Transcript Episode 173 – Implementing a Quarterly Review Process for Your Nonprofit on The Prosperous Nonprofit

[00:00:00] Stephanie Skryzowski: Welcome to the prosperous nonprofit, the podcast for leaders who are building financially sustainable and impactful nonprofits and changing the world. I’m Stephanie Skrzewski, a chief financial officer and founder and CEO of 100 degrees consulting. My personal mission is to empower leaders to better understand their numbers, to grow their impact and their income.

On this show, we talk to people who are leading the nonprofit sector in new. Innovative, disruptive, and entrepreneurial ways creating organizations that fuel their lives, their hearts, and their communities. Let’s dive in.

Hello. Welcome back to the prosperous nonprofit. I’m your host, Stephanie Skrzewski, and I am here to talk to you today about my quarterly review process. So this is something that I [00:01:00] like to do at the end of every quarter, and I kind of do a little bit more of a deep dive than I would normally do on a monthly basis.

And the time of recording is at the end of Q1, 2024. And so I just did this process actually over the weekend, which is not typically how I roll, but I did have some free space and time to think. And so I, I spent some time this weekend. Doing my quarterly review and I kind of wanted to walk you through it step by step.

And so that way you can think about implementing a quarterly review process in your own organization and maybe even in your own life. So I wanted to kind of share a little bit about what I do to review every single quarter. So the first thing that I do is, you know, you know where I’m going with this.

What’s your guess? I look at my numbers. Yes, I do. So the first thing that I do is I look at my numbers. So we call it our finance workbook, [00:02:00] which we also use with all of our clients. It’s a forecast where we also plug in our actuals every single month. And so January and February, we’re already in there, but I went in and updated March as well.

So now I have a quarterly data in all of our KPI trackers, but first looking at the financials. And now I’m looking at not only March, but I’m looking at the quarter. Um, And so kind of doing a little bit of a deep dive into, okay, how did this quarter go? What was our revenue compared to what we had planned for revenue?

What were the expenses? And when I look at expenses, I’m looking at especially any big variances. So I look at the three months compared to each other and I’m seeing like, where are things jumping out? Oh, we spent 10, 000 in this line item where the past two months we only spent 4, 000 what’s going on there.

Okay. So I have QuickBooks open at the same time, and so I’m clicking into QuickBooks and looking at okay, what were these anomalies caused by? And so for us, I was looking at our [00:03:00] revenue, and our revenue is on track for our annual goal, um, and so that’s that. That’s good. Our expenses are a bit higher this quarter because we had our team retreat.

And so that involved, obviously it was, you know, we, everybody had to fly to, to come together and, um, it was more expensive than a normal month or a normal quarter would be. So I was like, okay. Dug into what those anomalies were and saw that it was because of the team retreat. And so yeah, so looked in depth at revenue, in depth, at expenses, and then zoomed out and compared that to, um, to our, what our goals are for the year.

I also like to look at some financial benchmarks for us, and so. Basically, I take our revenue number and then this is sort of like a modified version of profit first. Okay, friends, if you have not read the book profit first by Mike Michalowicz, it is a game changer for the way that you’re looking at your money, um, [00:04:00] managing the finances of your organization.

Now, um, he wrote it for small businesses, but it is super applicable to nonprofits as well. You just have to kind of change, change your thinking, change some terms a little bit, but. The gist of it is that you take your profit first, right? So instead of saying, okay, we brought in say 100, 000 in revenue and then we spent say 80, 000 on expenses and, um, you know, for a small business, maybe 10, 000 in taxes and, You know, 5, 000 to pay myself or whatever it might be.

And now we only have like a couple thousand dollars left over with a hundred thousand dollars in revenue. Like this sucks because you’re taking your profit last, right? So he really flips the script and has you take your profit first. So if you make a hundred thousand dollars, he’s saying, okay, 20 percent should be profit.

Great. Take that 20 percent and move that into another bank account. So you can’t touch it. You can’t see it. Great. Now you have, you know, you’re going to spend 40 percent on expenses. You’re going to put this amount aside for taxes and you put it all into [00:05:00] separate bank accounts. And so it’s really visual, um, in that, okay, now all of your money is just sitting in one account.

And so for nonprofits, I think this also could be. Um, super helpful, right? And we don’t call it profit in the nonprofit space, but, um, it’s savings, right? It’s our cash reserve. And so we could say, okay, well, we’re going to take our cash reserve first. We’re going to make sure that we’re setting aside money for our cash reserve to make our organization more sustainable and be able to carry that impact into the future.

And then after that, then we realize how much money we have left to spend on expenses, right? And you adjust accordingly. Anyway, that was a bit of a tangent to tell you that there are metrics that I look at every quarter related to our financials. And so I’m looking at our revenue. And then I have a goal percentage of our revenue that, that should go to profit, right?

So, um, let’s just say it’s 20%. So I check, okay, well, was our profit 20%? Was [00:06:00] it higher? Was it lower? Um, then we have a percentage that should go towards our operating expenses and let’s say that’s 50%, right? So where our operating expense is 50 percent of revenue. Or were they higher or were they lower? And a percentage for taxes, um, a percentage for our team, you know?

And so when I did this, it was really interesting. Um, our profit was lower than our goal, than we wanted it to be. Our operating expenses were a bit higher than we wanted them to be. And our team was a bit higher than we wanted it to be as well. Um, and so, Yeah. So that’s good sort of fuel for us to figure out, okay, well, what do we need to change next quarter?

Right. So zooming out and looking not only at our financials, right. I’m not looking at just a P and L I’m going both directions. Right. So I’m going deeper where I’m digging into the detail in QuickBooks to see like, okay, what are the anomalies? Does this look right? But then I’m also zooming out, right.

I’m zooming in and then I’m zooming [00:07:00] out. To figure out like, okay, well, how close or how far away are we from our goals? Right? So what do we need to really make sure we’re working on for, uh, for next quarter? Um, so that’s what I’m doing. The first thing is I’m digging deep into the numbers. The second thing I’m doing is looking at our overall.

other KPIs that are not necessarily related to the financials. So we have a company scorecard that I look at every single month and it includes KPIs, key performance indicators for finance, for marketing, for Sales and client relations for client services for operations. And there are a few metrics in each of those departments that I’m looking at every single month.

And now I look at also every single quarter, again, kind of zooming out. To look at the big picture with each of these departments. So we already talked about finance. Like I said, I’ve got some metrics that I’m looking [00:08:00] at in terms of marketing, um, things like social media numbers. I’m looking at our email numbers, number of email subscribers, how many.

Email subscribers, are we adding because again, if I sort of zoom out on a quarterly basis, I’m easily able to think about like, okay, well, what activities did I do this quarter to generate these results? Like, oh, I barely did anything and I got all these new email subscribers or, oh wow, we put a lot of effort into this and the results are just not adding up.

That can give you a really good idea of. Okay. Well, what do we need to change next quarter? Right? And sometimes a month, 30 days is not really long enough to see the results of your efforts and you need a little bit longer. And that’s why looking at this on a quarterly basis is a great idea. So first I’ve looked at our financials.

The second I’m looking at our key performance indicators, our KPIs that we have on our, our company scorecard. And if [00:09:00] you don’t have KPIs for your organization, I would really. I would definitely think about, okay, well, what are the most important things that we need to be tracking that we need to be.

measuring and what does impact look like to us, right? And track those on a monthly basis. Like for some of our KPIs are how many clients do we have? What is our average monthly retainer? What’s our client retention rate? What is our average client lifespan? Um, how many new like education agreements are we signing for us to do workshops or, um, webinars with, uh, with clients?

with other partners, um, that we also track things around our client services, like how many of our client’s books are closed by a certain date. Um, so there’s lots of things that we are tracking here that are really important to us. It’s going to look very different than what was important to you, right?

So just making sure that you understand, [00:10:00] okay, what are our most important pieces here? And then start to track them every month. And then again, I use this quarterly sort of interval. To step back and look like, Oh, okay. For the past quarter, we’ve been really down in say, adding new clients. What’s going on?

Do we need to ramp up our efforts there? Right? So that’s the second thing I do is look at our KPIs. Now, the next thing I do. on a quarterly basis is I compare our quarter to our annual goals. And so we use something called the Vision Traction Organizer, and this is from the book. Okay. I think it’s from the book Rocket Fuel, um, and it’s from the Entrepreneurial Operating System.

So EOS. I don’t know if you’ve heard of this. before. Um, but EOS is sort of a methodology for basically running a small business, running a startup. And so we use this template and I really like the template. I may have talked about this before on the podcast, but if you just [00:11:00] Google vision traction organizer, um, I’m pretty sure you can get a free template, but we use this to help plan our year.

Um, and again, this can really be applied to your nonprofit as well. It’s certainly not, um, unique to only businesses, but anyway, I compare what we did in the quarter to our one year plan. Basically the VTO has you lay out very simply, what is your 10 year target? What is the three year picture look like?

And then what’s your one year plan? And so I always come back to. both the one year plan and the three year picture and say, okay, well for the one year plan, um, what did we do in this quarter that helped get us closer to our one year plan? And so I sat with and just looked at our one year plan and kind of highlighted some of the things that we did in Q1.

And I, I literally highlighted it in the spreadsheet, just highlighted what we’re getting closer to, what we’re doing really well at, um, in green. And then maybe the areas [00:12:00] where we didn’t really make a whole lot of progress. progress in this quarter, um, in yellow and things that we need to work on a little bit more.

And then of course things change, right? Like I was looking at our Q1 priorities and I’m thinking, Oh, I like literally did not even touch that particular, um, activity, that project that I thought I was going to do. And, uh, and that’s okay because our priorities shifted and that’s just no longer a priority.

We’re going a different direction. And so that’s the third thing I do is I compare. Um, our Q1 results, our Q1, um, activities with our big goals for the year. I also do zoom out and look like, okay, our three year picture, what does that look like? And are we getting ourselves closer to that with what happened in Q1?

And you know, I’m not looking at like every single activity or even every single week. And did we make progress every single week? It’s more like the big picture. So I really love using a quarterly cadence to look at the big picture of your [00:13:00] organization and maybe not get so lost in the details. So for me, this requires some time and some brain space and, um, just some like, Um, extra capacity, uh, and spaciousness in my calendar to be able to do this, hence why I did it on a Sunday evening after my daughters were in bed versus trying to do it like in between meetings.

Right. I just need a little bit more space to think big and to really just have a quiet moment. And so that’s the third thing I do is compare the Q1 activities to. What we had plans for the year and just assessing, all right, are we getting closer to our goals for the year?

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And then finally, the last step. thing that I do on a quarterly basis is I just write out our wins. I write out our wins and our challenges and I do it by hand in an old school notebook. So what I did last night actually, um, was looking back on Q1, it, in some [00:15:00] ways it felt hard for us. We definitely had our fair share of challenges, but I was like, man, we actually kind of rocked it and I wanted to, um, to share it with my leadership team.

And so I just wrote down all the wins. that I could think of, and it was a really good activity. To both encourage me a little bit. And also like, how can we then build on the momentum of this quarter’s wins to take into next quarter? Um, so, you know, we had a couple of tricky situations that we had to deal with in Q1, but I actually wrote them as a win because we navigated them with.

Poise and with ease and really use these situations as an opportunity to do better as a company and an opportunity to do things differently as a company. And so, um, not necessarily something that was all bad. I was really grateful for the way that we were able to handle ourselves in a couple of these situations.

Um, another win of ours, I’m just going to share [00:16:00] my wins with you y’all, um, was hosting an amazing team retreat at like a dream location for me. There’s, you know, I, I shared this in another podcast episode, but we were able to bring everyone together to the Finger Lakes region of Western New York, which is near where I live.

And it was just such a dream to have everyone there together. One of the things that I really focused on in Q1 was. creating partnerships with other organizations that serve nonprofits. And so we were able to start several new partnerships. I was also able to record, um, a lot of podcast episodes on other people’s podcasts, which was a big goal of mine as well.

That was huge. So I noted some of the numbers and our wins there. I was really excited about that. We also brought on a number of new clients and a new bookkeeper onto our team. And so that always feels like a win that organizations, you know, connect with us, that they are willing to trust us with their financials and that we’re also [00:17:00] able to attract amazing talent onto our team as well.

So that always feels like a huge win. And then, um, I had some wins here related to our numbers, which I shared a little bit with you as well. Well, and then a big win for me was, um, the progress that I made on my book. I recorded another episode about this, which y’all will hear if you haven’t listened already.

I’m not sure the timing of these, what’s going to go live first, but that was a huge win going on a book or treat, finishing my proposal, pitching my book to a bunch of agents. Um, that was a huge win as well. So that was my list of wins. You know, I didn’t share all of the numbers with you. So, uh, Right now, but I did put all of the numbers in the wins.

Um, so I said, we, you know, grew this percentage in revenue. I pitched my book to this number of agents. I was on this number of podcasts. So I think that piece is important when you’re documenting your wins. Um, because number one, you’ve probably done way more than. [00:18:00] You think you’ve done and number two, it’s always good to go back and track, you know, and that will also help you set goals for the next quarter.

If you’re like, okay, I, we grew in revenue by 10 percent this quarter. Let’s aim for 15 percent next quarter. You kind of have that benchmark to go by, which I, you know, y’all know, I love a benchmark. I love those numbers. Um, so that’s my last step. Actually, I guess sort of second to last or part A of the last step is writing down our wins because not all of them are necessarily something that’s trackable with a, um, with a KPI.

Like for example, going on my book retreat and finishing my proposal, sure, I guess I could have some KPIs around that, but not really. Like it doesn’t really make sense for our company, but that was a big win for me. And so I added it to our list. So think about that. Maybe there are some. Um, more qualitative wins that aren’t necessarily captured in a scorecard for your organization [00:19:00] with KPIs, but are really important to you.

So I love writing down my wins. And then the immediate thing I did after that was writing down our Q2 rocks. And so the Vision Traction Organizer, they call your rocks, those things that like you must do in that quarter, things that are like everything else needs to go around these things. Cause these are the things that you are 100%.

going to do. They are what is driving you towards those one year goals. And so, um, so right after I did the Q1 wins, I wrote down our Q2 rocks. And I think that was really helpful in sort of spearheading conversations with the team. It’s like, all right, if we want to continue moving towards these goals that we all set at the beginning of the year, here’s what we really need to focus on.

And in Q2. And so, um, all of these are, are, are measurable. Um, and we’ll be able to look at the end of Q2 and say, okay, well, did we accomplish these things? [00:20:00] I think the goal is to keep this on the like, Lower end, right? We don’t want 75 different goals for Q2, but some of the things that we are looking at in Q2, we’ve got some hiring to do.

We first need to, and we kind of actually already have tackled this, figuring out what additional roles we need in our company and then hiring them. Um, so I think we’ve already sort of figured out what we need, uh, but then working on hiring them. I’ve got some metrics in here, some numbers in terms of revenue, in terms of profit, expenses, numbers that we want to hit in Q2.

Um, another big goal for us is to implement a new project management system. And this is going to like change the face of work for all of us, but it’s really going to help our team streamline their workflow, um, hopefully increase profitability as well. And so that’ll be a big, that’s a big rock for Q2.

And then I’ve got some goals for me related to speaking and webinars and the book and, and things like that. So yeah. So that was the last part of what I did and [00:21:00] sort of doing my quarterly review and my quarterly process. Um, the last part of the VTO, the Vision Traction Organizer, is just documenting out any Um, so basically like what is going to get in the way of you being able to accomplish these goals.

And so for me, I haven’t reviewed this with my leadership team yet, but for me, what I’m thinking about is like, okay, well, if we want to sign this number of new clients, do we have enough leads in our pipeline to be able to do that? Another potential issue is team capacity. Like what can my operations team actually do and my capacity, what am I going to actually be able to do?

Sort of figuring out what your issues are up front will help you mitigate them so that you actually can hit all of your rocks for the quarter. And so, for example, one of my potential issues is my capacity, right? I have three clients with audits that are starting in the next 30 days. And so [00:22:00] I would ask myself, okay, well, is it realistic to be on, you know, 10 different podcasts?

You know, attend other people’s podcasts when I have to handle these audits with, you know, with excellence and it takes a lot of attention and time. So maybe not. Right. And so maybe I’m going to adjust my goal accordingly. So that’s super helpful to identify the issues up front so that your goals are realistic and doable.

Right. We don’t want to set pie in the sky goals and not really identify what’s going to hold us back from achieving those goals. Then we get to the end of the quarter and we’re like, Oh, we didn’t do any of those. Well, obviously not because there were all of these issues and roadblocks in your way. So that’s kind of the end of my quarterly review that I do by myself.

Um, and then my next step, which I have not done yet, is to take this to my leadership team. And so if you’re not currently doing some sort of quarterly review with your [00:23:00] leadership team at your organization, I would really encourage you to think about that. Because here’s the thing, when everybody.

understands at least some level of detail on how the organization is performing. They can be an active participant in the solution, in working towards the goals, right? But if you’re the only one that really sees the big picture, then how is everybody else going to be moving in the same direction, um, moving towards achieving that goal with you?

So we really need to all be informed. And so maybe that means you do share more information with the team. Maybe you are sharing more financial information. Or maybe there’s a way that, you know, if you needed to, um, for confidentiality reasons, you’re not able to share as much, but maybe there’s a way that you can still share what you need to share.

So the team feels really bought in. Yeah. So just to recap a quarterly basis, what I’m doing is I’m looking at our numbers. That’s the first thing I’m [00:24:00] doing. I’m going both like a deep, I’m doing a deep dive into detail, but then I’m also zooming out to look at the big picture. Then I’m looking at our KPIs.

So all of our key performance indicators for the company, um, both related to finances, but also looking at, um, for us it’s marketing and sales and client relations, client services, operations for you, it might be. Maybe finances and programs and fundraising, right? You have different KPIs that drive the organization and so figuring out what those are and tracking those and then looking at them, you know, definitely every month, but every quarter kind of doing a deep dive.

So that’s the third thing I do. The next thing I do is come over to our vision traction organizer and compare, you know, what we did this quarter to our one year, three year and 10 year goals to make sure we’re moving in the right direction. Then I write down physically in a notebook. I [00:25:00] wrote down all of our quarterly wins and then I plan for the following quarter, thinking of our, Next quarter’s rocks.

What are those major things that we need to prioritize and work on together as a team to get us closer to our goals for the year? And then of course, sharing all of that with the team. So I hope that was helpful friends. I would love to know if you have a quarterly review or a quarterly deep dive or a quarterly planning process, let me know.

what it is because I’m always looking for new ways to be efficient, to plan, to analyze, to assess. This is my jam. Uh, so y’all know where to find me. I’m always over on Instagram at stephanie. sky. And you can also find us over at 100degreesconsulting. com. And if you are a nonprofit organization that would love some help with this, especially related to your financials, well, you know, that’s what we do.

So come find us over at 100degreesconsulting. [00:26:00] com and you can set up a discovery call with a member of our team to help you figure out how we might be able to support you. All right, friends, I will see you next time. Thanks as always for being here. I appreciate you. Bye. Before you go, I just want to thank you for being here.

To access our show notes and bonus content, visit 100degreespodcast. com. That’s 100degreespodcast. com. And I’ll see you next time.