41):
Well, the first.
So that's a great question.
And when I talk or I educate,it's not just about Thrive.
Like you know, we're not theright fit for everybody.
The same way, everybody's notthe right fit for us.
But either way, I want peopleto be educated so that they know
how to assess what they needand the best place to get it.
(05:04):
So bookkeeping makes adifference in the sense that the
POS systems that people use torun their business whether it be
Mevo or Forest or Boulevard orVegaro or whichever program it
is that they're using is goingto track their day-to-day
operations of their business,but the bookkeeping piece none
(05:28):
of that tracks the money out.
It does provide information forcalculating compensation and
payroll, but it's not going todeal with the money out that's
on your credit card or thatyou're paying your subscriptions
or anything else.
So you need to look at yourfinancial statements, or whether
(05:50):
you're doing it in QuickBooksor Xero or in Excel, which is
not what I recommend.
However, excel is a phenomenaltool for assessing things.
You need to be able to see notjust the money in.
You need to see that money outand see is it being put to the
right place?
How do you know if you're in.
(06:14):
Uh, if you're in budget withyour compensation or with your
inventory purchases, or withyour back bar or your supplies,
or your telephone or youradvertising, you need that
bookkeeping piece to track howyou're spending the money.
Or with your back bar or yoursupplies, or your telephone or
your advertising.
You need that bookkeeping pieceto track how you're spending
the money, to be able to see amI in budget?
Michael Yost (06:33):
So again, you're speaking, obviously, our
language, which is again whywe've been great friends over
the course of years as things weadvocate at Strategies.
But I think it's interesting,as you well know, because you've
been in a number of our classesand we've been, like I said,
you know what we're advocate atStrategies.
But I think it's interesting,as you well know, because you've
been in a number of our classesand we've been, like I said,
you know what we're about atStrategies with our coaching and
things of that nature.
Let me ask this question howcan a bookkeeper enhance what?
(06:58):
Maybe someone isn't coachingright now, or things of that
nature?
Maybe they're not, but let'ssay they are.
How can a bookkeeper helpenhance the process?
Because maybe there are somepeople out there going oh well,
you know what, Like we advocate,hey, we advocate you use a cash
flow plan and you build yourexpenses and we have a cost per
hour calculator and we've gotall those things that you're
referencing and that's all greatand great tools, but still, how
(07:21):
does a bookkeeper help enhanceand add to some of the things
maybe people are already using?
And I have another questionthat's kind of a two-parter.
You mentioned the fact.
I think it's very interesting.
You mentioned the fact that youknow you talked about Excel.
While Excel is a great tool,why is that something that's not
always necessarily maybe thetool you want to be using,
(07:42):
Because there might be peoplelistening in.
I I know that have created lotsof spreadsheets for themselves
in Excel and what are some ofthe downfalls there, so I'm
giving you kind of a two-parterhere for you, Randy.
Randi Rose (07:53):
That's great.
So let me address that.
I'm not sure I may beaddressing them together at the
same time.
Your bookkeeping, same time.
Your bookkeeping, the first andforemost job of your CPA.
And, like you said, we've had arelationship for years.
We consider ourselves coachagnostic and software agnostic.
(08:15):
So we work with you, we workwith Inspiring Champions, we've
worked with Summit, we've workedwith Salon Cadence, you know,
with lots of different coachingcompanies, because you all have
a different flavor and focus andthere's not any one that's
right, like lots of hair salonsout there.
(08:36):
So why this one versus that one?
Right?
Same thing goes for software.
We work with Forrest and Vigaroand Mevo and Boulevard, et
cetera, et cetera.
Your CPA, your tax person, theirnumber one, like bare minimum
job is for you to be IRScompliant, to be able to do
(09:00):
taxes Right.
So, like I asked that aquestion, right, yes, raise your
hand.
So that's like your CPA, likethat's the very first fair
minimum.
However, a lot of people onlymeet with their CPA once a year
and so that doesn't give themthe opportunity to pivot or to
(09:20):
look timely and use thatinformation to be able to make
assessments and to makedecisions.
Your bookkeeping, yourfinancial statements, should be
able to be used by three people.
It needs to be used by the IRSfor your CPA, for your IRS tax
compliance.
They need to be able to look atyour profit and loss and your
balance sheet and do your taxesgive you your tax planning
(09:46):
balance sheet and do your taxesgive you your tax planning.
You need to use thatinformation.
If you need to go into a bankfor financing, the bank is going
to want to see your balancesheet.
They're going to want to knowwhat are you a good risk?
How much can you afford?
How much can we lend to youthat we're going to get paid
back, or all of those pieces.
And then you've got yourmanagement tools, the people who
are managing the business.
(10:07):
Not about taxes, but aboutmanaging the business, your CPA.
As a general rule because COPSAOD is definitely the outlier
here you know they're notlooking at your business to see
how much of your money that wasdeposited was from service sales
or retail sales or sales tax ortips payable or gift cards sold
(10:29):
.
A lot of CPAs are just lookingat here's the money in, here's
the money out, but that doesn'tgive you the picture that you
need to strategize what isprofitable.
What's keeping my doors open?
Where am I making my money?
Where am I bleeding?
What can I control?
And that's where bookkeepingcomes into play.
(11:00):
No-transcript that, even ifyou're interested in preemptive,
you want to either be lookingat your books more frequently or
you may need an additional tool, like your cash flow planner or
whatever any other coachingcompany is going to create like
that to see the more specificmetrics that when you turn the
(11:27):
knobs and the dials, I can movethe ship this way or I can move
the ship this way.
If you're waiting until the endof the month, you don't have
that opportunity to pivot.
So it's really important foryour financials to give you
information that answer thequestions that you have, which
(11:48):
is how do I be more profitable?
What does my strategy need tobe?
No pun intended, the name ofyour company is Strategies,
right, just like we say we wantpeople to thrive.
No pun intended.
The name of the company isThrive.
Did that answer your questions?
Did that answer your questions?
Michael Yost (12:03):
It did, it did.
And actually the second partwas the idea of Excel and you
talked about, like I said,having right software and, again
, a lot of people use Excel and,as you said, it is a fantastic
tool.
But what are the downfalls?
Because you kind of made thatreference.
It's like, hey, listen, it's agreat tool, but you know, then
(12:25):
there's a kind of like that dotdot dot.
So what's your thoughts on that?
Randi Rose (12:31):
One of the biggest, probably one of the biggest
downfalls.
Ooh, I just heard my New Yorkaccent.
I said flaw Doesn't come upvery often.
Michael Yost (12:41):
But when it does, there it is.
Randi Rose (12:43):
Catch me there.
One of the biggest downfalls isthe duplication of entry, which
is certainly I mean, I was anincubator in January and I've
heard this complaint not just atstrategies like it's like an
owner's biggest complaint why amI having to track this
(13:06):
information if my bookkeeper isalready doing it?
So as much as possible we dolike to connect the two, but
Excel is.
Any program is only as good asthe person interpreting the
information from the data orbuilding the data.
So you know what I'm saying.
Michael Yost (13:27):
Yeah, it's a little bit of garbage in garbage
out.
Randi Rose (13:30):
Absolutely.
I mean, one of the biggest.
One of the reasons why thereare certain tools we use in
Excel is has to do with therevenue recognition and the
expense recognition in the sameperiod.
A great example of that is theDecember January.
You may have your biggest salesin December.
However, your payroll is notuntil January.
(13:51):
So if you're just going likethat CPA example I gave before,
if your CPA is just going basedoff of money in, money out, you
got lots of money in in Decemberand your money out is happening
in January.
So your January is going tolook negative on the bottom line
and your December may lookinflated.
(14:15):
Okay, what's the realinformation you need to know?
That may require additionalsteps for you to have.
That may require additionalsteps for you to have.
That.
It may require things like okay, money comes out in January but
we need to show it in December.
That makes your bookkeepingmore complicated not impossible
(14:36):
by any stretch of theimagination, but you want your
books are going to be set up togive you the answers to the
questions that you need to makeeffective business decisions and
running your business.
Otherwise, why do it?
Michael Yost (14:49):
Right when you think about, like people that
might be listening in or thingsof that nature.
Maybe they're considering abookkeeper, or maybe they
already have one.
What would be some of the whatwould be some traits that they
should be looking for?
When it comes to a bookkeeper,that you would say, hey, listen,
make sure you know, this iswhat a bookkeeper should be
looking for.
When it comes to a bookkeeperthat you would say, hey, listen,
make sure you know, this iswhat a bookkeeper should be
(15:10):
providing to you.
This is how a bookkeeper shouldbe working with you.
This is how a bookkeeper shouldbe communicating with you.
Because I think oftentimes atleast my experience has been in
talking with people it feelslike there's a lack of
communication.
It feels like there's notenough questions being asked or
answered.
It feels like there's adisconnect and, in some ways, it
(15:32):
almost feels for lack of abetter way.
Not trying to put accountantsin a bad way, but you set it up
exactly right, randy.
Typically, with an accountant,you're meeting with them, maybe
quarterly, at best biannually oreven maybe only annually.
So that's a differentrelationship.
In many cases, a bookkeeper isa much more personal
relationship.
So give us a little bit aboutwhat should someone expect?
Randi Rose (15:57):
It's a great question.
So they should expect timelyresponses to your inquiries.
First and foremost.
If you are feeling, if you arefeeling like you have to chase
them down to get them to respondto you, you need to look
elsewhere If they're notdelivering what they say, just
like anybody else.
(16:17):
This next one is if they saythey're going to do something by
a certain time and they don'tfollow through, it's okay to
fire them, right?
You don't have to tolerate that.
You wouldn't do that to anybodywho comes into your business
and serve them that way.
So you should expect to beserved the same way that you
(16:38):
serve other people.
They should understand yourbusiness, and what I mean by
that is they don't necessarilyhave to have the same depth and
breadth of knowledge that wehave.
They don't need you know, likeall of your industry, kpis and
metrics, but they shouldunderstand that the money that
hits your bank deposits, thathits your bank account, isn't
(16:59):
necessarily revenue to you,isn't necessarily income to you,
and you're probably, first andforemost your balance sheet is
probably more important thanyour P&L, and when I say P&L, I
mean profit and loss, and mostpeople just go let me look at my
(17:20):
profit and loss.
Let me look at my profit andloss, and when I look at
someone's books, I start withthe balance sheet, because what
I can tell you is, if thebalance sheet's not accurate,
neither is your profit and loss,and it's usually on the balance
sheet that it gets you.
They should understand giftcards.
They should understand tips.
(17:41):
They should understand thedifference between back bar,
like your professional and yourretail.
They should be asking youquestions what is it that you
need to know, or what's theanswers you need, and then go
figure out how to provide youwith those answers, whether
(18:02):
that's from QuickBooks, fromXero, from Excel, from your POS
system or some combination.
Michael Yost (18:09):
Ok, so let me jump in and ask you this question,
because you mentioned this about.
You look at the balance sheetand you're looking to see.
Is it accurate?
What are the most commoninaccuracies that you might see
that shows up it?
What are the most commoninaccuracies that you might see
that shows up Because maybesomeone's again is going well,
I'm going to take a look at mybalance sheet and I'm going to
(18:30):
see or can you, can you maybegive any red flags that you
commonly see that makes itinaccurate, which, in turn,
again all the dominoes start tofall.
Randi Rose (18:41):
Absolutely so.
When I look at someone's books,the first thing that you that I
look for and that you want tolook for is inventory.
Do you have inventory on yourbalance sheet?
Because that's one of theplaces inventory is technically
(19:02):
not.
An is technically not yourinventory is technically not
your inventory.
Your retail is not really anexpense to you, right?
Until you sell it.
So do you have too much of yourcash tied up in inventory?
If your inventory is not onyour balance sheet, it's going
to be a little hard to figurethat out.
You're going to have to jumpthrough a couple of other hoops.
(19:25):
Your tips, if you're a business.
There are some businesses thatdon't take tips.
They're not the norm, but theydo exist.
So if you're a business thattakes tips, that money should
not be showing up anywhere onyour profit and loss.
It should be on your balancesheet.
There should be some type of atips payable.
(19:46):
If there isn't, then I want toknow why?
Gift cards Many businesses.
If you do accept money for giftcards, why is your money in
your gift Like okay, your bankaccount may say you have $40,000
, but it says that you have a$200,000 gift liability balance,
(20:08):
right, okay.
So basically, if you were tosell your business, you have
$200,000 of liabilityoutstanding that someone's going
to absorb because you'vealready spent that money.
We need to take a look at that.
Michael Yost (20:23):
Right.
Randi Rose (20:23):
Right.
So those are like some of thosekey pieces On the P&L.
I don't want to just see sales,I want to see how much of your
sales is service, how much of itis retail.
If you are getting more nuancedand you are seeing, you know,
maybe you have a spa, maybe youhave.
You want to see the breakout ofyour hair, your nails and your
(20:46):
spa.
Okay, great, but at the bareminimum we should be able to see
here's my service revenue,here's my retail revenue and see
the difference between the two.
Because understanding yourretail to service whether you
are team-based pay or you arehourly or you are commission,
either way you need to knowbecause that's going to tell you
your strategy on what needs tobe adjusted and how you need to
(21:09):
tackle it.
And then cost of goods.
So, I can't tell you how manybooks I look at that someone's
profit and loss goes right fromincome to expenses and there's
no cost of service or cost oflabor.
And the reality is is that'sthe direct cause?
That's the piece that's goingto be able to tell you am I
(21:31):
priced accurately?
Because that's the cost of youproviding that service or that
product, not your rent.
Your rent is something that youneed to know about, don't get
me wrong.
It's its own metric.
However, if you don't have cogson your books, you should be
asking some questions why not?
Michael Yost (21:51):
Gotcha.
Randi Rose (21:53):
Those are like the biggest.
Then the last one to that isfrom a compensation perspective.
You've got your incomeproducing people and then you've
got your non-income producingpeople or your administrative.
Are those broken out?
It is important overall for youto know the number, but it's
also important for you to knowthe difference between the two,
(22:14):
because that goes back into isyour compensation accurate?
Michael Yost (22:17):
This is great stuff, randy, that you're
sharing, and I've got a list ofquestions that are much longer
than the ones I even got achance to get to, so I have to
do this again.
But for anyone that's lookingto connect with you and get more
information on Thrive itself,where do they find you?
Randi Rose (22:40):
They can find us on the website.
So we have a website.
Do you want me to spell it out?
Absolutely, dot thrive.
T-h-r-i-v-e businessB-U-S-I-N-E-S-S services,
s-e-r-v-i-c-e-s dot net.
(23:01):
All right, awesome Not a dotcom You're not going to find us.
Michael Yost (23:05):
There you go, it's a dot net.
Randi Rose (23:06):
Dot net and if you forward slash and hit salon,
you'll actually go.
We're in the process of redoingthe website, so if you look at
the main page, you're going tobe like I thought you said you
work with salons.
So if you go to the forwardslash salon, you'll get.
Here are some of the people wework with.
Here are the results we'veproduced.
Here's how to reach out to usand here are some questions
(23:28):
specifically for that.
Um, my telephone number, thebusiness number, is 619-688-9248
.
I'm extension zero.
So if you just hit zero you'llgo to me and then I'll be able
to just respond to you and thenthe best, the next best way,
honestly, is via email.
(23:48):
Um, and my name's Randy Rose.
My email is randi R-A-N-D-I atthrivebusinessservicesnet.
Michael Yost (23:59):
Perfect.
Randi Rose (23:59):
So those are the ways to reach out to us.
Michael Yost (24:02):
Awesome and, again , we'll make sure that we put
those in the descriptor and getall that information for anyone
that's looking for it.
So, randy, I just want to saythank you so much for hanging
out with us today.
Thanks for the greatinformation.
I love some of the tips.
Again, what should people belooking for?
I love the fact that you gaveus some things that we should be
(24:22):
aware of, that we do and don'twant to see when we're looking
at our own financial statements.
And again, just in general, howa bookkeeper can be an
extension and an addition in apositive way, to the health of
your business.
So thank you so much.
Randi Rose (24:36):
Yeah, you're very welcome.
By the way, I forgot to mentionwe do have an Insta.
Michael Yost (24:43):
Perfect, everyone loves Insta.
Randi Rose (24:45):
After, for you know we'll put that on the the your
descriptor.
Yeah, so you know we do have anInsta, we do have a LinkedIn,
we do have a Facebook, so I'llgive you all of those.
Listen, we thank you for theopportunity.
We love what you guys are up to.
We love the commitment that youhave to business owners really
(25:08):
being successful.
I think that you guys arephenomenal.
The majority of the clients weinteracted with during COVID I
don't know of any strategiesclient that I work with that
went out of business.
They were all so prepared andso connected to their financials
that it was just not that itwasn't extraordinarily painful,
(25:33):
because it was, but they wereprepared to be able to pivot and
really that's hats off to youguys.
Michael Yost (25:41):
Well, thank you for that.
We really appreciate thosewords and it means a lot because
, again, at the core, that'swhat we're about, and I know
that's what you're about isbuilding healthy, strong, again
flourishing companies.
So, thank you for those wordswe appreciate it.
Randi Rose (25:57):
You're very welcome.
I look forward to doing thisanytime with you and I can't
wait to see you in October.
Michael Yost (26:01):
I will see you in October.
Thanks, Randy have a great day.
Randi Rose (26:05):
Bye, bye, thanks.
Michael Yost (26:06):
All right, and thank you to everyone that tuned
in.
We appreciate all of you and wewill see you at our next
podcast.
Thanks.
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