Conversation with Dondrea Owens
When I ask “do you know your numbers in business” do you get excited or do you get a sick feeling in your stomach?
If you’re like me a few years ago, it’s the sick feeling - but I’m happy to say I’m on the other side of this and I want you to join me.
Today I’m talking with Dondrea Owens who is a Certified Public Accountant that helps creatives and small business owners know their numbers so they can grow their profit, up-level their life and keep more money while doing it. She knows what it’s like to wear all the hats in your business and that’s something we talk about in our conversation. That in order to grow your business to what you dream of it being, you have to put on the CEO hat and think strategically.
But you don’t have to start with a whole bunch of strategy. As a matter of fact, Dondrea shares your first step towards knowing your numbers and having confidence in them and all it involves is a piece of paper and a pen. That’s it! You don’t need to know any fancy software to get started and gain confidence. You have everything you need right now.
If you're ready to learn all about accounting, knowing your numbers and being the CFO of your yoga business, then let's dig in!
How to get comfortable with the numbers in your yoga business
It can be a little intimidating and uncomfortable to talk about money and dive into the finance part of your yoga business.
First of all, know that everyone starts at the very beginning and that's okay!
I encourage you to just get started, as uncomfortable as it may be, and take steps forward to educate yourself. Knowing your numbers is actually going to help you grow your yoga business. And trust me, it gets easier over time.
Now, what does knowing your numbers even mean?
Simply put, it's knowing what money is coming in (income) and what is going out (expenses).
There is an incredible confidence that comes from knowing your numbers. I've heard this time and time again from yoga teachers. It's very empowering to be educated and in control of your finances.
"It's educating yourself with money, growing that muscle, and actually looking at yourself and saying - you know what? I am better with money. I do know more than I knew when I first began. It's just developing confidence." - Dondrea Owens
**This was also a podcast episode (episode #95). Use the player below if you'd prefer to listen to this message.
When it comes to finance in your yoga business, start simple
Here are a few simple steps to getting started:
Make sure you have a separate bank account for your business.
Start with a spreadsheet or even a pen and paper!
Write down all of your expenses and then your income.
Find your "magic number" - See below!
Having this general idea of what is coming in and going out makes transitioning to an accounting software so much easier when the time comes for that.
Finding the magic number in your yoga business
First, take a piece of paper and write down all of your expenses. Print out the last three months of your bank statement and go back to look at what's there. This is your first number.
Now that you see all of your expenses, what do you need to pay yourself each month? This is your second number. When you add those two numbers together, you get the "magic number!" This is your break-even point in your business. This is the number that you need to bring in every month just to cover the basics. Knowing what ENOUGH is is so powerful. What do you really need to pay your bills and keep your yoga business running?
"Knowing this number should take so much pressure off of you! I see people make goals all the time with no basis behind them. Start where you are and then let's build on that." - Dondrea Owens
Bookkeepers, Accountants, CFO - What's the difference?
What is the difference between bookkeepers, accountants, and CFOs? Who do you need to hire in your yoga business - and when?
There are some important distinctions between all three of roles and it's a progression as your business grows.
This is the place to start. You want a tax accountant that you trust to prepare your tax returns for you. These are the people who can represent you in the event you are audited. No one else can do that. They are required to maintain professional standards and get re-certified annually in order to be up to date on the tax laws so they can serve you well.
Tip: Get a tax accountant so you and your business are protected.
After you get a tax accountant, your next step is to find a monthly bookkeeper who is well-versed in your type of business (yoga or wellness). You want someone who understands your business so that they can present reports to you in a way that makes sense. They will ask you what your difference service lines are (your different income streams like group classes, online courses, a membership, etc) and can give you a breakdown on where exactly your money is coming from.
Tip: Have a consultation with a potential bookkeeper first. Make sure the pricing and their description of services is very clear. At a minimum, a bookkeeper should be categorizing your transactions, reconciling to the bank statement, and producing a report from the software for you. Ask them if they have worked with anyone in your industry before and if they can provide you with referrals.
CFO (Chief Financial Officer)
When you start to grow and bring on employees, then you want to think about bringing on a CFO who can help you strategize forward. Everything before this point is just historical data. CFOs will analyze your numbers and t