Transcript Episode 13

Transcript Episode 13: Behind The Scenes Of How I Spend Money In My Business

Transcript Episode 13

Stephanie Skryzowski:

Welcome to the 100 Degrees of Entrepreneurship podcast, the show for purpose-driven entrepreneurs who want to get inspired to step outside of your comfort zone, expand it to your purpose, and grow your business in a big way. I’m your host, Stephanie Skryzowski, a globetrotting CFO, whose mission is to empower leaders to better understand their numbers, to grow their impact and their income. Let’s dive in.

Hello, friends. Today we are getting into some numbers. Now, do not run away from me. I promise we are not going to get too technical, but I am going to share with you how I spend my money in my business. I’m going to share all the dirty details with you, and this is going to be a good one. I’m really excited because you know what? I always tell our clients that where you spend your money really reflects what you value. And so on the flip side, as we are building our profit plans, I always say, make sure to build expenses in there for the things that you value. If you really value your team and making your team really feel united and supported, then make sure you are putting money into your plan to actually execute that, right? So our money and the way we spend it really reflects our values.

Now, really quickly. If you don’t already have a template for planning out all of your expenses, I have one for you. If you go to, you can download a free copy of our Profit Playbook, which is this amazing Excel sheet that allows you to map out your revenue and your expenses by month as well as your cash flow so you will know at any given point in time how much money you’re going to have in the bank in the future. So this is a great template to really help you understand your numbers really, really easily.

Okay, so let’s dive in. So what I did in order to kind of come up with some data to share with you today was I ran a profit and loss statement from QuickBooks Online, which is where we keep our books for all of time. And for all of time, for me, that’s about five years. I started the business in late 2015, and really started tracking everything in QuickBooks in 2016. So I’ve got just about five years of data. And included in here, what I did actually was I ran a profit and loss by year. So I could see a column for 2016, a column for 2017, 2018, 2019, 2020, et cetera.

So if you’re kind of following along with me, and if you’re listening to this in front of your computer, awesome. Do the same thing. Go into QuickBooks and run a P&L for the entire history of your business, and then have the columns separate by a year. So this is going to help you kind of see that bigger picture and kind of follow along with what I’m talking about today. So if you know, the P&L the top part is revenue, your income, right, then your expenses. And so today I’m really focusing on expenses, because again, I am going to share with you exactly how I spend my money in my business.

So if I were to break this down by the biggest sort of categories, I kind of group them into a few different things. So first of all, our salaries and benefits. So I have a team right now that is made up of some contractors and some employees, full-time employees and part-time employees. So under salaries and benefits are my full-time employees, as well as all of their payroll taxes and retirement benefits. And right now I have retirement benefits for myself. I don’t offer them to the team yet, but hope to do that very soon in the future.

But I will say too, when I’m saying salaries, I include my own salary because you know what? Your own salary, your pay is an expense to your business. If you are structured as an S corp, you are required to be a W2 employee of your company and pay yourself a salary. And I don’t like to look at financials without the owner salary included because that really is, that’s an expense to your business. You need to work for pay. So if you’re not paying yourself yet, that’s a whole other conversation that we will 100% get to another day. But right now, just for the sake of this, we’re talking about salaries and benefits. That’s one category. Contractors is another big category. So I have contractors for operations, for marketing, for some of our client work as well. And some other smaller projects along the way fall under contractors.

The next biggest category is software. So if you’re an online business owner, there’s a lot of software that we have, right? There’s QuickBooks subscriptions. There’s this plugin. There’s your communication software, G Suite, acuity. There’s all the things, right? So that’s the next biggest one. Salaries and benefits, contractors, software.

The next biggest one is education. So under here, I include any courses, any coaching, masterminds. Anything that I am spending money on to further my own professional development goes under this category. And so the next one is travel. Okay. Pre-2020, I did a significant amount of travel for conferences to go visit clients, to go to masterminds. So travel is the category. And then the last one is sort of administrative/professional support. So my CPA. Yes, I am a CFO. I am a numbers person, but I still have a CPA. A CPA is a tax professional that knows what they are doing when it comes to the IRS. So I have a CPA and legal support. So along the way, I’ve had different legal fees for making sure my contracts are in place for different situations I have come up. Legal is in there as well. It’s really important to make sure we’re budgeting for all these things. Okay. So to recap, over the last five years in my business, the major categories that I’ve spent money on are salaries, contractors, software, education, travel, and professional fees.

So what are the percentages? Actually, wait, before we talk about the percentages, I will say, I am not including taxes and I am not including owner’s draws. Now, why am I not including taxes? I’m not including taxes because taxes vary for every single person depending on the way your business is structured, depending on the way that your taxes are filed. Are you married? Are you single? Do you file jointly married, or do you file as separate even though you’re married? It depends on your income. Do you have spousal income that is included as well? Do you have real estate income? There are so many variables that everyone’s tax situation is wildly different. So I’m not including taxes here because I don’t think that there’s a sort of apples to apples type comparison we can do.

I’m also not including owner’s draws because owner’s draws vary for every single business out there. Now I am including my salary because I’m a W2 employee of my business and my salary is an expense, but my owner’s draws or my distributions are not an expense to my business. I can take out as much or as little as I want from my business. So I’m not including that. So just so you can kind of visualize what I’m including, what I’m not including. I am including just really the direct expenses, what it costs to run my business. Okay.

So over the past five years, the biggest expense by far has been salaries and contractors is right behind it. So from 2016 to 2020, I spent about 48% of my expenses went towards salaries and benefits. And again, when I say benefits, I mean at my own retirement account, as well as just payroll taxes for my employees. And at this point when I’m recording this in early 2021, I have three employees and I have four contractors. Well, I guess three employees plus myself. So four employees total of the business and four contractors. So 48%, almost half of my expenses are going towards paying people, including myself. Now the second biggest expense contractors, 20%. So I’m spending 20% of my expenses on my contractor. So add those together if we want know just people costs, 68% of my expenses go towards people.

Now let’s make this really easy. Let’s just use a nice round number. Let’s say I have a hundred thousand dollars in expenses. So I’m telling you that $48,000 are going towards salaries, $20,000 are going towards contractors and total $68,000 out of my hypothetical hundred K in expenses are to people. So it’s really interesting. Is there a right or wrong number to this? I don’t think so. I think it really depends on your business model, right? My business model is a one on one consulting done for you service business. So I think it only makes sense that most of my money, 68% of my money is being spent on people to help provide those services to our clients.

Now, if you had a business that was entirely say digital products, and you’re not really trading time for money, like my business is like an agency model is, and you are still spending 68% of your expenses on your team, that might raise a little bit of a red flag. Let’s dive into this a little bit deeper. That’s not to say that it’s completely wrong or right. It’s just saying like, okay, let’s figure out what’s going on here if we’re spending nearly 70% of our expenses on people when our business model is not really tied to people. Okay. So 68% on people.

What’s the next biggest expense? The next biggest expense is only 12%. So again, with this pretend hundred thousand dollars in expenses, $12,000 is going towards software. Software is my next biggest expense after people, which I guess thinking about it, it kind of makes sense, right? Because software is like a fake person. Software is like the little robot that’s doing the things that a person would have done before we had the software like Acuity Scheduling for example. If I didn’t have Acuity, I would have to have my assistant scheduling all my meetings for me, or Zoom is another software, or we have a special software that helps you import really, really big Excel sheets into QuickBooks. So all of that software combined is 12% of my expenses.

So the next one. Now here’s where we’re getting a little bit into the conversation about what you value in your business. So the next one was education. And remember I included courses, coaching, and masterminds into this category and it’s 10%. So I am essentially reinvesting back into my business. Ten percent of my expenses are going towards education. Now, when it was just me or when it was just me and one or two other people, it was mostly education for myself. I was taking courses and I had invested since literally day one, actually day zero of my business. I had a business coach before I had a business. So I invested in that from day one. And I’ve done a couple of masterminds over the years as well that were pretty big investments, as well as a couple of big courses as well. So the course of five years, 10% of my money has gone to education.

Now, has it all been life-changing? No. Have I gotten the return on that 10% or in this sort of pretend numbers $10,000 out of my a hundred thousand in expenses? Yes, tenfold. And that’s something that, as an entrepreneur, I really value being able to continuously grow. And if you’re working in a corporate job or you’re working for somebody else, maybe you’ve got some mandatory continuing professional education that you have to do for certain professions, or maybe there’d be a course here and there at this big corporation that would pop up, but it’s not really developing you as a person. It’s just kind of like, that’s just something I have to do. Whereas I feel like education as an entrepreneur is both professional development and really personal development. And I’ve just loved what I’ve invested in. And it’s something that I’m always on the lookout for the next piece of education that I want to bring into my life and into my business. So 10% of my expenses go to education.

Next is travel. And 5% of my expenses have gone to travel. Now if 2020 was not what it was, if 2020 was not COVID, this number definitely would have been much bigger. I had lots of conferences planned. I’m still a little bit mourning the fact that I didn’t get to go to all these amazing places that I was supposed to go if conferences had happened in person, but you know what? It’s for the better. I still got to do them virtually. It’s just I didn’t get to go to Denver or Seattle, which are two places I’ve never been before and would love to. Anyway, so travel was 5%. Probably would have been higher if not for COVID.

And then the last category was professional fees or sort of administration of the business. And that was 5% as well. And that’s my CPA and legal support. And if you’re listening to this and kind of starting to sketch out, okay, well, I have a service business as well, kind of thinking about how my expenses should be laid out, please don’t forget legal. Please don’t forget your CPA, your tax accountant, or even a bookkeeper. These things are so important to the ongoing success of your business, to the sustainability of your business. I mean, one bad contract could take your business out. And I don’t say that lightly, and I’m not really joking around, but there were times in my business where I didn’t have a good contract and it nearly did take me out both emotionally and financially. So this is really important to budget for.

And if you think about it in the grand scheme of things, a $300 contract template from an attorney sounds like a lot, or paying a thousand dollars to have a tax accountant doing your taxes and reviewing your numbers seems like a lot in the moment. It seemed like a lot for me to. I’ve had CPA bills or legal bills and I’m like, “Ugh, couldn’t I just have done this myself or Googled it or something? This is so expensive.” But I look back now and 5% of my total expenses is a drop in the bucket. It’s nothing. It’s nothing. Five percent of my total expenses spent on something that is going to help my business keep going and continue to be sustainable and to not run into any issues with the law, with the IRS, it is worth it. It is worth the peace of mind, my friends.

So if you are thinking about it, if you’re hesitating, because you’re like, “Ugh, just seemed like so much money,” I totally understand because I felt the same way. But 5% of my total expenses, again, on my fake $100,000 in expenses, only five grand on this kind of thing? So worth it. It is worth the sleep that you will get at night, knowing that you are protected and everything is legit.

So that is how over the past five years I have spent my money. The most money is going to my people and then my software, which are like my robot people, right? And then education, because that’s something I really, really value. Travel and professional fees.

You hear me talk all the time about how important it is to know your numbers as a business owner, but you may be thinking, well, how in the world do I do that? Where do I even begin? So I have a free resource for you. The Profit Playbook is an amazing template that you spend about 15 minutes getting it all set up and you can literally see into the future of your business revenue, expenses, cashflow just like a crystal ball. It is a huge resource that will absolutely help you create a roadmap to reach your goals in your business. It is for free over at

So there have been some anomalies in my business over the years. And I was looking at my P&L in preparation for this episode. And a couple of things popped out to me. I’m looking at the P&L again by year. So I’m looking. I ran the P&L total for the entire life of my business, and then separated the columns into years. You can very easily do this in QuickBooks. And some years were a lot bigger than others. And so I wanted to just tell you some of the biggest expenses that were sort of anomalies. Some years, I did have a lot bigger expenses than other years. And I wanted to share with you what those were in case you’re thinking about making a big investment into your business as well.

So one of my biggest expenses was growing contractors to employees. So contractors that started with a monthly retainer of maybe a thousand dollars a month growing into very, very competitive salaries. So that’s a big difference. And then you’ve also got to add in employer payroll taxes, and that’s an additional expense for the business as well. So making that shift was very costly to my business, but I would not change that for anything. I have loved having full-time employees in my business because I think it really shows from my perspective, my commitment to my team, and it shows me their commitment to our clients and to our business. And so I’ve really loved that. And it just helped sort of bring us together really and feel more like a cohesive team. Even though we don’t see each other in person because we’re all over the country, it’s helped us feel more cohesive because we’re kind of all in this together. We’re all working towards the same goals and towards the same cause versus sort of corralling a team of contractors who also have all kinds of other work and other things going on.

That being said, there’s nothing wrong with that. That is 100% where my business started and we still have contractors on our team today. But for me, after a while, that felt a little bit like herding cats. And I really love the full dedication of a full-time employee. It’s been really my biggest expense over time, but one that I would 100% do all over again.

So the next one, the next big expense is my retirement account. And this is one of those things, again, that it’s like, oh my goodness, number one, why didn’t I do it sooner? But number two, one of those expenses that has been a very large expense, but I would 100% do again in a heartbeat. So for my business, I was recommended by my CPA to open a SEP IRA. And so this is a retirement account through my business where my business can contribute up to 25% of my salary to this retirement account. I happen to have my SEP IRA at Vanguard. I really like Vanguard. Talk to your own tax professional for their advice on what makes sense for your business and for your life and your goals. But that was what was recommended to me. And I’ve been maxing that out every single year since I started it. I think about three years ago now, maybe two years.

So again, huge expense, but I love that it’s a deductible expense on my taxes, but I’m also reaping the benefits of having a fully maxed out retirement account every year. That’s something that’s really important to me. And for the first couple of years of my business, I was not contributing anything to any retirement account and I was not saving anything to the level that I am today. And so if you’re in that place where you’re like, oh my goodness, my profit margins are razor thin and I’m barely scraping by, I get it. If you’re in the beginning stages of your business, it might not be the time to open a retirement account. But if you’re seeing margins that are very healthy and strong and are continuing to trend upwards, please, please save your money and open a retirement account. You will not regret it. I don’t think anybody ever regretted saving money, right? So retirement account, another big expense that I would 100% do again.

So the next one is a mastermind. So I was part of two different masterminds and two different masterminds actually in the same year. So that year was very busy. There were a lot of calls. I was very well-coached, I will say, during that year. But when I first joined the one mastermind in the late 2017, that was the first big investment that I had made into my business. There was an online business owner that I felt really aligned with her values and her purpose. And she was having a mastermind and I had a conversation with her. She said the cost to me. And to be honest, I said, yes, without even really like, oh, maybe I should think twice about this. This is a lot of money. I said, yes. And it was so, so, so worth it.

So if you’re thinking about a mastermind, first of all, I’ve been part of other masterminds and I have not felt so aligned with. So I think first of all, it’s making sure that the person who’s leading it as well as other people in it that you share similar values, that you are all working towards similar goals. Now, I don’t mean being all in the same industry, but you need to be kind of moving in the same direction. I also wanted to make sure that I was in a room with at least some other people that were a couple levels ahead of me. So even though this mastermind was a huge investment in my business, I feel like it paid off tenfold, twenty fold, thirty fold. I don’t know. I haven’t done the math, but it had a huge, huge return because not only was I introduced to new people who maybe became clients or people who introduced me to people who became clients, but I also learned new techniques and tactics that I could use in my business to help me grow, to introduce new revenue streams to my business.

And third and maybe the most important thing that I got out of these masterminds was the fact that I learned how to think bigger. I learned how to play in a bigger arena. And left to my own devices, I probably would have continued playing kind of small and not settling for status quo, but just been happy with status quo without knowing what the potential was out there. And so the masterminds really helped me to see an even bigger potential than I realized was accessible to me. So that was my third biggest expense over the last five years.

And finally, my last biggest expense, my sort of one-time big chunk of money out the door was our rebrand and website redesign that we did in early 2020. So this was a really big investment and something I had been thinking about for a couple years, but it was a little bit nervous to give the green light on this project. I had had my website, my logo done by somebody that I had found on Etsy in the first month of my business. I knew nothing about creating a website. I did not want to try and do it myself. I don’t know how I actually landed on Etsy. Who knew website designers were even there? But I found somebody on Etsy to do a website and a logo and a “brand design” for $250.

And at the time I hadn’t made any money in my business yet. So $250 seemed like kind of a big investment. But I thought, well, I feel like I need sort of professional image online. So it’s worth it. Let me just pay the 250 bucks to get a website. And that was the website I used for the first four plus years of my business. And you know what? It was fine. I hit six figures. I hit multiple six figures using this website, using this logo that was done by somebody for a couple hundred bucks. So just a little word of encouragement. If you feel like you need all the bells and whistles and all the shiny fancy things to get started or to get to that next level, chances are you really don’t. And I made it multiple years in my business without a fancy website.

So the website was another really large expense in my business that I feel really did pay off because not only did we do just the website, but we also up-leveled our branding. And we also went through extensive sessions where we talked about really what we wanted the brand to feel like and what we represented and what our values are. And I feel like it comes across so much better in our current branding than it ever did with our old logo, our old website. So again, it was a big investment that I do feel like it was worth it.

Now this one is a little bit harder to quantify the ROI, but I knew that as my business was coming up on five years with the same website and the same sort of visual imagery that it felt like it was time. Now I know that I’m not going to have this investment again for several more years. I’m going to stick with this branding and stick with this website for some time now. But I think it was definitely a good time to do it. This was the year.

So we talked about my biggest expenses over the last five years, the different categories in exactly how I spend my money. We talked about some of the one time big expenses that I have invested in over time. And I want to share a little secret with you before we wrap up today on how I am getting even more insight and analysis from my numbers so that not only can I see, okay, what are the major categories I’m spending my money on and what are the big expenses, but I can also see a profit and loss by each of the different activities in my business.

So recently in late 2020, I started using classes within QuickBooks Online to separate expenses into different buckets. So for example, I have the line item in QuickBooks called contractors. Well, I want to know which contractors are for which pieces of my business, that way I can look at both the income and the expenses for each piece of my business and see, okay, what has a profit margin? What does not have a very high profit margin? What do I really need to think about and look at and maybe shift? So for me, the classes that I am using in my business right now are CFO services. So this is our one-on-one work, our done-for-you bookkeeping and CFO services that we provide to our clients. And so I can see all of the revenue from those services and all of the expenses. So the expenses in this column are things like any of my team members that work on our client projects. They are software that is directly tied to serving our clients, things like that.

So the next class I use is coaching. So I have a coaching program. I don’t talk about it too, too much, but I absolutely love coaching other service-based business owners, especially those women that are running finance-related businesses. So maybe you’re a CPA accountant, a bookkeeper, maybe you do CFO work as well. I love coaching them and especially mom business owners. So that’s my favorite. So I do coaching. And so I track the revenue from the coaching as well as any expenses related to coaching. I have a column or a class for our digital products and programs. So we also have our entrepreneurs CFO corner. That is our ongoing membership. We have a course called Master Your Nonprofit Numbers, which you may not even know about, but we’ve had a number of people go through that course for nonprofit leaders. So there are expenses related to that that I want to know how much of my total software costs is related to software to host, to run these digital products and programs.

And then I have operations and team. So operations is just sort of generally anything I need to operate the business that doesn’t really fall into any of the one categories that I mentioned. Zoom kind of tackles all of those different things or Acuity Scheduling. That’s something that I just need to run the business period. It’s not really related to one particular activity.

And then for my team, as my team really grew extensively in 2020, listen, I started 2020 with one CFO, one full-time CFO and one assistant, a very part-time assistant. Over the course of 2020, our team now has four CFOs and marketing director and operations director and an assistant that’s working for me about four times more than the older system was working for me. So we’ve grown extensively. And what that means is that there’s expenses when it comes to having a team that are specifically related to your team, right? So we did a virtual team retreat and we had training for the team and I have bought gifts for the team and the team has needed their own professional development that the business has paid for.

So I really wanted to be able to capture how much money my team was costing me. As the words were just coming out of my mouth, I don’t want it to sound like the team is costing me because it’s really how much money am I investing in my team. That’s a much better way to say it. How much money am I investing in my team?

So in addition to looking at each of these line items, now I can break these line items out by each of the different pieces of my business. So I’ll repeat them again. Our CFO services, our digital products and programs, our coaching, operations, and then team. So not only does everything have a line item from the chart of accounts like contractors, for example, or software, but it is also coated with a class so that then I can see the profit and loss for each of these pieces of my business. So that’s how I’m spending my money.

Now, I would love to give you a little bit more data on where I’m spending my money in terms of percentages for each of those pieces of my business. But here’s what I can tell you. Our CFO services, I’m spending the most money there and I’m making the most money there, right? So we’ve got a pretty strong margin on that. We’re making the money from our clients. And then I have to spend the money to pay our contractors to actually execute the work and to pay for the software. Coaching. There’s not really that many expenses when it comes to coaching. There’s obviously my time and my effort and the resources that we have developed.

But in terms of money going out the door, aside from gifts and some software, there’s not a whole lot there. Digital products and programs, there’s some software pieces, but because these are digital again, the biggest expense is a little bit of software and some of my time. Operations. We try to really keep things lean in the business in terms of our operations and make sure that we’re only spending money on things that are causing us some sort of benefit, whether it’s efficiency or helping us generate revenue or serve our clients, whatever it means. And then our team.

And I think being able to break out our expenses into each of these different categories as well, has been really important because one of my goals in 2019, actually, it might’ve been a goal in 2020 as well, I have to check back to my power sheets, was to really serve my team and support my team well. And so, because that is one of my values and one of my goals, I want to be spending money there, right? Again, remember what I talked about in the beginning where we want to make sure our values and our goals are attached to money and vice versa that what we’re spending on is attached to a goal that we have or a value that we have or something that’s really important to us.

So there you have it. I was really excited to dive into this little analysis for you and really show you how I was spending money in my business, the biggest expenses that I have invested in, in my business over time, as well as a sort of more advanced way that I am classifying transactions in QuickBooks so that I have more information to make better decisions. So this is all stuff that you can do for yourself very, very easily. I promise that I did not break out any kind of CFO wizardry or magic to be able to pull these numbers.

And just a quick reminder, if you want to do this for yourself, go into QuickBooks or whatever software you use, pull your P&L or your profit and loss report for all of time. And for all of time, for most of us, if you’ve been in business for a few years, it’s going to go back a few years. If you’ve been in business for 20 years, maybe just look at the past five. And then you can have it show your columns by year. So what I’m looking at right now shows me all of my account codes and then a column for 2016, 17, 18, 19, 20, and then a total. So I can see five years across the spreadsheet and that’s really all you have to do. That’s it. So it’s very simple and this is really going to help you see, okay, where am I spending my money in my business? What do I value in my business and are the two aligned?

Then, if you want to take it a step further, you can create classes in QuickBooks so that again, you can run a P&L for whatever period of time you want. Say, maybe you just want to look at the last year. So run a P&L for 2020. And then instead of having the columns be the years, have the columns be the classes. Then you can see where where’s my money coming from in each of these parts of my business. And where is my money going? How am I spending my money in each of these parts of my business? And it’s just another way to dig a little bit deeper and make sure that your values are aligned with the way that you’re spending money.

So if you have any questions, you know that I am always here. If you want to start tracking your money, maybe you’re not even there yet. Maybe you’re like, oh my goodness. I’m not even started tracking this stuff, but I need to go, over to And you can grab our free Profit Playbook. It’s an awesome template that will help you sort of start to visualize your numbers in a new way. It’s a spreadsheet that’s very easy to use. You don’t have to do any crazy math or formulas or anything. Plug your numbers in, and you will have a whole new visibility into your business in a way that you’ve never had before.

So I strongly encourage you to do that. This can be part of your monthly money dates, and I’m super excited that you stuck with me. And I would love to know how are you spending money in your business? What did you discover from this episode? Pop over to Instagram and tag me at Stephanie.skry. I would love to know what was your biggest takeaway? How are you spending money? And is it aligned with what you value in your business in your life? I’ll see you next time.

Thanks for listening to the 100 Degrees of Entrepreneurship podcast. To access our show notes and bonus content, visit Make sure to snap a screenshot on your phone of this episode and tag me on Instagram at Stephanie.skry and I’ll be sure to share. Thanks for being here, friends, and I’ll see you next time.

Transcript Episode 13

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