Our Business By the Numbers
Get an inside view of how our bootstrapped service business operates financially.
Photo of the week: Pioneer Works Supper Club dinner with Phoebe Tran, Founder and Chef of Bé Bếp (“baby kitchen” in Vietnamese) which also provides post-partum recovery meals!
Learning by Seeing
Our mission is to help entrepreneurs start-up, and advice on how to run a company’s finances is never as good as seeing how it’s done. Therefore, we’re going to make a habit of providing our company’s financial performance to our readers as we’re starting out on our journey.
Instead of talking high level and big picture, we’re going to go deep and tactical with real life examples from our own experiences.
We’re Already Late
Four months into 2024, the publicly traded tech giants are still in the midst of reporting their 2023 financials along with updated forward looking guidance. However, early stage start-ups operate at different timescales. As long as I’ve been in start-up finance, we were requested to provide prior month’s cash burn and sales numbers internally to the CEO within 3 to 5 days of the month ending. It’s the end of April and we’re looking at Q1 2024 financials. We’re already late.
Why the Rush?
Start-ups operate on speed, and speed can be expensive. The quick turnaround on numbers provides leadership quick feedback to make decisions. More importantly, start-ups tend to lack financial controls, which are standardized processes, checks, and approvals that direct the usage of and safeguard the company’s funds. In the absence of the standardized controls, consistent and close monitoring helps prevent the misuse of funds.
The Background
How We Got Started
My co-founder and I both left our former employer shortly after the start-up had restructured and pivoted the business. We were burnt out from our demanding tech jobs and had increasingly more responsibilities at home as both mothers and “house managers”, for lack of a better term. We were also both frustrated and demoralized by little space there was in early stage start-ups for working moms, so we’re on a mission to help other moms be their own bosses. Overall though we want to help all founders, creators, and startups, because we believe in empowering entrepreneurs in starting up.
Where We Are Now
We started our venture in January 2024, which means this is our first quarter in our new joint venture. It may be an unfair starting point to measure by since we have one consulting client we’re starting with. However, I’m a highly risk averse person with bills to pay, and I wouldn’t consider jumping ship without a bit of recurring income as a cushion. Meaning I always look to start a new business with some immediate revenue.
By every other measure, we are indeed starting out with no product, no clear roadmap, and no clear direction. We form hypotheses, we experiment, we iterate, and we pivot. Rinse and repeat. With each meandering step, we get a little closer *we think* to what we’re hoping to achieve.
Then without further ado, we unveil the numbers.
The Numbers
All of our numbers are on a cash basis, meaning based on actual transactions on banking and credit card statements. Usually corporations are expected to report on accrual based which would follow all the Generally Accepted Accounting Principles (GAAP) Standards. If we get that far, we may transition, but we’d recommend cash basis for any entrepreneur starting out.
LeHerring LLC by the Numbers
Revenue: $24K
$14K from prior year’s work
$10K from current year’s work
Not accounted here is $18K in outstanding Accounts Receivables for work completed but not yet paid
We have been invoicing on average $5000 per month in Q1 2024 to our consulting customers. This will likely remain steady in the first half of Q2 as we continue to focus on building out our business services and go-to-market plan.
Expenses: $5K
Predominantly from software costs ($2.5K) and taxes / licenses / insurance ($1.5K)
Not accounted here is another $2K in outstanding Accounts Payable for some vendor work we’ve contracted out
There are a few expenses we’ll be reviewing and cutting out which should cut out about half of the costs. However, overall spend will increase in Q2 when we bring on more contract work to help speed up our progress.
As a side note, because we’ve been using personal assets such as computer equipment, wifi, our homes as office space, we’re vastly underreporting our expenses. However, since the uses are split between personal and businesses, we’ll exclude those costs. We can revisit them when they become sizable expenses. This approach remains the most conservative approach for reporting for tax purposes (ie higher revenue lower costs means higher taxes).
Net Income: $19K
Cash on Hand: $27K
$19K in net income makes of the bulk of the cash on hand
$8K from prior year(s) consulting profits that are rolled into
Our current monetary goal for 2024 is to generate enough profit for each co-founder to max out our 401K contributions. With $18K in outstanding AR and expected $5K in revenue per month, we’ll likely hit that target by mid-summer.
Everything else we plan to re-invest back into the business likely through more software investments, outsourcing, and advertising.
Assessment to Date
Headwinds
Time constraints: We remain limited in terms of bandwidth because of our caregiver responsibilities. Whenever we try to find more time, we end up losing focus elsewhere.
Split focus: We spent Q1 doing a lot of experimentation, spinning up a lot of new systems, but that also means that we were immensely fragmented. The split focus meant we got less done.
Lack of automation: Some of the tools we’re using now are pretty new and don’t currently integrate well with our workflows. We’ve gotten better with practice, but we will need to automate more of what we do.
Learnings
For most of Q1, we’ve been experimenting with different ways of approaching our go-to-market strategy
Content Creation on Social Media — Instagram, LinkedIn, Pinterest, Reddit, and Facebook
Leveraging Marketplaces — Upwork, Etsy, and Gumroad
Traditional B2B Go-to-Market — High-touch sales, long-form content, and advertising
For our situation, high-touch sales from our referral network outperformed other options in landing us clients. LinkedIn organic traffic, Facebook ads, and our long-form content got us the most consistent eyeballs. Instagram occasionally got us impressions, but engagement from end users was limited from our small sample size.
Wins
Consulting. This is naturally our forte since we’re leveraging our experience most directly here. We’ll need to figure out how to make this at a minimum sustainable and at best scalable. For now, it’s our bread and butter.
Long-form Content. As two founders from somewhat technical backgrounds, we didn’t expect long-form to be our natural leaning, but we can more easily produce 5-10 long-form pieces of content per week than create one Instagram reel. It shows how uncomfortable we are with video creative.
Our Mission. One of the most validating aspects of our journey so far is how much our mission has resonated with the people we’ve talked with. Pursuing a high-powered tech or corporate career, having a family, and managing life all at once is hard. Entrepreneurship is our answer to finding that work life balance, and we think others will want to join us.
Thanks for reading, and see ya next week!
Kim and Jenn