EPISODE 48: Can You Afford to Grow? Using QuickBooks Before You Hire, Buy, or Expand omslagafbeelding

EPISODE 48: Can You Afford to Grow? Using QuickBooks Before You Hire, Buy, or Expand

EPISODE 48: Can You Afford to Grow? Using QuickBooks Before You Hire, Buy, or Expand

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 Episode 48: Can You Afford to Grow? Using QuickBooks Before You Hire, Buy, or ExpandWould you hire someone who costs $70,000 a year if they could bring in $100,000 in new sales? In Erica’s example, materials, subcontractors, and other direct costs use up $60,000 of those sales. That leaves $40,000 to cover a $70,000 position. What looked like a $30,000 gain becomes a $30,000 annual shortfall.In this episode of QuickBooks Mastery for Small Business Success, Erica Northrup and her dad, Lee Davis, work through two questions to ask before you sign a contract, make a job offer, or buy equipment. How much would the decision add to profit? And can the business cover the bills between the day the work starts and the day the customer pays?Free Episode 48 Growth Decision WorksheetBring one decision you’re weighing. This four-page fillable worksheet helps you price it, test a slower start, and decide whether to proceed, wait, or start smaller. Get the free Growth Decision WorksheetKey TakeawaysTrace a strong quarter back to the customers and jobs behind it. One unusually large job can make a permanent increase in payroll or rent look affordable.A $55,000 salary is the starting point for a hiring budget. Add employer payroll costs, benefits, tools, and the time it takes to train someone before they can carry a full workload.A $1,000 monthly payment tells you little about what a $50,000 machine will earn. Count the jobs you expect to use it on, the rental or labor costs it could save, and what it will cost to move, store, and maintain.Loan principal reduces cash and the outstanding loan balance. Interest and depreciation can affect the Profit and Loss. A cash forecast helps you see whether you can make the full payment in a slow month.Questions to Reflect OnIf I win the contract I’m bidding on, how many payrolls will I cover before the first customer payment arrives?Lee describes a business that bought a backhoe for one project and had no trailer to move it to the next. What’s the “trailer” I’ve overlooked in my own estimate?What would make me comfortable saying yes: a second signed job, a minimum cash balance, or a trial rental that shows how often we’ll use the machine?Mentioned in This EpisodeProfit and Loss by month. Compare revenue, gross profit, and operating expenses across busy and slow months.Balance Sheet. Check cash, unpaid customer invoices, vendor bills, and existing debt before taking on another obligation.Statement of Cash Flows. See how much cash operations have generated and how borrowing or equipment purchases affected the bank balance.Job costing, the operating budget, and a separate cash forecast. Use the costs of comparable work to estimate the return, then put expected collections and payments on a calendar.Episode Chapters & Timestamps00:00 – Can you afford to grow?02:40 – Cost the contract before you sign09:31 – What three strong months can hide12:24 – What a $55,000 hire really costs16:05 – How $100,000 in new sales can leave you $30,000 short17:43 – Is the $50,000 machine worth buying?20:35 – Where an equipment loan shows up in QuickBooks23:01 – Three QuickBooks reports to open before you grow26:29 – When to wait, rent, or bring in temporary help29:48 – Can a $1 million business afford a $70,000 hire?32:16 – Build a budget and a separate cash forecast37:11 – Your free Growth Decision WorksheetYour Action Step This WeekOn page 3 of the worksheet, write down your lowest expected cash balance and the minimum reserve you want to protect. Now move one major customer payment back a month. If that puts payroll at risk, use page 4 to record what would need to change before you commit.Continue the ConversationEpisode 45 – Where Did the Money Go? Why Profit and Cash Aren’t the Same ThingEpisode 46 – Are You Actually Making Money? What Your P&L Should Be Telling YouEpisode 47 – How Much Can You Pay Yourself? What Your Business Can Actually AffordRecommended ResourcesWant more help using QuickBooks to make decisions like these? Join the QuickBooks Mastery Course WaitlistUnsure whether the numbers in your reports are reliable? Take the free QuickBooks Clarity ScorecardAbout Lee Davis & CompanyErica Northrup and Lee Davis are the father-daughter team behind Lee Davis & Company. Through QuickBooks consulting, training, and this podcast, they help small-business owners understand their reports and use them to make decisions. Visit Lee Davis & CompanyHave a QuickBooks Question?What’s the hire, purchase, or expansion you’re trying to price? We may feature your question in a future episode. Email Erica and LeeFollow & ShareFollow QuickBooks Mastery for Small Business Success in your favorite podcast app. If you know an owner who’s about to make an offer or sign an equipment loan, share Episode 48 with them. Listen and follow the podcast
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