FinTeam Business Consulting

How's Your Business Doing?

Do You Ever Ask Yourself...

How's my business actually doing?

Are we going to be okay financially

Is my bookkeeper doing a good job?

Why don't I have enough money to pay myself?

Is my business ready to sell

Who can I talk to about my business's finances?

If so, we made assessment this for you!

What's The Drake Check All About?

Why did we start the Drake Check?

Friends, colleagues, and clients would commonly ask our owner, Drake, for feedback on their financial situation so they could get an idea of how they were doing and where they needed to improve. The impact that came out of these meetings was significant

As time went on, Drake started getting pressed for time, but still wanted to help out these businesses. Instead of scrapping these business reviews, we decided to formalize and automate the process so we could efficiently and effectively answer the question we frequently get from business owners: "How is my business actually doing?"

Why should you have a Drake Check on your business?

In its simplest form, the Drake Check is designed to take all of the financial inputs from your business and answer a simple question: are things good or not good? 

We go into much more detail, of course, and are happy to share with you why we believe things are good or not good. We also share where and how you can improve your business from a financial perspective. 

Here are some use-cases for why businesses have scheduled a Drake Check:

  • Profit margins are falling and they want to understand why. 
  • Cash is drying up and they need to know where it's going.
  • Their business got a big windfall and they want to know where to allocate that cash.
  • A business has been using the same bookkeeper for years and no one has checked their work. 
  • The owners are thinking about selling their business and want to know what they can do to maximize their sale price. 

We're convinced that FinTeam is an excellent partner for most small businesses, but we still want your business to financially flourish regardless of whether you work with us or not. 

What's the process for the Drake Check?

We keep it simple, quick, and efficient. 

  • Schedule a time with us to chat; we'd love to hear about your story, business, and dreams.
  • We'll set up an NDA that we will both sign - it ensures that we keep all of your information confidential. 
  • We'll need access to your accounting software (preferably Quickbooks Online) and may add an application to your QBO that we use to automate some of our reporting. 
  • Finally, once the Drake Check is complete (turnaround time is ~one week), we'll set up another meeting to walk through our findings. 

How Do We Do It?

We analyze these five components of your business, grade them, and share areas for optimization:

Profitability

Understanding revenue (recurring vs. one-time) and expenses (fixed vs. variable) is key to assessing business health. Profitability boils down to revenue minus expenses. We can delve deeper by evaluating: Revenue trends, profit margins, concentration risk, cost management, and profitability ratios.

By analyzing these factors, we can assess a business's ability to generate profit and identify areas for improvement.

For more, check out this blog post!

Cash Flow

Profit tells you if a business makes money, but cash flow reveals when that money comes in and goes out. A healthy cash flow ensures a business has enough funds to operate and grow.

We can assess cash flow by looking at its three categories:

Operating Cash Flow (OCF): This is the cash generated from core business activities (sales, expenses, payroll). 
Investing Cash Flow (ICF): This tracks cash used for long-term assets (equipment, investments).
Financing Cash Flow (FCF): This shows how a business raises or repays capital. 

By evaluating these components, we can assess a business's ability to manage cash flow and ensure it has the resources for future success.

See this blog post for more information!

Financial Leverage

Businesses use financial leverage (debt and other financial instruments) to potentially increase the returns their business generates. Leverage acts like a lever, where a small input can yield significant results, but magnify risks.

There are two main debt types:

Long-Term Debt (1+ year): Used for long-term investments like property (more flexibility for repayment).
Short-Term Debt (< 1 year): Used for day-to-day operations or unexpected expenses.

The key is finding the right debt balance. Too much debt can be risky, but a good strategy can accelerate growth.

For more information on financial leverage, including how much debt you should ideally have, check out this blog!

Operational Leverage

Operational leverage analyzes how a company's cost structure, specifically the balance between fixed and variable costs, impacts profits.

Fixed Costs: These remain constant regardless of sales (rent, salaries, insurance). They create a baseline expense that must be covered even with low sales.
Variable Costs: These fluctuate with sales volume (raw materials, commissions, shipping). As sales rise, so do variable costs.

The Degree of Operational Leverage (DOL): DOL measures how sensitive a company's operating income is to sales changes. A higher DOL signifies a greater amplification effect on fluctuations in profitability based on changes in revenue. 

By understanding operational leverage, companies can make informed decisions about pricing, production strategies, and risk management to optimize long-term profitability.

We dive into operational leverage more in this blog

Accounting Processes and Procedures

A well-functioning accounting system provides the foundation for smart business decisions, optimized profits, and achieving financial goals. Let's break down what we evaluate and where we frequently see issues with small business accounting. 

Accounting is the meticulous process of recording, classifying, analyzing, and interpreting financial transactions. This meticulousness ensures reliable data for analysis.

Here's what good accounting looks like:

Accurate Transaction Recording: Every financial exchange, from vendor payments to customer receipts, needs clear details like date, amount, and vendor information.
Vendor Management: Maintaining good records of vendor terms, including payment deadlines and discounts, is crucial. Streamlined recordkeeping simplifies these processes.
Open Communication: Regularly share financial reports and discuss any concerns with your CPA, CFO, and finance team to ensure everyone's on the same page.

By prioritizing good bookkeeping practices and avoiding these common pitfalls, you'll gain the financial insights needed to make informed decisions, achieve your financial goals, and focus on what matters most – running your business.

Check out this blog for more information!

Ready for the Drake Check?

You don't have to pay someone to tell you how your business can financially flourish