Our Business by the Numbers: April 2024
Practicing what we preach. More discipline and consistent looks at our finances has helped us uncover operational issues from moving from a team 1 to 2.
Photo of the week: Happened to walk by the Jeffrey Deitch gallery in Soho last weekend where Frank Stella’s Recent Works is on exhibit. This is one of five very large sculptures of swirling shapes and colors, standing 16’-18’ tall. Known as a master of reinvention, Frank Stella passed away on May 4, 2024 at the age of 87.
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 basis 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.
Tax basis: We don’t often talk about “tax basis”. For small self-employed individuals operating as a pass-through entity or sole proprietorship, that’s the only basis that really matters. As the business grows and the corporate structure changes, businesses may be on an accrual basis following GAAP standards. Then Tax CPAs will maintain the book to tax difference for tax purposes.
Fun Fact: At one company I worked at, we had an army of actuaries and accountants to report on four different accounting bases!
LeHerring LLC by the Numbers
Revenue: $7K
We collected on $7K in work done from Jan to Mar 2024
Otherwise, April was a slow month. We logged enough hours to generate $4K in revenue, which is sitting in outstanding AR.
Current AR outstanding is $14K (down $4K from month ending March)
Revenue Forecast & Expectations:
May cash revenue will be down from April as we’re still behind on AR billing given our payment terms. However, we expect to bill more hours in May: $6K versus the $4K in April.
June cash revenue should be a major bump. We’ll be collecting on the full AR outstanding of $14K, May’s billing. And, we starting June, we’re moving to a new retainer billing (which pays a flat amount monthly in advance as opposed to arrears).
Jul - Aug is unknown as we see capacity opening up. In other words, we’re losing billable hours. We’re actively building new business pipeline for the summer months.
Expenses: $1K
There were a few recurring costs including insurance, virtual office, and some software.
We’ve trimmed a few annual software items that reduced our spend.
Even after trims, we’re still seeing spend creep from software, which accounts for 60% of our expenses. SaaS subscriptions that renew automatically and have no utility will have to be further trimmed.
Expense Forecast & Expectations:
May expenses will be high (double MoM). We spent funds on travel to attend the AANHPI Night Market event at the Vice President’s residence, which was totally worth it! More to come on how Jenn got invited to the event.
June expenses will be similar to May. We plan to bring on some contract labor to expand our product offerings.
Jul - Aug expenses will be at minimum the same as May and June forecasts. What could increase spend are: 1) expansion into an e-commerce pilot and 2) investment in product research and MVP development. We’re aiming to build up a cash reserve to spend on these expansion and testing efforts.
Net Income: $6K
This is roughly in line with Q1’s net income of $19K. In Jenn’s cynical sentiment, if we were to independently assess our individual earnings, we’d be making 140% of the federal poverty line for a family 3. That’s a pretty low amount! 😂 But I like to include the value and savings we bring as SAHMs to our family as part of the math.
Cash on Hand: $34K
Estimate Caveat: I call this an estimate, because we haven’t consolidated our billings and expenses into one entity.
We’re at 74% of our annual 401K contribution goal with the cash available on hand.
Given our potential expenditures for Jul - Aug, however, we’ll likely need more funds than this. TBD how much. We’ll carve out some time in May to pull together a budget and forecast.
Our Self-Assessment
Headwinds
Time: April showed us how penalizing the lack of childcare is for SAHMs who try to work. Last month, school only covered 50% of a 40-hour workweek.
This is a recurring theme as we juggle our duties at home while launching this venture. Here are some of our other thoughts on this matter:
I also wrote about childcare options when school is out the cost can be prohibitive.
If you ever wondered, here’s also what a SAHM’s salary would be, with all the duties she performs
Social Media: We suck at social media. But, we’ll keep at it in a modified form and in a way that’s still fun (not burdensome) to us.
Learnings
Ventures that failed can still have success. Jenn shut down her first business a decade ago, yet a loyal customer spent years searching for her and her product.
Financial modeling and strategic advisory consulting may have more demand (and be less crowded) than we expected. Marketing seems saturated and harder to differentiate. We’re struggling to make headways there. We’ve just started doing some outreach, and we’ll learn more which services have much demand an better product-market fit for us.
Wins
Organic Keywords: Our content is beginning to rank. We went from 0 (March) to 6 (April) and now at 23 (May).
Quality time with the kids: Both our kids are April babies, and it was spring break! Lots of celebrating and extended family time.
Upcoming Projects
Applying for grants in May. We’re doing this for two main reasons:
Funding is one of the biggest pain points for mom-owned businesses. We need first-hand experience with the application process if we’re going to help other founders.
We want to invest in building MVPs of our product ideas and services and have the marketing budget to test initial response.
We are also dipping our toes into a few other areas:
Reviving an old e-commerce business: Hush hush for now, but watch this space.
Newsletter vs. Blogging vs. Programmatic SEO: Jenn’s domain expertise is SEO. There’s so much we want to try out, that we’ll be using the rest of May to experiment a bit. We’ll come back with learnings (good or bad…)!
Setting up the Back Office: Things like banking, credit cards, and back office software automation. This might get punted until the summer months. We need to have higher confidence that our we’ll get to $100K annual revenue this year.
Thanks for reading, and until next time, happy hustling.
-Jenn & Kim