Your Business Is Making Money… So Why Are You Still Stressed?

Most business owners don’t start their companies because they love numbers… but at some point, the numbers start to matter a lot. And if you’ve ever thought “my business is doing well, so why does money still feel stressful?” you’re not alone. That’s exactly where Holzherr Consulting comes in. Founded by Jared Holzherr, Holzherr Consulting helps business owners get clear, organized, and actually confident when it comes to their finances, from bookkeeping to bigger-picture strategy. Jared is passionate about helping entrepreneurs understand what’s really going on behind the scenes so they can grow smarter, not just busier. He’s also excited to sponsor the next Babes In Business event on May 27 and is looking forward to meeting and working with more incredible businesses in our community. If you’ve been avoiding your numbers or just know there’s more you could be doing, this is a conversation you’ll want to keep reading.

Everyone says “business is booming” — so why do so many owners still

feel broke or stressed about money?

There is a perception that when a business is busy and there is an abundance of

cash in the bank, it is very successful. However, that is not always the case. The

proof is in the pudding they say. The P&L and Balance Sheet tell the true story of how successful and profitable a business really is. Every business needs a set of

financial statements they can rely on so they can keep themselves honest. At the

end of the day, revenue is not bottom-line profit. Just because you have a lot of

revenue, does not mean you are profitable. A lot of businesses are just barely

scrapping by each month by making payroll and paying their rent. By reviewing

your operating expenses and cost of goods sold each month, you can stay on top

of how profitable your company really is. You are able to pinpoint on your

overspending. You are able to see if you are undercharging your customers.

Knowing your numbers make you a responsible business owner who is ready for

growth.

What are the most common money mistakes you see business owners

making without even realizing it?

There are two common money mistakes business owners are making. First is not knowing their numbers. They believe they are “too small” to have an accountant or bookkeeper on their team. Contrary to popular belief, bookkeeping can be very difficult. One complex situation can destroy your books. This creates false narratives of how well your business is doing. You’re going to want to find an accountant/bookkeeper who can grow with your company. This way you can review your financials monthly or quarterly so you know exactly how well you are doing. You should know when/if you are spending too much on subscriptions, marketing, payroll, etc. Looking at a P&L monthly gives you the ability to see how and where you can improve your business operations and thus making your company more profitable.

The second mistake I see is not understanding cash flow. Cash Flow is simply

the movement of cash in and out of your business bank account. The money

coming in (sales, investments, interest earned etc.) VS money going out (rent,

payroll, loan payments, taxes etc.) You may have a very profitable business but if

you’re paying down a loan of $1,500/month that is going to squeeze your cash

each month and make you feel broke but the business could be very profitable.

Another example is if your customers are not paying you on time, you are going

to feel like your business is not doing well because you never have enough cash

in the bank but in reality, you just can’t get your customers to pay in a reasonable

amount of time. You may stress about making payroll each month because you

need a better way of collecting cash. Sometimes, having a Line of Credit with a

bank can help with these issues. You can borrow money in the short term at a

low interest rate so you can cover your expenses each month. A third example

would be if you have a lot of inventory. Businesses with a lot of inventory often

suck up cash because their cash is constantly being spent on more inventory

which is ready to be sold to your customers. An accountant like the ones at

Holzherr Consulting can help you build a Cash Flow analysis so you can better

manage your cash. This way you are able to anticipate and create a plan for

when your low on cash.

For someone thinking “I can’t afford a bookkeeper right now” — what

would you say to them?

If your financials are messy or unclear, you’re probably already paying for it—just

in less obvious ways: missed tax deductions, underpricing, late fees, bad

decisions, or stress-driven choices. A good bookkeeper doesn’t just track

numbers, they give you visibility into your business operations, which is what

actually keeps a business alive. I know businesses are always worried about

paying taxes each year but if you had a set of clean monthly financials, you

would be able to accurately predict what you need to pay each year in taxes, so

tax time is no longer stressful. You need to be looking for an

accountant/bookkeeper who is willing to grow with your business as the years go

on. That is where Holzherr Consulting comes in. We offer very competitive

monthly rates for small businesses. This gives you the ability to work with highly

skilled accountants/bookkeepers at a fraction of the cost.

What actually happens behind the scenes when your books are messy or

not being tracked properly?

On the surface, your business might look fine – Sales are coming in, clients are

happy and things seem to be moving along smoothly. Behind the scenes, your

messy or untracked books are quietly creating massive problems that compound

over time.

For example:

1. Lack of Visibility - You lose visibility into your books and will not be able to

accurately calculate your profit, what your spending and which parts of your

business need work

2. Cash Flow Issues – You get blind sided by large or unforeseen payments that

you are unable to pay for. Your bank account is so low one month, that you

have to fund payroll with your personal funds

3. Overspending – You end up overspending in areas you are not tracking. You

may forget you are paying for a monthly subscription that you no longer need.

A vendor may charge you twice and you don’t even realize

4. Growth becomes Risky – If you want to grow your business, you need to

know where every dollar is going. You don’t want to over hire or invest in the

wrong areas. Keeping clean monthly financials helps you understand where

and when to spend your businesses money that makes the most sense

5. End of the Year Tax Stress – Without monthly financials, you will not be able

to tax plan with your CPA to make sure you have enough to pay your taxes at

the end of the year. You may get hit with a massive tax bill at the end of the

year which you can’t afford to pay.

What are some real examples of how you’ve helped clients go from

overwhelmed to financially in control?

I started my accounting firm by helping a small advertising firm. They decided to

go with a cheap bookkeeper who destroyed their books. For 2 straight years,

they had no idea what their true profitability was but they wanted to grow the

business. There were over $600,000 in mistakes on their financials when I

started. Those mistakes made them look significantly more profitable than they

really were. They would have paid over 90K more in taxes had I not cleaned up

their books. I came in and reconciled two years of financials for them.

Furthermore, I put the correct processes and controls in place, so they were able

to confidently rely on their financials each and every month. We then started

budgeting and forecasting for future periods to a point we were able to accurately

forecast their net income for 6-12 months down the road. This gave them

valuable insight into when and who to hire as they grew the company.

A second example was a restaurant who had no books at all. They were

completely flying blind and did not fully understand where the money was going

each month. They had no idea they were overspending on subscriptions. They

had no idea they were paying $2,000/month in overdraft bank fees. They did not

know the fees for Uber Eats were crushing their profits. When I came in and

helped identify the areas of improvements on their P&L, they were able to turn a struggling business into a very profitable one. We continued to work together to

improve the efficiency of the operation. We switched their meat vendor which

saved them $15,000/year. It was with these small changes; we turned the

business around. All it took was having cleaning monthly financials to analyze.

For businesses constantly dealing with cash flow issues, what are they

usually getting wrong?

In order to have a good handle on Cash Flow, you need a solid accountant or

bookkeeper who can help you build a Cash Flow analysis that will predict how

much cash you will have in the future. That analysis will track everything coming

into your account (Sales/Receivables, Interest earned, donations, grants etc.). It

will also track everything leaving your bank account (vendor payments, payroll,

CC payments, quarterly taxes, payments for inventory etc.). You need to have a

solid understanding of what is coming and going so you can predict how much

cash you will have to operate the business. Something that I see a lot with small

business is that their customers are not paying in 30 days. They give you the run

around and pay in 60-90 days. This can severely effect the cash you have in the

bank and thus effect the operations of your business. You need to make sure you

have a solid collections process to make sure your clients pay on a timely basis.

That is another way Holzherr Consulting can help small businesses – reaching

out to customers to pay on time. Another pitfall of poorly managing your cash is

when you have poor expense control. You need to be able to anticipate all of

your operating expenses for a period of time. This way you are not hit with

unexpected large cash outflows out of your bank which will negatively influence

your business operations. This is why a lot of business owners need a Line of

Credit from a bank. This can be a savior in a period of time when you are low on

cash. You don’t want to be constantly injecting your own capital into the business.

Another way to help yourself if you have cash flow issues is to have a cash

reserve. Leaving 10-50K in the bank and making sure your bank account never

exceeds that balance. This way you can avoid overdraft or bank fees. Holzherr

Consulting builds 13 week Cash Flow analysis statements for your business so

you are able to predict exactly how much cash you will need to run your business

over a given period.

What’s the difference between being busy and being profitable — and how

can owners tell where they stand?

Being profitable and being busy are two completely different scenarios. Just

because you are busy does not mean you are making enough to be considered

profitable. Maybe you need to increase the cost of your product or maybe you

need to reduce your overhead/payroll in order to see a positive net income.

Holzherr Consulting can help make sure you know exactly how profitable you are

month to month. This way you can tweak the necessary areas in your business

so you can turn a profit.

Why are budgeting and forecasting so important, even for small or newer

businesses?

Budgeting and forecasting your financial results are extremely important. It is a

way to determine if you are going to be profitable in the future. You may want to

open another store but unless you put a budget together, you wouldn’t know if

your ready. You unfortunately may be hitting a rough patch as you lost a few

clients and will need to lay off an employee. Also, when you budget, you can look

at how your business is performing against the budget. Holzherr Consulting

emphasizes the importance of comparing your Budget vs your Actual

revenue/expenses each month. This way you can see how efficiently you are

running the business. When you look into the details of your numbers, you can

identify areas of improvement. You can make small adjustments in several key

areas so you can drive profitability.

S-Corp vs LLC — can you break this down in a simple way and explain

when each one actually makes sense?

LLC – This is the simplest form of business structure. If you are making 5-80K in

profit and your income is inconsistent, this makes sense. You are not required to

pay yourself on payroll and can take distributions as you please. You will file a

basic tax return for $250-500.

S-Corp – This is a form of LLC but it is designed for a business making in excess

of 80K in profit (not revenue) who has consistent predictable income. You are

required to pay yourself a “reasonable salary” on payroll. A reasonable salary is

defined as the cost to replace you in the business. There are actual services that

can help you determine that number. This way if the IRS comes knocking, you

can say you did your due diligence. The great thing about an S-Corp is that after

you pay yourself a reasonable salary, you can withdraw the rest of your profits as

Owner Distributions. The reason you want to do this is you do not have to pay

self-employment tax. This is a savings of 15% or more which can be massive.

For example, if you have 50K in profits after paying yourself a reasonable salary,

you would have saved $7,500. Furthermore, the payroll expenses gets written off

on your books. The only downfall of a S-Corp is that your tax return will cost

roughly $1000.

If any of this hit a little too close to home, it might be time to take a closer look at what’s really going on behind the scenes in your business. The good news is you don’t have to figure it out alone. Jared Holzherr of Holzherr Consulting is here to help you get clear, organized, and back in control of your numbers so your business can actually feel as good as it looks on the outside. To learn more, explore his services, or get in touch, visit his website or reach out directly at 201-406-4633 and find him on Instagram @HolzherrConsulting