This is a transcript of Episode 026 of the Epic Business Growth for CPAs podcast. Enjoy!

Hannah: [00:00:00] We need to design businesses to be profitable from the beginning. And you know, maybe it’s not as profitable as we want at the start, but we need to get it there really quickly. 

Geraldine: [00:00:11] Welcome to the She Thinks Big Podcast, where you’ll hear from women entrepreneurs who are doing good in the world. From spark to screw up to success. Thinking big is in their core. It’s in yours, and it’s in mine. 

I’ve traveled to 50 countries and seven continents, done an Ironman, and co-founded a company that has generated millions of dollars for sustainability. My name is Geraldine Carter, and I’m delighted to share with you, conversations and coaching with amazing women. Time to get inspired and grow your impact.  

Today’s episode is with Hannah Smolinski of Brighten Up Financial. Hannah is a strategic financial partner for business owners. You can think of her like a virtual CFO. 

Hi Hannah, welcome to the, she thinks big podcast. 

Hannah: [00:00:54] Hi Geraldine, I am so happy to be here. 

Geraldine: [00:00:57] I’m so excited to have you here today to talk about numbers, and I want to give our listeners a little bit of background about you and what you do before we start.

So, what I know about you is that you are a virtual CFO. Helping business owners get a better handle on their numbers, understanding their numbers, and knowing what to do with their numbers so that those numbers don’t just sit on paper on a bookshelf gathering dust. 

Hannah: [00:01:21] You pretty much summed it up pretty well. What I do is I work mostly with small business owners because they don’t need a full-time CFO. So, I come in, and I can work with them a couple of hours a month, and we can get really clear on what the strategy is for their business and then put it into numbers because everything you do in your business all comes out in the numbers at the end of the day.

So that’s really where I sit, and I love being that strategic financial partner for business owners. 

Geraldine: [00:01:47] Awesome. Awesome. So, let’s dive into the meat of his conversation. As a virtual CFO, what’s a really common challenge that you see business owners struggling with? 

Hannah: [00:01:56] One of the big things is just figuring out what you can actually charge and what revenue really looks like in your business. And revenue, which you’ve explained on the podcast before but what I always try to remind people is the money that you’re taking in, not your profit at the end of the day, because that doesn’t include all the business expenses to get things up and running. So, I think sometimes people really confuse those two concepts when you’re first getting started.

And then they’re also not, always understanding the expenses that it really takes to run a business. And either they’re way underestimating it, depending on the type of business or their way overestimate the amount of money that they need. And they might go out and get a line of credit for their business, or they’ll go out and get a business credit card and start buying office supplies and doing all these things that maybe they don’t actually need.

So, if you were, say, a service provider, similar to what we do, I do consulting, and then you do coaching, you know, you really don’t need that much to start a business. It’s, you know, get yourself legal, get set up, and then start serving clients, and you start making money. You don’t actually have to go out and get the fanciest website and spend $10,000 for something super custom.

A lot of times, people don’t even need to start with a website. I think sometimes it gets a little bit overwhelming like I need to have all these things. When really you can really simplify, and you can focus on what’s going to return me profit, what’s going to return me money right now. 

Geraldine: [00:03:17] There’s a piece in there that I think was interesting around, you know, really clarifying revenue and expenses and what we think they’re going to be, and that revenue and take-home pay are not one and the same. 

Hannah: [00:03:27] Right. 

Geraldine: [00:03:28] And revenue and profit are not one and the same. 

Hannah: [00:03:30] Right, and profit and take-home pay are not one and the same as well. 

Geraldine: [00:03:34] What I see across my clients is, if they’re really good at what they do, right? They’re really like masters at their craft. But most of us don’t get this sort of financial education around running a business that we need to run a business. And some bookkeepers can help you understand how to read your profit and loss and how to interpret it and what is on your balance sheet.

And a CPA can help you understand the tax code and so on and maybe help you a bit with your business. But there’s a real gap in knowledge for once you have your numbers from the bookkeeper, what to do with them, and how to apply them going forward. 

So, given that there’s this knowledge gap for people when they’re starting and growing their businesses, what do you think are the most important tools or things that they need to know in order to run their finances better? 

Hannah: [00:04:21] That’s a good question because this is kind of part of my passion and why I started this business is I want people to be empowered too. So they don’t have to hire professionals to come in and do all this stuff for them. I want them to be able to be empowered and know these things.

Kind of starting with the foundations of, we were talking about like what is revenue? What are expenses? Like, those are great foundational pieces, and I actually just finished like, a whole blog series on just sort of the building blocks of how do you read a balance sheet? How do you read an income statement? How do you read some of these basics?

Geraldine: [00:04:52] Income statement. Because some people have a different term for that. 

Hannah: [00:04:55] Oh, yes, yes, income statement. Also called the profit and loss statement. Also, sometimes called a statement of earnings, but all those things, sometimes just getting really clear on what goes where, is sort of part of the beginning because I have people saying, well, why isn’t my draw that I take every month, why isn’t that showing up on my P and L on my profit and loss statement? Actually, that belongs on your balance sheet. So, if it is showing up on your P and L that we have problems that I need to talk to your bookkeeper. But sometimes just getting those really core foundational things of what’s there is number one, it kind of goes into what’s reasonable for your business, and that can be kind of hard to tell.

I hear people asking all the time what I should spend on marketing? What should I spend on rent? What should I spend on employees? And should, is sort of a hard question to answer. And I think a lot of people get caught up thinking that they need to spend a certain amount in every category, each business is going to be really different.

And I think that’s where kind of the freedom and the flexibility actually comes in. This is your business. You can design this to be what you want it to be. So, you don’t actually have to spend money on marketing if you don’t want to. There are other ways to do marketing for free, but what does that look like for your business, and is it going to work?

So, I do wish that all business owners would kind of understand that there’s not really any should when it comes to your expenses. You can make that look like what works for you and for your business. 

Geraldine: [00:06:21] Awesome. I love that. I think there are a lot of people who are scared that they may be missing something that they should be spending on. 

Hannah: [00:06:27] Right. Maybe, but probably not. If your business is working for you and you’re making money, and you’re able to get to a target audience. Then I think you’re probably good. Keep doing that. 

Geraldine: [00:06:38] What do you see at the six-figure level where, you know, we presume that once women have gotten their businesses sort of out of nascency of five figures and into six, that things are now stable and they have a certain level of knowledge, but that might not be the case.

I’m curious to know if those six figures women still have some of these same challenges or if they have a new set of challenges? 

Hannah: [00:07:01] Well, I mean, I think it’s important to also call out, I guess the, if you want to call it magical thinking of five figures versus six figures versus seven, eight, nine blah, blah, blah.

I don’t really care how many figures or how many zeroes are behind your revenue. It’s. Because yes, it presents different challenges at different levels, but there’s also no magical like, the bright line at each point that says, okay, now this point, your business is going to experience X, and then it’s going to experience X.

Because also different industries are posing different things. We have a service-based business, so it’s going to probably be around the six-figure level we’re going to reach capacity issues where we are one person, and we can only do so much where we either have to work more, or, we have to charge more, or we have to do something. But let’s say it’s a software business that sells a $20,000 software. You can sell five pieces of that, and you don’t have to do a whole lot to reach six figures.

So it kind of depends on the industry to start to talk about revenue levels and the different challenges, but I think a lot of your listeners are probably in this service-based business and probably do start to get to a different level once they reach six figures and it’s usually right for us, it’s probably going to be more like, growing a team or starting maybe a new revenue stream, maybe a passive income or some sort of course, or one to many models.

So, it’s where you start to kind of bring in a different level of, okay, now we have more complexity. It’s not just, I’m sitting down with one person, and they’re giving me money. Now it’s okay. I have a whole different line of marketing for this new thing.

Or I now have employee costs that maybe I didn’t have before. The complexity starts to get built-in as you start scaling up. And particularly started scaling up to that, you know, multi six-figure or your business looks nothing like it did in the beginning and just everything can start changing. 

Geraldine: [00:08:59] If you’re thinking about hiring somebody and you think about their salary, what percent do you factor to add on top for employee costs?

Hannah: [00:09:08] 10% just off the top of my head, I actually have a free download on my website right now that you can plug in the actual salary or an hourly rate. I have an hourly tab and then a salary tab. I know you like worksheets so go and grab that one, but it puts it in there because it’s going to be a little bit different based on state.

So, I’ll just say 10% off the top, but depending on the states, you might have one or 2% difference. So, I usually see like, 10, 11% tops. 

Geraldine: [00:09:35] Okay, easy, and that’s just taxes that’s not any kind of benefits package. 

Hannah: [00:09:40] Right? Yes. A benefits package could look, Oh, it could look crazy different. Especially health insurance right now is one of the big things. I don’t see too many business owners until they’re at least over the million-dollar mark offering health insurance or offering to cover a percentage of health insurance right now. 

Geraldine: [00:09:58] Interesting. Right. Okay. Say a little bit more about that. Because I think a lot of people when they’re starting out and it’s their first hire or wondering about health insurance and if they’re required to provide it and so on.

Hannah: [00:10:09] Yes. For small business centers, we don’t have any federal requirement to provide health insurance. I don’t know the actual number of employees, but almost everybody who’s listening here now will probably not reach that point for quite a while unless you’re exceedingly, rapidly scaling, but you don’t have to provide any health insurance.

It’s more of something that you would provide at this point as a goodwill gesture or something to keep a good employee, and you don’t even have to go out and get your own plan, a health insurance plan. You can also offer stipends. So, a $200 stipend towards health insurance or a $400 or whatever you think is reasonable, if that’s something that you really had a passion for, that you wanted to build into your business and do that for your employees.

Geraldine: [00:10:53] I think there’s a lot of confusion out there about what people need to…

Hannah: [00:10:56] Oh, yes. Yes, you don’t have to do retirement. If you have an employee, you have to, you know, get them set up on a payroll system, and you need to withhold taxes for them, and you need to do whatever the state says. But usually, that’s pretty minimal as well. And besides that, you don’t have to offer any benefits if you don’t want to. 

Geraldine: [00:11:17] Great. That’s super helpful. What are some of the trends that you see in the difference between how men and women handle numbers and finances? 

Hannah: [00:11:24] Yes, I would love to do a study on this eventually. So right now, I’m just taking some sort of notes based on my own observation.

So, it’s very situational. Not saying that all women do this, or all men do this. One of the biggest things that I have noticed is that women spend a lot of money on personal development.

Personal development, professional development, but mostly it seems like they’re trying to fill skill gaps. It seems like we are very aware of what we don’t know, and we’re trying to fill those with courses and groups and training and all the things that we are just very self-aware of those things.

And I don’t see that with many of my male clients. If they have a problem, they might hire a consultant to come in and fix it. But they’re not necessarily the ones going out and trying to say, Oh, this is the weakness. I’m going to go make myself better. It’s really interesting.

I can give you like, one really specific example. I have one client who never got his  Ph.D. in a field that it’s very common to get a Ph.D., so he’s a professional engineer. You know how that is like Ph.D., they’re everywhere. It’s a badge of honor, and it’s kind of, you know, something that a lot of people get. You just never got it, and he’s totally fine with it and never really wanted to pursue it.

He was like, I was sick and tired of not making money, so I went out and started making money and basically has owned his business ever since. But another client of mine has gone out and has gotten into deep, deep, deep debt, trying to get a Ph.D. that she could not have done, but she felt like it was something she needed to do to be what she wanted to be.

And I mean, I’m totally fine with goals. I try to support goals wherever I can, and we weren’t working together when she made the decision to go and get her Ph.D. But had I been there, I probably would have advised her that was not a good time financially to actually go out and get that certificate because she was able to make money and serve her clients, and it was a choice that she decided to make. But I think it was that feeling of, I need to be this. 

Geraldine: [00:13:35] I need the letters to validate that I know something. 

Hannah: [00:13:38] Right. So, I think we’re all just battling that feeling of maybe not being good enough in business too. I mean, that comes from generations of women not being able to do what men can do. And I mean, even in like the accounting profession, 50 years ago it was dominated by men, completely dominant.

Now it’s dominated by females. And it’s something that so many women are really good at, but it’s still we feel like we have to prove it over and over and over again. I was actually looking at a certification this year, which I’m like, I don’t actually need another certification, but it’s still just one of those things we feel like we need to keep doing to make ourselves more valid.

Geraldine: [00:14:18] What do you see some of the men doing that maybe get them into trouble that the women don’t do quite the same way? 

Hannah: [00:14:23] I think they’re a little more off the cuff. They tend to just kind of go forth. This again is a small sample size, but the men that I’ve worked with have been more, you know, let’s just do it. Just do it. Just go and without maybe some of the planning, and I always kind of think they’re going to go a little slower, but it’s like, oh, that thing you talked about last week, oh, you’re doing it this week. Okay. Well, that would have been maybe good to know.

So, they just kind of seem to get on the ideas maybe a little quicker. But I mean, I know there are lots of women who get on things really fast, but they’ll jump into bigger investments, and they’ll jump in quicker. They will invest a lot quicker than women will. 

Geraldine: [00:15:00] Whereas women might do a little bit more homework or maybe be a little bit more cautious. 

Hannah: [00:15:04] Yes. Maybe even if it’s something they know that they need. Maybe they just need to validate it or check with someone else. They feel like they need to get permission before they just say yes too. 

Geraldine: [00:15:15] Interesting. And to what extent do you see that getting men into trouble, or is that really beneficial and we should just move a little faster? Where’s it some of both?

Hannah: [00:15:25] Sometimes there’s been financial investments that they get into and then maybe have to dig themselves back out of after, you know, maybe it wasn’t thoroughly vetted enough, or a consultant wasn’t thoroughly vetted enough and all of a sudden you’ve paid someone $20,000 a year and really hasn’t produced any tangible returns.

Things like that have happened, but sometimes that’s also just setting up some sort of like monitoring system. When you do make an investment and determining whether or not it’s something you want to keep going. And I don’t think these people had that in place. 

Geraldine: [00:15:58] At what point in business are people ready to work with you? Like when should they start to think about seeking you out? 

Hannah: [00:16:04] So usually when people are coming to me, they are getting to the point where their revenue is in that multiple six figures. You know, usually, around 300 to $500,000 a year is kind of usually where they are, where they start to feel these pains of, okay, my employees are growing, or I need to grow my employees, or I am scaling to maybe a second location, or I’m doing some sort of growth.

I have something that’s happening from a growth perspective, or I have not been able to reach the goals that I’ve wanted to, and I can’t figure out why, and I feel like the money part is part of it.

Or sometimes they’re taking questions to their bookkeeper, and their bookkeeper’s going. I am not the person to help you with this. So, this happened recently where a bookkeeper referred someone to me because they said, oh, she’s asking about cash flow, and I don’t do cash flow. That’s not what I do. So, go, talk to Hannah.

So, then we can sit down and start to say, okay, cash flow is like one of the biggest challenges for small businesses. So how do we predict it better? How do we plan for it? How do we try to make sure you’re in a position that you don’t have to worry about it the way that you’re probably losing sleep about it every night right now? 

We need to design businesses to be profitable from the beginning. And you know, maybe there, it’s not as profitable as we want at the start, but we need to get it there really quickly. 

Geraldine: [00:17:26] So when people are starting out in their first few years of business, and, they have a bookkeeper, and they have a CPA. And they’re aware that they have this sort of knowledge gap, like you say, of being able to forecast what’s going to happen in the future in their business financially, but they’re not yet in a place where they can afford to work with a CFO.

Even though I might argue that you can’t afford not to work with one if they’re not there yet, what can they do to support their knowledge in the meantime?

Hannah: [00:17:52] Well, I am trying to build a lot of resources for them right now. Because I do want people to be able to have access even if they can’t afford it at the moment. I think that the biggest thing is sitting down with your numbers, getting the best understanding you can of what’s actually there and seeing, okay, and then just measuring it every month. You say, get a budget, put it in place. I say that, as well. 

If you need help putting together a budget, you can hire somebody to help you put together a budget, and that’s not something that you need to have an ongoing relationship with somebody.

I have strategy sessions for that, and I’m sure even sitting down with you, you can sit down and put together a budget with someone. Invest that, and then be committed to looking at it monthly, put it into a budget versus actual and get that in place. 

And the more you understand the numbers, and you say, okay, now that I’m paying attention, then I can say, okay, I know last month looked like that, and that felt really crazy busy. I know what this next month is going to look like. That was crazy busy, so I can estimate that it’s going to look pretty similar or vice versa.

Maybe last year was crazy busy. This month there’s nothing. I can predict that I probably shouldn’t spend any money that’s not absolutely necessary at the moment. Just kind of start to understand those trends. If you start to understand the ups and downs of ebbs and flows of your business because you’re now paying attention, it will help that much more trying to predict and look into the future.

Geraldine: [00:19:17] I love that. Cause you totally, when you start to look at your numbers, you get a feel over time for the story they tell. 

Hannah: [00:19:23] You’ve probably heard that saying, “What gets measured gets managed.” And there’s a bunch of different variations on that, but it’s really, really, really true. Just starting to measure something. I mean, you’re going to be doing this talk on KPIs at the, this is my [mom’s] conference. If you start measuring those key performance indicators, all of a sudden, they start to become part of your consciousness, and then you can actually start paying attention and changing things to affect them, which is awesome.

Geraldine: [00:19:48] Yes. So, I have my list of KPIs that I like people to measure. What’s on your list?

Hannah: [00:19:53] Well, it’s a little bit different for each business, but obviously we always look at things like monthly revenue, monthly profit, your margin between what your cost of goods is, because I have some product-based businesses, so we’re always looking at margins to make sure that that’s what we want it to be.

And then I always have some customer metrics. So, a number of orders or how many new leads or what are you actually converting? Kind of depending on what the business is, how many sessions. It’s a therapy-related business. How many sessions do you have? What does that look like? So, it’s a little bit different and customized for each one, but I’m always tracking margin, revenue, and profit.

I also look to look at net cash. What’s the net cash in a business? That’s basically all your cash minus what you have to pay in current debt. So, if you have credit card liabilities or you have a loan that’s out, what’s the difference between that? That stuff that you would find on a balance sheet. 

Geraldine: [00:20:50] Yeah. So, it’s going to say at the bottom of your balance sheet, what is the difference? I’ve never seen net cash at the bottom of the balance sheet. 

Hannah: [00:20:56] Yes. You have to calculate it. So, you basically take your cash minus your liabilities, and you can calculate that, and it’s just kind of helpful. If you have a business that had been heavily in debt and you have a goal of trying to get out of debt. If you’re checking net cash, that gives you a better idea because you can borrow money on loan and that shows up on your balance sheet as cash, but it’s not really giving you a very good picture of what’s happening overall to your total financial health picture. So, I like looking at net cash. 

Geraldine: [00:21:25] So how close to or different from net worth is net cash?

Hannah: [00:21:29] So, net worth would include all your assets of the business as well. So, net cash would just be looking at what liquid cash do you have sitting on, to pay your very immediate, what are these debts that you have? 

Geraldine: [00:21:43] Got it. 

Hannah: [00:21:44] Whereas your net worth will actually put, okay, do you have a property in your business? Do you have equipment? Do you have, what else are the assets on your balance sheet? That are kind of coming all to that worth  if you were to turn around and sell the business tomorrow, and you had tons of assets, you would be able to sell it if not just for whatever you have in cash at the bank. You actually have a bunch of assets as well.

Geraldine: [00:22:07] Okay, got it. 

Hannah: [00:22:07] Yes.

Geraldine: [00:22:08] That makes sense. That’s awesome. And that will be really helpful because a number of my clients, I’d say probably half of them are carrying some amount of debt. Be it student loan debt, be it business startup debt, be it the line of credit. So being able to understand what that gets at, I think if I’m hearing you right, what that gets at is, are you progressing in paying down your debt.

Hannah: [00:22:27] Yes. I actually have a calculation worksheet for that too. I can show you where to get that too. I tried to identify four metrics that I like to look at. Every year when I’m saying, okay, did we progress on these goals? Did we progress by the, essentially, do we get into a better situation in 2018 than we were in 2017.

And so, you can plug in the numbers, and I just have four key metrics to kind of run through those things that I like to look at. 

Geraldine: [00:22:52] Awesome. And that’s in the template that you just mentioned? 

Hannah: [00:22:55] Yes. 

Geraldine: [00:22:56] So I will include all of those things in the show notes. Your URL, if people want to go visit you, is 

Hannah: [00:23:05] That’s it. Yes. And if they want to email me directly, it’s Hannah with an H on the end. 

Geraldine: [00:23:13] It’s an anagram. Anagram?

Hannah: [00:23:14] Palindrome.

Geraldine: [00:23:15] Palindrome.

Hannah: [00:23:16] I think it is the word. Palindrome.

Geraldine: [00:23:18] We’re not letter people, we’re number people. 

Hannah: [00:23:19] Yes, I know. I’m like, somebody decided that that would be a funny nickname for me once that didn’t stick, so I was like, okay. 

Geraldine: [00:23:26] So, can we call you Palindrome?

Hannah: [00:23:29] Yeah. I was like, that doesn’t exactly roll off the tongue.

Geraldine: [00:23:32] Yes. Nor is it any shorter than Hannah.

Hannah: [00:23:35] No. 

Geraldine: [00:23:36] Awesome. 

Hannah: [00:23:38] Yes. 

Geraldine: [00:23:38] Well, this has been such a treat to have you on The She Thinks Big Podcast. Thank you so much for coming. 

Hannah: [00:23:43] Thank you for having me. I love to be able to talk about all this stuff and thank you for doing the work that you’re doing because I know you people are getting into a much better place financially when they’re working with you. So, thank you. 

Geraldine: [00:23:54] Hannah, you are welcome. I love helping women get better with the numbers in their business. 

Ladies, I include a bunch of links in the show notes, including links to Hannah’s blog posts, her metrics worksheet, The True Cost of an Employee, and my own template that I created for you Budget versus Actuals for 2019. That’s a Google spreadsheet that you can simply make a copy of.

All of those will be linked-to in the show notes, so definitely go check that out. If you got something useful out of today’s episode and you know another woman in business who you think might benefit from hearing it, please share it with her. When you share an episode, she wins because she gets the help she needs.

I win because I get more listeners and you win because when you share something useful, you look good. When you share an episode, we all win. That’s it for this time. I’ll see you next week. 

If you want to find out more about The She Thinks Big Podcast or hears previous episodes, head on over to my website, And of course, I want to know what you’re thinking big about. I hope you’ll share in The She Thinks Big Facebook group. I love hearing from listeners because here in my studio, all I hear is crickets and my meowing cats. 

Thanks so much for listening to the show this week. You can subscribe to Apple Podcasts or wherever you get your podcasts. And while you’re there, please do leave me a raving five-star review. 

You can write to me at, and if you want to send a tweet, I’m @GeraldineCarter. You’ve been listening to She Thinks Big. 

See you next week.