Business Financial Numbers to Know at the Beginning and Ending of the Year - Episode 124

Do you know your numbers? In this episode, May Yeo Silvers takes listeners beyond the surface of basic profit and loss, into the heart of what truly determines a business’s financial health. With insights grounded in her own entrepreneurial journey with M2 Hospitality and Events4Anyone, May opens up about the often-overlooked aspects of financial analysis that can spell the difference between growth and stagnation.

 

The essence of May’s discussion lies in the critical examination of opening and closing balances, a simple yet profound indicator of a business's profitability over the year. But the journey doesn’t stop at these balances; May delves deeper, examining the intricacies of expenses across various categories such as technology, labor, and marketing. It’s not just about tracking where the money goes but understanding the return on these investments that illuminates the path to informed decision-making.

 

Turning the attention to revenue, May explains the importance of knowing not just how much you earn, but how and where from. This analysis isn’t merely reflective but predictive, guiding where resources should be channeled in the future to maximize profitability.

 

The concept of working capital is demystified as May explains its role in ensuring operational liquidity. She brings practicality to the forefront, advising on how to calculate the necessary working capital to keep the business afloat during tough times.

 

May’s narrative is interspersed with personal anecdotes of efficiency and cost-savings, like her strategic move to consolidate software platforms, showcasing how operational tweaks can lead to significant financial savings.

 

This episode stands as a testament to the power of financial literacy in the entrepreneurial journey. May doesn’t just share a formula for analyzing business finances; she invites her listeners to adopt a mindset shift. By embracing a deeper understanding of their financials, entrepreneurs can unlock new levels of insight, leading to more strategic decisions, optimized profitability, and ultimately, a healthier business.

 

Quotes

• “At the end of the year and at the beginning of the year, I always look at a few numbers and then I make business decisions based on what the numbers are telling me. Emotions come into play, of course, they are taken into consideration, but numbers don't lie.” (2:58 | May Silvers) 

• “So let's just say that your opening balance is $20,000. The opening balance, $20,000, if you're a brand new business. Let's keep this simple. If you're a brand new business, $20,000 you put in at the beginning of the year as a working capital for your business. That means you don't have any revenue come in yet. And then at the end of the year, you can see that your closing balance is $30,000. So you're very happy that you have more money at the end of the year than the beginning of the year.” (5:19 | May Silvers)

• “I also need to know where the revenue came from. So I start looking at, okay, I booked this event, and this event came from where? Who referred me the lead? Or Did it come from Facebook ads? Or did it come from my social media where, you know, people reach out to me based on the content that I created?” (10:00 | May Silvers)

• “So before you go into thinking that, oh, you know what, just cut, cut, cut, save money. I also have to think about the efficiency of the business. doesn't make sense for me to have two separate platforms to do two separate things, whereas I can have a platform that can do it all. So it's not just the money, but also the efficiency of how the business is being run, because the efficiency will ultimately affect how profitable you are.” (19:59 | May Silvers) 

• “My marketing strategy for 2024, is it going to require more working capital? If it's going to require more working capital, how much more? Is $20,000 enough? If $20,000 is enough, which is my working capital for 2023, okay, if $20,000 is sufficient based on the pipeline of the leads or sales that's coming in, so I know that there's more business coming into the business. I can actually take that $10,000 out and then put it in somewhere else where I can earn interest or invest.” (22:03 | May Silvers)

 

Links

If you are looking for a software that allows you to book calls, automate your proposal, contract and invoicing process, project and funds management, HoneyBook, one of the most popular software used by the majority of event prof is for you! If you want to get 50% off for the first year of your subscription, click this link to start a free trial!

Connect with May at: may@events4anyone.com

Website: www.mayyeosilvers.com

LinkedIn: https://www.linkedin.com/in/mayyeosilvers/

Facebook: www.facebook.com/mayyeosilvers

IG: www.instagram.com/mayyeosilvers

TikTok: https://www.tiktok.com/@mayyeosilversofficial

FB private group: https://www.facebook.com/groups/events4anyone

Podcast production and show notes provided by HiveCast.fm