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8: Profit vs. Cash Flow vs. Cash on Hand — The Differences You Need to Know to Reach Your Goals
Episode 8 • 22nd May 2024 • Harmonious Wealth • Iyanna Vaughn
00:00:00 00:31:37

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Do you know the difference between profit vs. cash flow vs. cash on hand?

You might have looked at your profit number but then wondered why your cash isn't saying the same thing. 

You're seemingly profitable but you're continuously running into depleted or nearly depleted cash.


Profit, cash flow, and cash on hand are all different things and as your business grows and gets more complex with your income sources and expenses, it’s not enough to just know revenue and expenses. 


In this episode, you’ll understand what your profit margins should be for different aspects of your business so you can create the cash flow you need to sustain your business. You’ll also learn why understanding your cash flow is how you’ll be able to increase your cash on hand, which allows you to have business savings, pay off debt, and pay yourself more. 


05:38 — Why you need to know your profit numbers more than revenue numbers 

07:07 — Understanding your profit margin and where it should be

08:32 —🖥️ Screenshare: Visualizing Your Revenue, Direct Costs, Operating Expenses, and Profit Margins

11:04 — What you need to understand about cash flow and how it determines your cash on hand

13:06 — 🖥️ Screenshare: Visualizing Your Starting Cash, Incoming and Outgoing Cash, and Cash on Hand

16:26 — How to use the connection between profit and cash on hand to reach your business, lifestyle and legacy goals 


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  3. Take a screenshot of the review and submit in the Review Form here so we can email you if you win 


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Profit Planning Intensive - Increase your profit by 25%

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Transcripts

Iyanna Vaughn:

Have you ever looked at your profit and wonder why your

Iyanna Vaughn:

cash isn't saying the same thing?

Iyanna Vaughn:

Have you looked at your net income on your tax return and you seemingly have

Iyanna Vaughn:

profit, but you also have a tax bill and you're looking like, okay, somebody's

Iyanna Vaughn:

lying because where is that in my account?

Iyanna Vaughn:

You're seemingly profitable, but you're continuously running into

Iyanna Vaughn:

depleted or nearly depleted cash.

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And you seem to be borrowing money from all different avenues.

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You pay off your debt only to use it the next month for your typical expenses.

Iyanna Vaughn:

Now imagine this, you know exactly how cash flows into your business and

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you're no longer using your credit card as an emergency fund, but leveraging

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it for cashback, income and points.

Iyanna Vaughn:

Okay.

Iyanna Vaughn:

You know exactly how everything's supposed to be coming into your

Iyanna Vaughn:

business and you're aware of all the cash that goes out in your business.

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So you feel empowered and confident.

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On how you can improve it today.

Iyanna Vaughn:

I'm going to teach you that profit is not the same as

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cash, not the same as cashflow.

Iyanna Vaughn:

And I'll teach you exactly how cash flows in your business.

Iyanna Vaughn:

Stay tuned.

Iyanna Vaughn:

This is the Harmonious Wealth Podcast, where we're breaking online business

Iyanna Vaughn:

owners free from chasing every next revenue milestone and instead prioritizing

Iyanna Vaughn:

lifestyle and legacy goals so you can finally have the personal wealth

Iyanna Vaughn:

to show for your business success.

Iyanna Vaughn:

I'm your host, Iyanna Vaughn, fractional CFO and bookkeeper here to guide you.

Iyanna Vaughn:

Now let's start building your financial legacy.

Iyanna Vaughn:

Hey, welcome to the Harmonious Wealth podcast with your host, Iyanna Vaughn.

Iyanna Vaughn:

So in episode one, I talked about how revenue doesn't matter if you're

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not having the cash on hand or the personal wealth to show for it.

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And when it comes to profit in your business, usually that's a surprise

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during tax season or at the end of the year along with a tax surprise when

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it's time to do your taxes in April.

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Now, even if you're looking at your profit on a quarterly or monthly

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basis, I'd highly recommend monthly.

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You're kind of disheartened because your cash typically, or may

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look different from your profit.

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You wonder why cash is no way near what your profit is looking like when you do

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have those profitable months and you might be depleting it and mismanaging your cash.

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I've been there.

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So the short version before we go into a deep dive, I will have some

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visual aids for you, is profit is income retained after your expenses.

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So we have revenue minus expenses equals profit.

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Cashflow is the journey in which cash flows into your business

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and out of your business.

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And then it has like the river bank of like what's left over for cash on hand.

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I want to share how all these look for you.

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If you've been wondering, okay, why is my cash different than my profit?

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How do I determine how cash flows in my business?

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This is for you.

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So I know what you want.

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You want a comprehensive financial strategy in your business so that you can

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be more proactive so that you understand that what you're looking at is accurate

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and you can assess how it communicates your company's financial health, right?

Iyanna Vaughn:

Okay.

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Simply, you just want to know what you're looking at and your financial reports

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are accurate and understand how it works so that you can better improve it.

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When we work with our clients, we help them create a financial system where every

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dollar has a place, purpose, and function.

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And you might not have that yet because you're, you're guessing, right?

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You might have like one report, which is the income statement where you

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look at your profit, but you don't understand the different reports that

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you should be getting every month.

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So it's like you, you just going off of intuition and feeling like, okay,

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I know I need something different or something more comprehensive, but I

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don't necessarily know what it is.

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You want a financial system to have a place for every single dollar is

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because you aren't seeing the cash grow and you're not able to pay yourself

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consistently and well every single month.

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So with our clients, we help them keep a pulse of like cash on hand for both

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their business and personal so that they can stay loyal to an automated system

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for cashflow on things like a tool like profit first, so that they're, they're

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not avoiding looking at their money.

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I want to help you have harmony between your personal and business financials.

Iyanna Vaughn:

So we have a four step framework that we have with our clients.

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And that includes the first is creating a legacy plan.

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So we sit with our clients, we help them unpack what their immediate lifestyle

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goals are, as well as their legacy goals.

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So like, what would their life look like at 60?

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What would they want to retire with?

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How can their business be the number one or one that's one of the

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top vehicles to make that happen?

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Then we assess trends.

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So assessing trends to me is like.

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We're looking at the financial reports and you're getting

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educated on what transpired.

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And then in the third step, we're highlighting gaps so that we can

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improve the gap between where you are now and where you want to be.

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During the first part of our framework, we create a personal spending plan that

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goes through your bills every month.

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We want to make sure that we uncover exactly what you

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need to be paying yourself.

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And we have a goal for you to live off of 50 percent of your take on pay.

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Then we will be able to highlight the gap of like, okay, immediately, what

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is stopping you from being able to pay yourself what you need every single month.

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And then we go into how do we plan for the next three years to get

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you closer to your legacy goal.

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After we highlight those gaps, we're able to plan for profit.

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So after planning for profit, you're able to see how your business

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has been growing throughout the quarter, throughout the years.

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And then we kind of recalibrate every single year to just make sure your

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legacy plan is where it needs to be.

Iyanna Vaughn:

Now to the meat and potatoes of this episode.

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So I'm going to go again, I'm going to have a visual aid.

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First, I want to talk about profit.

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So with profit, you typically see, you know, people sharing their revenue

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versus what they make in profit.

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No shade.

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That is fine.

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However, it does not give you a reality of what to expect for profit

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in your business because you don't know the typical guidelines of

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what you should be spending here.

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Where should your investments be?

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And how to know that you are doing the right thing, right?

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Because when I think of larger companies, they, they are public, right?

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So you can see their financial reports publicly.

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Whereas with small business owners, of course, we're not sharing all

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of our financial data, so you don't have a benchmark and knowing like

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what's actually right or wrong for what you're doing in your business.

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Along with not talking about profit, we don't talk about cashflow when it

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comes to like an online business space.

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biggest thing is talking about how to improve your revenue alone, where

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there are other areas in your business that we need to see that improvement.

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So while profit absolutely impacts your cashflow and cash on hand, that's

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not the end all be all because there's things that you need to do in all areas

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of your business to see improvements.

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I talk about why you're, you're making multi six figures or you're

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making great revenue in your business, but not seeing the cash

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on hand in episodes two and three.

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So if you do have some, some issues on how you're maintaining your

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cash on a mindset level, Definitely check out episodes two and three.

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Improving your profit is like an art.

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And I like to start that art piece by understanding what your take home

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pay must be so that you can live and thrive versus just surviving.

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So a rule of thumb for me, again, is living off of 50 percent of your

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take home pay so that you can use the other 50 percent for savings,

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investments, retirement, and thriving.

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Like say, if you want to get your nails done, massage, all that.

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Because you're living off of half of your take home pay, you have the flexibility to

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have the lifestyle that you would desire, of course, without overconsumption, and

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create a better future for yourself.

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So once we have that ideal take home pay, we have a baseline for

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where you should be with revenue.

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After we get a baseline and we know what your take home pay must be, and

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we have a baseline for your revenue, I like to say, okay, our North

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star is to have your profit be at 50 percent before paying yourself.

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50 percent profit margin will help you then create a plan to pay yourself

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what you desire and then also implement some tax strategies that might have

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a little bit of cash Implemented in those, but you're able to dictate what

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your tax liability should look like.

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Right?

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So I'm going to show you a visual because when it goes into, like

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revenue minus direct costs equals gross profit minus operating

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expenses equals operating profit.

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I do want to give you that visual.

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So let me pull that up right now.

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So first up is revenue.

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So we have income stream one, two, and three, then we get

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total income or total revenue.

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Whatever you name it, that's fine.

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And then the direct costs, so direct costs directly relate to revenue.

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So if you are a service provider, it'll, it'll be your delivery team.

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So subcontractors and, also like any specific expenses

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that relate to the project.

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So if you're an event planner, it'll be your Your event assistance, as well as

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like any event expenses that directly relate to the project of that event.

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And then if you're a designer, it'll be like your designers, right?

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And any like graphics that you purchase to complete the

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project, that's a direct cost.

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and then if you're a product based business owner, it'll be like your cost

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of goods sold, like your inventory.

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And then once that inventory is sold, now it's a cost of goods sold as well

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as like shipping and things like that.

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So think about like what is an expense that is directly

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tied to me generating revenue.

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That's a direct cost.

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You want to ensure that each project is at least 70 percent of revenue.

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So say for instance, for this, business, their subcontractor, maybe it's like

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one person they're getting, maybe it's one contractor getting 3000 a month.

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And that's only, that's just under 13 percent of their business.

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Maybe they have the different revenue streams, which helps them and improve

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their their profit because they have different streams of income.

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And then we have transaction fees to me.

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That's a direct cost because the merchant fees that directly relate to

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you getting sales is a direct cost.

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So we have gross profit.

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So gross profit is at 84.

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So that checks off the box of being over 70, 70 percent of revenue.

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Then we have operating activities.

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So no matter what happens in your business, whether or not you make

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revenue, you're going to have operating expenses and overhead, right?

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So we have software.

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So we said not no more than 5%.

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We're at less than three.

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That's great.

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And then we have some professional fees.

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Maybe they did some coaching, anything else?

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Phone, internet, just all these basic things.

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I just kind of put numbers down and operating expenses were at 28.

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8.

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And let's look at the operating revenue.

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I didn't have that here.

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I'm going to do this divided by

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this number.

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And that's 55.

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So yeah, we're at 55% before we consider the owner's pay.

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So that is it for, for the screen share for right now.

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I'm going to show it again when I talk about cashflow.

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Hopefully this works when we getting back.

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Okay.

Iyanna Vaughn:

So we talked about profit, right?

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Next up, we're talking about cash flow.

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So cash flow was like how the business, how, where you start in cash.

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So the river bank at top, the Nile river comes down and then the river

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bank at the end, like the, the cash on hand at the end of the day.

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Most people think their profit is their cashflow.

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They should have that in cash on hand, but that's not true, right?

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They might think, " Oh, you know, I'm, I'm saving cash by using

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debt or using a credit card."

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That could be true, but then you also have a bill of to

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pay that card that next month.

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My approach with cashflow is to simplify as much as possible.

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Right?

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All cash that comes in minus all cash that comes out is your net cash change

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and that produces your cash on hand.

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So income and cash is going to be your revenue that comes in your sales,

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not by creating new invoices, right?

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is by the cash collected and it could be some passive income sources like

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your interest income from having a high yield savings account and then

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it could be like your cash back income like say if you use your points just

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to kind of get cash back that could be like a passive income source.

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You also have what you contribute to your business.

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So the opposite of owner's draw is owner's contribution.

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So you're paying from your personal to your business and you're

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contributing to your business.

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That's cash coming in.

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And then if you have like a grant or a loan, then that's also cash

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coming into your business, right?

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Outgoing cash is of course your expenses, which you pay yourself

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an owner's draw estimated taxes, tax debt, things of that nature.

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Outgoing cash also includes like you paying off your loan or other debts

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and then your credit card payments, which can be a little cloudy, right?

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Because if you're spending a high ticket item on your credit card,

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And, that saved you for that month.

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But if you have something like Amex platinum card and you have to

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just pay off, pay it off the next month, it's going to interrupt

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your cash on hand that next month.

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So I'm gonna show you a visual aid of like what cash on hand is.

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So here is cashflow.

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I made it similar to the income statement that we just looked at,

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but it's a little bit different.

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So first we have the beginning balance, right?

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This is the beginning balance of cash on hand for a company.

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And then we have all cash that came in.

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This one, I just made it seem as if it was just 220k straight up.

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And then I have like after your transaction fees, like

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what Stripe transfers to you.

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Because I kind of made it like a little uneven just to make a visual so

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that you're not thinking exactly what Stripe You've made in sales is exactly

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what's going to come in your bank because there are some, there could be

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transaction fees that you might incur.

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And then other cash coming in.

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So there was no loans for this month for that, for this particular client.

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And then there were no owner's contribution.

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So it's at zero.

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So total cash in was just revenue.

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And then we have your operating expenses.

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Everything that we saw in the last report is what we have here.

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So we have operating activities, 9, 710.

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And then what I did here was do like a tax estimate of 15 percent

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of the revenue if we're doing profit first, just as a visual sake.

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So to me, this cash on hand is technically like you're paying estimated taxes, right?

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So 3, 400.

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3, 400.

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Almost 3, 500 got taken out of the business.

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And then we have your owner's distribution, and then we have

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a credit card payment, and then we have total cash out.

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So all the cash that came in, which was 23, 000 minus all the cash that

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came out was 19, 000, almost 900 was at a net of 33, 97, 83 cents.

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So we see profit, right, is not the same.

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As ending cash on hand, because there were things that happened

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outside of the income statement that contributed to the cash changing.

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I hope this helps.

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Let me know in the comments, if it does, if you're watching on the YouTube version.

Iyanna Vaughn:

Okay.

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So we know that improving your profits, right?

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Has the chance or capability to improve your cashflow and the more cash that

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you retain, the more cash that you have to leverage and invest for your future.

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So again, if you only look at the income statement or profit and

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loss statement, you're only looking at one section of your business.

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You also need to look at your balance sheet, which shows your assets, what

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you own; liabilities, what you owe; and equity, which, which is left over.

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And then you have your statement of cash flows.

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So it doesn't look like what we just showed you, but what I just showed you is

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exactly how cash flows in your business.

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So you want to be able to say, okay, I received my report.

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I'm able to understand everything that's going on.

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I'm looking at my bank account every single day, and I don't feel In the

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angst, because I know exactly what's going on, you're able to pay yourself

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exactly what you need so that you can have your weekly massages, your bi

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weekly nails getting done, because you're paying yourself what you need and then

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you're also strategically increasing your profit so that you can have, you

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can have like, you know, Savings, right?

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The last bit is cash on hand and I'm going to go a little bit

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deeper into the profit focus.

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So you might avoid looking at your cash on hand or your bank account.

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Because you don't want that negative energy because you don't

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like what you're going to see.

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So when you have that mindset of not wanting to look at your numbers,

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you're not going to change your habit.

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And it's going to perpetually put you in a place of wanting to run away from

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the truth when you should be running towards that truth so that you can face

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it, even if it doesn't feel comfortable.

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So my approach into helping increase your cash on hand is the profit focus.

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And I'll get into this deeper.

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So the first focus is fixing your cash on hand.

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The elephant in the room is we don't have enough cash on hand, and I want you to be

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able to handle the little that you have.

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really well so that when you have more, you're able to not self sabotage yourself.

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So what we do with our clients, we create a 12 month weekly cashflow forecast.

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So as of today, we're going to look 52 weeks in advance and see based on

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where you are right now, what cash on hand should look like based on

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your monthly recurring revenue, your launches and your typical expenses

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and what you need to pay yourself.

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This is what your cash on hand should look like.

Iyanna Vaughn:

And I want to look at 24 weeks or six months in advance so that

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we don't have any surprises.

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So with our clients, we work on a new zero based on their habits,

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where they are and as a company, and we kind of incrementally grow it.

Iyanna Vaughn:

So I.

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Typically, like our North star is to have our zero at one month of

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expenses, but we're going to get gradually get up to that, right?

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Like if you're consistently consistently having 1000 flow in your business

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on a weekly basis, I'm not going to say, let's make sure we get 10 K

Iyanna Vaughn:

that's we could get there, but that's not going to be an overnight fixed.

Iyanna Vaughn:

So once we have a new zero for your account, we're going to ensure for the

Iyanna Vaughn:

next 24 weeks, ideally for the whole year, there are no negative balances.

Iyanna Vaughn:

And if there are like chances where it could be negative or low or your new zero,

Iyanna Vaughn:

we're going to say, okay, you need to make X amount or you need to consider investing

Iyanna Vaughn:

on this expense on a particular week so that you can maintain healthy cashflow

Iyanna Vaughn:

throughout the, throughout the months.

Iyanna Vaughn:

And a bonus is, I always tell my clients, let's open a high yield

Iyanna Vaughn:

savings account so that you can earn interest income, holding your money.

Iyanna Vaughn:

In an account versus like in a regular checking account,

Iyanna Vaughn:

you're not getting nothing.

Iyanna Vaughn:

The second focus is fixing your business debt.

Iyanna Vaughn:

So once you have your cash on hand, where it needs to be, then

Iyanna Vaughn:

you have money to be able to get aggressive on your business debt.

Iyanna Vaughn:

So nothing disheartens me more when, you're thinking that you have that cash

Iyanna Vaughn:

on hand or you have enough cash to pay off your debt and then when you pay

Iyanna Vaughn:

off your debt, you're needing the cash.

Iyanna Vaughn:

You're using the debt all over again to pay your expenses.

Iyanna Vaughn:

If you're having like any cash drama in your business, I'm not going

Iyanna Vaughn:

to say let's pay off all the debt.

Iyanna Vaughn:

I'm going to say, let's make sure that we have adequate cash on hand.

Iyanna Vaughn:

Let's make sure that we're able to pay expenses, pay you.

Iyanna Vaughn:

And then once we get to where we need to be, then we can get aggressive.

Iyanna Vaughn:

So it might be paying the minimum balance, if not a little bit over the minimum

Iyanna Vaughn:

balance so that you're not negatively impacted by the interest, right?

Iyanna Vaughn:

And then once we get your cash on hand where it needs to be or saving 10k, then

Iyanna Vaughn:

we can say, okay, anything excess of that can be used for paying off debt.

Iyanna Vaughn:

And a trick that I like to do is, if you want to pay or get a

Iyanna Vaughn:

little aggressive, do it in halves.

Iyanna Vaughn:

Say you want to pay your debt an extra 500.

Iyanna Vaughn:

To make sure that you don't need that in the future, split it 250

Iyanna Vaughn:

in savings, 250 for the debt.

Iyanna Vaughn:

That way, if anything happens, you have savings piling up for

Iyanna Vaughn:

you so that you don't need it.

Iyanna Vaughn:

And another thing that I see is like, you're, you're missing

Iyanna Vaughn:

that money if you're kind of transferring it back and forth.

Iyanna Vaughn:

So doing it incrementally and strategically will help you not miss

Iyanna Vaughn:

the money once it's gone, as well as paying off your debt where it needs to

Iyanna Vaughn:

So improving a profit one helps your cash on hand, and then two, fixes or pays off

Iyanna Vaughn:

your debt aggressively because you already have the cash on hand that you need.

Iyanna Vaughn:

So one of our clients, she was struggling with her debt.

Iyanna Vaughn:

She wanted to make sure that she had cash on hand to pay herself,

Iyanna Vaughn:

her expenses and manage her debt.

Iyanna Vaughn:

So what we did was instead of just kind of overthinking everything, I'm like,

Iyanna Vaughn:

let's just kind of spill this data out on the cashflow planner so that

Iyanna Vaughn:

we know exactly how to predict how to pay off her payment processor loan.

Iyanna Vaughn:

So with this calculation, I was able to calculate the exact week that she

Iyanna Vaughn:

would get, she would be able to pay this off and then how it would positively

Iyanna Vaughn:

impact her cash on hand afterwards.

Iyanna Vaughn:

And that leads me to the next profit focus is paying yourself more in your business.

Iyanna Vaughn:

So remember when I said that we get an idea of what your take home pay should be?

Iyanna Vaughn:

Your business may not be in a place to immediately pay your ideal take

Iyanna Vaughn:

home pay, but we'll work on that.

Iyanna Vaughn:

So, Remember when I told y'all, well, you might not remember this might be the

Iyanna Vaughn:

first episode with me, but in episodes two and three, I talked about like the

Iyanna Vaughn:

habits of a CEO with healthy cashflow is that they pay themselves well,

Iyanna Vaughn:

consistently, and that helps them better improve their businesses because they're

Iyanna Vaughn:

actually not resenting their business since they're paying themselves well.

Iyanna Vaughn:

So, with our clients during a legacy meeting, we.

Iyanna Vaughn:

Well, if we're unpacking their personal spending plan, if they're not able

Iyanna Vaughn:

to just yet pay themselves their ideal take on pay, we might go from

Iyanna Vaughn:

50 percent take on pay, maybe 60, 65.

Iyanna Vaughn:

These are all objective because what we'll do is just say, okay, how can

Iyanna Vaughn:

we reduce your personal overhead?

Iyanna Vaughn:

What now that we have an idea of what you typically spend and what I

Iyanna Vaughn:

like them to go like after we Create that personal spending plan They

Iyanna Vaughn:

will use different softwares that will automate their personal finances

Iyanna Vaughn:

so that we can have touch points So we're not doing personal bookkeeping.

Iyanna Vaughn:

I did that before it was it was cute, but we're not doing that anymore.

Iyanna Vaughn:

We're gonna get you on a automated system Like quick and simply quicken

Iyanna Vaughn:

or quick and simply I I really love that You I use it for myself and it's

Iyanna Vaughn:

a way to automate my personal finances.

Iyanna Vaughn:

I can look at my net worth, I can look at my income, look at my

Iyanna Vaughn:

spending and make budgets based off of what I need and what I want.

Iyanna Vaughn:

So we're going to use a system like that or rocket money so that you have

Iyanna Vaughn:

guidelines for your personal while we work on a deep dive of your business finances.

Iyanna Vaughn:

Once we do your spending plan in two weeks, we'll do your cashflow call

Iyanna Vaughn:

and I'll map out your entire year for cash on hand based off of your

Iyanna Vaughn:

recurring revenue in your business, your expenses, what you pay yourself.

Iyanna Vaughn:

And then on the personal side, it'll be your take home pay, your net pay

Iyanna Vaughn:

for your take home pay, your typical expenses that we mapped out in your

Iyanna Vaughn:

personal spending plan to kind of give you an idea of how your cash will look

Iyanna Vaughn:

in both your business and personal.

Iyanna Vaughn:

So as you're paying yourself more, you can do the same thing, right?

Iyanna Vaughn:

You can do the same thing of making sure you have adequate cash on

Iyanna Vaughn:

hand and your personal, making sure that you're obliterating your

Iyanna Vaughn:

debt because now you're not living off of all of your take home pay.

Iyanna Vaughn:

And then it gets into the next profit focus, which is focus number four and

Iyanna Vaughn:

that is getting serious about retirement.

Iyanna Vaughn:

So as a fellow human, I want you to stop avoiding your future,

Iyanna Vaughn:

especially if you're an entrepreneur.

Iyanna Vaughn:

So getting started, even if it's just a little bit, so I do want to have a caveat

Iyanna Vaughn:

with these different profit focuses.

Iyanna Vaughn:

You don't have to wait till one gets to an ideal place to do the other.

Iyanna Vaughn:

It's more so of like focus versus starting.

Iyanna Vaughn:

So even when we first start, you can contribute a little

Iyanna Vaughn:

bit to your retirement.

Iyanna Vaughn:

You can contribute a little bit to your Roth, right?

Iyanna Vaughn:

When we start focusing on it, then we're like, okay, let's.

Iyanna Vaughn:

Maximize those things.

Iyanna Vaughn:

So, you know, this, this could mean like, if you don't have a Roth IRA,

Iyanna Vaughn:

opening a Roth IRA, this could be like a backdoor Roth if your income

Iyanna Vaughn:

is over 161, 000 in the year 2024 or whatever that limit is for the year,

Iyanna Vaughn:

this can be leveraging your HSA.

Iyanna Vaughn:

This can be opening a retirement account in your business, whether

Iyanna Vaughn:

it's a SEP IRA, 401k, simple IRA.

Iyanna Vaughn:

But I won't get into those details in this episode and I'm not going to tell you like

Iyanna Vaughn:

what you need to do, but that's an idea of getting serious about retirement is

Iyanna Vaughn:

opening those different accounts for you.

Iyanna Vaughn:

Especially if you have an S corp in your company and you are an employee of.

Iyanna Vaughn:

You're a company.

Iyanna Vaughn:

You want to consider the future, right?

Iyanna Vaughn:

So you might not want to open a 401k for your business based

Iyanna Vaughn:

off of your business model.

Iyanna Vaughn:

So for me, I want to think of like, if I were to have an employee,

Iyanna Vaughn:

I don't have one at the moment.

Iyanna Vaughn:

I did have some before, I did restructure and now I have contractors,

Iyanna Vaughn:

but if I were to ever evolve back into having an employee, the

Iyanna Vaughn:

retirement account that I have needs to work for every future employee.

Iyanna Vaughn:

So keeping that in mind versus just opening whatever retirement

Iyanna Vaughn:

account that you want or desire that's going to be important.

Iyanna Vaughn:

And then once we get to this focus, we're able to maximize your contribution

Iyanna Vaughn:

so that you can one, take care of your future self, and then also

Iyanna Vaughn:

have that tax benefit in the now.

Iyanna Vaughn:

The fifth and final profit focus is becoming an investor,

Iyanna Vaughn:

becoming an investor.

Iyanna Vaughn:

So now that we've touched on all the profit focuses, it's time to do something

Iyanna Vaughn:

with that excess cash on hand, right?

Iyanna Vaughn:

To increase your wealth.

Iyanna Vaughn:

Focusing on investment, being an investor in your own business looks like the self

Iyanna Vaughn:

directed route that can be becoming an angel investor in small businesses so

Iyanna Vaughn:

that they can have capital to get started.

Iyanna Vaughn:

That can be helping a new business, get started or acquiring

Iyanna Vaughn:

a business that's similar to yours, purchasing that business.

Iyanna Vaughn:

And then being able to make money off of the residuals or the

Iyanna Vaughn:

future profits of said business.

Iyanna Vaughn:

And that could also be real estate investing, like

Iyanna Vaughn:

commercial real estate investing.

Iyanna Vaughn:

So say for instance, you're buying property and it's complimentary

Iyanna Vaughn:

for your business because maybe you have events and it works for you.

Iyanna Vaughn:

Another way is, is you can rent out that event space or rental space so

Iyanna Vaughn:

that you can have cash flow coming in and then you can have that investments.

Iyanna Vaughn:

Or the excess cash that you have, you know, instead of doing a self

Iyanna Vaughn:

directed route, on the business side, you can do that in your personal.

Iyanna Vaughn:

You can put money into your investment accounts because

Iyanna Vaughn:

you do have that excess cash.

Iyanna Vaughn:

And when you're working with the CFO, you're able to have

Iyanna Vaughn:

someone like what we do with our clients we look at stock basis.

Iyanna Vaughn:

So say for instance stock basis is making sure that you're not

Iyanna Vaughn:

paying over in a certain amount where you get tax on capital gains.

Iyanna Vaughn:

So Because you're an S corp.

Iyanna Vaughn:

I do talk about this a lot in my email series.

Iyanna Vaughn:

So it'll be a shameless plug.

Iyanna Vaughn:

Go join the soft, soft life Sundays, where I teach you how to improve

Iyanna Vaughn:

your profit, improve your revenue and pay yourself well on your business.

Iyanna Vaughn:

So now that we went through all of the profit focuses, think of

Iyanna Vaughn:

each focus as a spout, right?

Iyanna Vaughn:

And it might be like the faucet, you're turning it on.

Iyanna Vaughn:

You, it might be like a little bit turned on or like heavy turned on, right.

Iyanna Vaughn:

With all the pressure they can be on at once at full speed, at low speed,

Iyanna Vaughn:

whatever works for your business, wherever works for where you are in life.

Iyanna Vaughn:

Right.

Iyanna Vaughn:

But I like to have it in mind.

Iyanna Vaughn:

So it's like, okay, what focus are we on in this quarter?

Iyanna Vaughn:

You know, what focus are we on in this year?

Iyanna Vaughn:

What, what focus can we like, how can we open the spout or like make a little

Iyanna Vaughn:

bit more pressure in this one spout so that we can get the ball rolling

Iyanna Vaughn:

to get to more pressure in another.

Iyanna Vaughn:

So thinking of like having those faucets come down, right?

Iyanna Vaughn:

And it's beautifully done.

Iyanna Vaughn:

So you might be thinking like after this episode, like I need way more

Iyanna Vaughn:

profit to have healthy cashflow.

Iyanna Vaughn:

But during the profit planning intensive with our clients, you know,

Iyanna Vaughn:

we work with your current cashflow.

Iyanna Vaughn:

We're not trying to promise overnight that you're going to go

Iyanna Vaughn:

from 1000 to 15, 000 cash on hand.

Iyanna Vaughn:

Right.

Iyanna Vaughn:

It's more of a gradual fix, which is more, which is why I like to kind of

Iyanna Vaughn:

think of the profit focus and kind of increase things and have the baseline

Iyanna Vaughn:

and kind of do things for your business and it's incremental growth, right?

Iyanna Vaughn:

And we want to have it to your own ideals, not what everyone

Iyanna Vaughn:

says or things of that nature.

Iyanna Vaughn:

You might think it might take a while for your goals to be accomplished or

Iyanna Vaughn:

your profit focuses to be in order.

Iyanna Vaughn:

And it depends on what you think of a while, right?

Iyanna Vaughn:

Because you're not looking at it or focusing on it it might take long when

Iyanna Vaughn:

you actually focus on it, where it might not, because you need to start

Iyanna Vaughn:

with getting the baseline first and knowing what you need, how you need

Iyanna Vaughn:

to grow and go in your business to reach your success based on your terms.

Iyanna Vaughn:

Hey there, let me know in the comments below, what's your biggest aha

Iyanna Vaughn:

moment when it comes to cash flow or how cash flows in your business?

Iyanna Vaughn:

How will you look at your cash differently moving forward?

Iyanna Vaughn:

If you're ready to learn how to increase your profit in your business

Iyanna Vaughn:

and manage your cash better, join my weekly series, Soft Life Sundays.

Iyanna Vaughn:

I want you to avoid living paycheck to paycheck, better yet,

Iyanna Vaughn:

Stripe payout to Stripe payout.

Iyanna Vaughn:

You need visibility in your personal funds so that you can pay yourself well.

Iyanna Vaughn:

The Soft Life Sunday series will give you tips to uncover what you need

Iyanna Vaughn:

to pay yourself to avoid living on 100 percent of your take home pay

Iyanna Vaughn:

so that you can stop surviving and thrive, save, and invest personally,

Iyanna Vaughn:

personally to hit your legacy goals.

Iyanna Vaughn:

Go to lovelyfinancials.

Iyanna Vaughn:

com slash Sunday to get started.

Iyanna Vaughn:

If you're a woman growing your business and family and want to

Iyanna Vaughn:

have your business build personal wealth and legacy to subscribe.

Iyanna Vaughn:

Subscribe to either YouTube or wherever you listen to your favorite podcasts.

Iyanna Vaughn:

I'm on a mission to help a hundred women reach at least 1 million and

Iyanna Vaughn:

net worth to create generational wealth and break generational curses.

Iyanna Vaughn:

If this aligns with you, I'd love to have you be a part of the community.

Iyanna Vaughn:

So stay tuned for more episodes on Harmonious Wealth.

Iyanna Vaughn:

Hey there girlfriend, if you're ready to finally have the lifestyle

Iyanna Vaughn:

and legacy to show for your business success, I would love for you to

Iyanna Vaughn:

click that subscribe button on your favorite podcast app or YouTube.

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