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Spa Marketing Made Easy | Spa Business Growth
SMME #429 Using Your Numbers to Make Better Business Decisions with Danielle Hayden
00:29:35
Using Your Numbers to Make Better Business Decisions with Danielle Hayden
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- [00:00]
Daniela Warner
Welcome to Spa Marketing Made Easy, a podcast for spa owners who want to step up their leadership and business skills and step into the role as spa CEO. I'm your host, Daniela Warner, CEO of Atto Aesthetics and founder of the Growth Factor Framework program, where we teach, coach, and guide spa owners in scaling their spas to the next level of growth and unlocking freedom in their life and their business. I'm so glad you're here now. Now, let's dive into the show.
- [00:31]
Unknown Host
Important question for you, friends. How are you feeling about your money and your taxes today? If you're listening to this, on the day that it's released, April 14, the day before tax day, my wish is that you feel calm and prepared and like it doesn't even matter that your taxes and quarterlies are due tomorrow. Hopefully you already have them paid. But that feeling of calm is not something that I have always had. I had years that just felt like complete chaos, and I decided, you know what? I do not want this energy in my life. But how do we get rid of it? Because we all pay taxes, right? That's not going away. But you can get rid of the stress when you're surrounded by the right money team. And that is why I am so excited to introduce Danielle Hayden, our guest on today's show. She has the most incredible background. Get this. She is a hairstylist turned cpa, and she's the CEO of Kickstart Accounting. Her accounting firm has been around for the past 10 years. We had so many synergies over the. The times that we were talking over Zoom. And Kickstart Accounting is the newest partner in apa. Now, if you're not familiar with apa, it's a place for aesthetic professionals to build a thriving business and community. And one of the perks in there is that we have a big black book of recommended vendors, many of whom offer sizable discounts to APA members, including Kickstart Accounting. Anyway, Danielle gives tons of information, tons of value in this episode. I hope that you enjoy it. Definitely worth a listen. So let's go ahead and play that interview. All right, Danielle, welcome to the Spa Marketing Made Easy podcast. I. I love talking about money. I love talking about numbers. I love normalizing these conversations with women. So I'm so excited. You're such an open book. I think there's some really important things that we can get out there today around money and finance and accounting. So thank you so much for being here.
- [02:38]
Danielle Hayden
I'm really looking forward to it. I promise we're going to make this Topic really exciting. I know most people shy away from this convers, but my. My mission is really to make money and numbers approachable and, and fun to talk about.
- [02:55]
Unknown Host
Well, I love that because it is like, it's kind of this weird thing that when we start a business or even if we're on like a specific career path, if we're an employee and trying to move up, we're uncomfortable asking for raises, we're uncomfortable saying how much money we want to make. It's one of those. It's like, what is it? Death, taxes and politics or whatever.
- [03:19]
Danielle Hayden
Like my mom used to say before any. Any dinner that I went to. Remember, Danielle, don't talk about religion, politics, or money. And now I'm like, ma. I go on a live screen to talk about money on a regular basis.
- [03:33]
Unknown Host
I was so last night I was at karat. My kids do karate twice a week or actually taekwondo, but I don't know why in my mind it is like inferior used that it's karate, but it's actually taekwondo. And I was talking to this other mom. She was so like, I just clicked with her right away. And she was, she's a preschool teacher. And I was like, you know, there's people that put their lesson plans online and then you sell them and you can do. And I'm like telling her this whole thing. And I'm in like, Daniela coach mode. You know, Even though I'm at a mom event, I had like a different hat on. I was like, so how much money do you want to make every month? And I was like, didn't realize that in the coaching space, like, when I'm talking to somebody, I can so easily just be like, tell me how much money you want to make, you know, and, and talk about it and talk about it. And at karate, it was like the most inappropriate thing. And I was like, okay, let me put my phone away. Like, because I had my calculator out. I was like, I can calculate your profit margin and what you would need to do. So I was like, okay, stop. Like, get back in mom mode. Like, let's be focused on the. The roundhouse kicks and go from there. That's great.
- [04:43]
Danielle Hayden
It's great self awareness to bring it back in check.
- [04:47]
Unknown Host
And sometimes you need that like, transition moment, you know? But it is something that I do think should be so normalized. And I think there's so many. Because we're. We grow up with those beliefs of don't talk about this or it's not appropriate, or people are clearly uncomfortable to talk about it, we need to do it even more as business owners to make sure that we're comfortable looking at the numbers and understanding. Understanding the overall health of our business and understanding what we need to be able to live the life that we want to live. So before we really, like, start going down the rabbit hole here, why don't you tell us a little bit, Just the summary version, the nutshell version of, like, you, how you went down this path, how you started your company, all of those types of things.
- [05:38]
Danielle Hayden
Yeah. So I actually started my career as a hairdresser. I was working behind the chair as a creative. And while I was working, I got really good at understanding the numbers of what I needed to bring in to hit these different goals. And I started to teach the girls who I worked with how to read their paycheck, how to reach their goals, how we, as a salon could hit our, like, our retail metrics. We became salon of the Year and really helps them understand the numbers.
- [06:14]
Unknown Host
I always say, like, spa and salon are like peasants, so.
- [06:18]
Danielle Hayden
Yes. Yeah, they really are. So I. I realized I had this knack for helping people understand the numbers and to use it as a game. Right. Like, I mean, in that context, yes, it's our. Our. Our paycheck, but to use the numbers as a game of how our. Our personal and our. Our business goals. Then took a hard right into corporate accounting. And my job there was to help the CEO, the investors, the management team, understand our numbers so that we can make better business decisions.
- [06:54]
Unknown Host
So did you just go from hairstylers to corporate, or was there, like, any schooling or training? Like, how.
- [06:58]
Danielle Hayden
Yeah, I was going to school. I have my master's degree, my cpa, so while I was working in the salon, I was going to school work. Okay.
- [07:05]
Unknown Host
Because I was like, that is a hard right turn.
- [07:07]
Danielle Hayden
Yeah. Yeah. I was doing both at the same time. So while I was doing hair, I was always in school. Worked at Ernst and Young while I was still behind the chair, finally left the salon to go into. Into working in the accounting field full time. And at that same time, I was, you know, I realized I was doing a lot of the same thing, helping people understand their numbers so that we can hit our goals. So the board, the investors, the management team, the CEO, we had to look at that information and decide what's working, what's not working, what are we going to stop doing, where are we going to go the next quarter, how are we going to do better so that we hit our goals. I remember this moment in the boardroom where I was sitting there watching this conversation unfold. And I said, I am doing this to help the rich get richer. Right? Like, I'm helping these people, these investors in this room. And I truly believe that every business owner. Right. Small business owners deserve access to that same information so every single person can make that same decision. I was doing some volunteer work at a local entrepreneurship hub here, and I realized that small business owners didn't even have bookkeeping in place.
- [08:31]
Unknown Host
Oh, no. I mean, it's. It's amazing. I was working with a. A spa that was doing about 800,000 a year. 800,000. And she literally had no idea where her ne. I was like, well, doesn't your CPA or doesn't. Don't they send you your report? She's like, no, I just look at it when I do my taxes at the end of the year.
- [08:50]
Danielle Hayden
Oh, yeah, we. We can talk more about that. We can talk more about that. But so I. I realized that ever, you know, we. We can't set a budget or a business plan or. Or raise money. Like, we can't do any of that unless we have bookkeeping in place. And so I went on a mission 10 years ago. Kickstart just celebrated 10 years this year. Congrats. Thank you. We went on a mission 10 years ago to help every single business owner with bookkeeping, which then helps them understand their numbers, make better business decisions. We do taxes as well, but taxes are like a bonus. Like, we can just show up and super prepared because we're business owners who use our numbers to make business decisions every single month.
- [09:33]
Unknown Host
And that's such a. For me, we have this kind of process that we've been doing for the past, I would say, probably six years. We're also 10. We're in our 11th year now. So we were. We're on a very similar path. And probably around six years ago, I started meeting with my financial advisor, my cpa, and my husband, and at the end of the year and really saying, what are our goals as a family? And so how much money do I want to pay myself? And so how do I take that number with my CPA and my financial advisor to understand what the goals of the business are? Because it seems kind of backwards. Most people are, like, looking at their business and setting the goals. But for me, you should be building a business around the life that you want to live and using that as the. Well, here's how much money I want to be able to hit my goals. And here's the profit margin that we're hitting and so here's the goals that we need to set, and that has worked tremendously in helping me live the life that I want. That changes season by season too, right? I mean, I have, I have two small kids. You know, I started this business before kids. I birthed two kids. My husband was active duty for 21 years, so we were moving all the time. So there's different seasons where you need different things. And without the relationship that I had with our CPA and like, like understanding those important pieces, I have no idea how I would have been able to make some of those business decisions. You know, I mean, it's vital.
- [11:20]
Danielle Hayden
You feel like it's never enough. So if you're not meeting with your money team, so I call that your money team. If you're not meeting with your money team and you're not having that strategic level conversation with them, you end up in this cycle where nothing ever feels like enough. No matter how much money you bring in, no matter how much revenue you have, no matter how much you pay yourself, no matter how much draws you take never feels like enough. Because you never took the moment to set the budget, to set the goal, and to coordinate that conversation with your money team.
- [11:50]
Unknown Host
But that's the hardest thing to answer, right, is when is enough enough? I mean, that's the. I can have someone come in and tell me everything that they don't want. And then you ask them what they want and it's like, I don't know, I want $1 million spa. Well, why do you want a million dollar spa? You know, like, do you want a million dollar spa? Do you want a $10 million spa? Or do you want a half million dollar spa? Like, what is, what are the things that you want? And I think that even just by getting to a place where you're setting goals, you have to answer those questions for yourself. It forces you to think about the life that you want to live and what you desire and all of those pieces.
- [12:30]
Danielle Hayden
Yeah.
- [12:31]
Unknown Host
So tell me more about. You had mentioned there's like four money people. Who are these people? Tell me about your money team.
- [12:38]
Danielle Hayden
Yeah, so we want four people on the money team. And I know four sounds like a lot, but I don't really don't care how big or small you are. So you might just be starting out. You might be celebrating 10 years like we are. I always want you to have four people. The primary person is your bookkeeper. Now, most people go into business and they hear you need to get a cpa, right? You need to send me to file your taxes. But your CPA can't file an accurate tax return, and they can't give you the information and the support you need without bookkeeping. So really, our most important person that's going to organize and coordinate everything for you is a bookkeeper. And that's why at Kickstart Accounting, we start with bookkeeping. Because it is really difficult as a business owner to do all the things. And I know that as a business owner, you want to stay in your zone of genius to do only the things that you can do. And I want you to stay there. You don't need to know how to do bookkeeping. I went to school for a really long time to do bookkeeping. Our, our job is to help you while you're out making money, spending money to organize the income and the expenses. And we do that every single week at Kickstart. And then your bookkeeper should be sending you the financial statements every single month. Now, our clients receive what we call a snapshot. It's where we walk you through a high level overview of your numbers. No matter who you are working with, you should be looking at your financial statements every single month. Bookkeeping is show you showing you where you just went. Right. Like what just happened. And we need to be looking at that monthly so that we're doing that in real time. Does that make sense?
- [14:16]
Unknown Host
Yeah.
- [14:17]
Danielle Hayden
All right. The second person is our tax account. So they are our tax account and cpa, Their only job is to file the tax return and to help you with tax planning. So a lot of times what happens is that we, because our tax account is the first person we hire, we're calling our tax account for business advice. We're saying, well, you didn't send me the financial statements. Like, I don't care about the bookkeeping. I mold your bookkeeping so I can file your tax return. Right. Like they're not thinking about it in that way. Your bookkeeper is thinking about, I need to organize the financials so that you understand your numbers so that you can make better business decisions. Your tax account's job is to make sure that you can file the tax return. Again, the bookkeeper is giving the tax account accurate financials. They need to know what they're looking at. They need to have that information so that the tax accountant can then file the return and help you with tax planning. Those two people should be able to talk together. So here at Kickstart, when, when somebody gets on the phone with our, our team of CPAs, we've already coordinated hours behind the scenes with Our bookkeepers. So the bookkeepers and the tax accountants, they've already coordinated behind the scenes. So by the time our client gets on the call, things are done. And so you want a team who can talk to each other so that you're not having to play that, that middleman. So second person is the tax account. The third person is your financial advisor. So you had mentioned, you know, your husband, the financial advisor helping you look at what do I need personally? Our business can't be our retirement fund. We need to have outside investments. Like it creates a whole person, a whole unit. And so we need to have retirement options, investment options, savings that sit outside of our business. And our financial advisor helps us navigate that. And then we have our cfo. Our CFO is the fourth person on the money team. Now I said bookkeeping helps us look backwards. So what just happened? And our CFO helps us to start navigate the future. Our CFO is going to help us look at what are our goals in the future. And let's set a strategic budget, let's pay down debt, let's look at cash planning, let's start to plan for the, for the future. But we can't do that until we have a really clear vision of what just happened in the past.
- [16:40]
Unknown Host
And so you said you want all four people no matter what size you were. How the CFO is the one that I'm questioning. So at what point I know a lot of businesses will say hire a fractional CFO or have just like a once a year sit down with a cfo. Are you even doing that? Say I'm a nurse and I just left anesthesia, I'm starting my med spa and it's just me right now like I am a solo nurse injector and that's what I'm doing. Would you still have a cfo?
- [17:19]
Danielle Hayden
So just like you said, we, we offer fractional CFO services for our clients and one off budgets. So for somebody in that situation, I would say get your bookkeeping done first. Right. We need to know bookkeeping is organized. You'll have your CPA team and then you can do a once a year budget with a CFO team. So our CFO team comes in for our bookkeeping clients, does that once a year. Your, your budget talks about the goals, where the business is, is going and then they're there when they're ready to initiate that on ongoing process. But I do believe that every business should be setting a budget. But when you're ready, the bookkeeper and the tax account are my non Negotiables, the financial advisor I actually want you to have pretty early on in, in business.
- [18:08]
Unknown Host
Yeah.
- [18:09]
Danielle Hayden
And then I agree with you. The CFO is something you can add on as a one time budget or as you are ready to start looking at the future. Not every business owner is ready to look at the future.
- [18:20]
Unknown Host
So we were talking a bit before we hit record here about S Corps versus single member LLCs and when is the right time to do that? Is who is that person that's giving you that advice? Is that the cfo? Is that the cpa? Is that your bookkeeper? Like where are you? That's been one of my biggest complaints that I've heard from our account from our students that are saying my, my CPA doesn't tell me anything. They don't tell me that I should be doing a backdoor Roth or they don't tell me that I should be bringing on a 401k account for my staff or that I should be switching over to an escort. These things that can save you tens of thousands of dollars in taxes. So who's, whose role is that?
- [19:14]
Danielle Hayden
So I disagree with my industry. So I'm going to say start there. That what I'm going to say is not standard across the board. Not all CPAs do this. The CPA tax world has become very transactional and in part I blame our government for this because you have to get in a lot of tax returns in this small window of were working under a very tight deadline and CPAs were taught how to file a tax return, not run a business. They're no more of an entrepreneur. You know, they went to school to file that tax return. So they're not entrepreneurs. So we have turned this, this thing into a very transactional experience for entrepreneurs and it leaves people very frustrated. And so what we've created at Kickstart Accounting through we have, we call it our sister company KSA Tax Part. We've created this experience where we can work together both the bookkeeping and the tax team to be able to answer questions like this. We go out of our way to make sure that our clients have this answer every single year. Your CPA should at least annually be looking at your entity structure to let you know if you are working within the right entity structure. So during our mid year tax check ins, every single one of our clients receives a mid year tax check in and like August, September, October timeframe. And during their tax snapshot we're walking them through are you in the right entity structure? And that's where we're looking at, you know, should you become an S Corp or, or should you stay where you're at? Is an LLC the right, right for you? However, at any time, if you start to think like, if you listen to the show and you're like, oh, I actually do hit those milestones, you should be able to go and ask your CPA and your bookkeeper at any time if you should become a S Corp. Unfortunately, the answer in the tax world is gray because not everybody agrees on when is the right time to become an S Corp. Your CPA should be able to run some forecasts for you to show you how much you would save. But if it's okay with you, I'd love to give you kind of like my three things that I want to see before somebody becomes an S Corp. Yeah, absolutely. Okay, so if you are hitting these three milestones, go have the conversation with your, your cpa. If they don't want to have a conversation with you, we will have that conversation with you. So if you are making net income of $100,000 a year or more for more than two years, so not your gross revenue, I want you to look at your net income. Because after all of your expenses, you need to have enough money to pay yourself. The IRS says this is not Danielle's role. It's not Kickstarter. The IRS says that once you become an escort, you have to be on payroll. You have to pay yourself through payroll, and you have to pay yourself what's called a reasonable compensation. And reasonable compensation is how much would you have to pay somebody else to do your job in your area. So this is location base, and we find that around $100,000 of profit is enough to pay you, plus the payroll taxes and possibly take out the owner's drawers as well.
- [22:39]
Unknown Host
Okay, so that's rule number one.
- [22:41]
Danielle Hayden
That's rule number one. Rule number two is that you are consistently taking out owner's drawers today. So just like we're not going to go on a diet on Monday, we're not going to start routine on Monday. You are not suddenly going to become an S Corp and have enough cash to pay yourself. So as an llc, if you are not consistently taking owner's drawers, then we need to get taking owners draws first so that we know that your business has enough cash to pay yourself once you become an S Corp. If you can't pay yourself and you need to dissolve your S Corp status, you can't become an S Corp again for five years. So it is a, it is a decision that we need to take take seriously number three is that you are not commingling business and personal expenses. So if you are currently, you know, paying for your mortgage through your business or, or your kids daycare, yowzers, that is happens. It happens more than I want to admit. So if you're doing that type of commingling, you need to stop the commingling first. Just like the diet on Monday. You know, I like to use that as an example because just because you become an S corp and you think that oh now it'll be really serious, I'm going to really stick to it. You're not separate your business and personal expenses. Start paying yourself on a regular basis. Moving money from your business account to your personal account, taking those draws. Once we have that established and we're bringing home a net income of over 100,000, it's a no brainer to become an S Corp. It is a great tax savings. You can pay yourself through payroll, you can enjoy the reimbursements through an accountable plan. You now have a paycheck stub to go buy a car or apply for a mortgage. Like there's some serious benefits of becoming an S Corp and having those three things in place make that decision really easy.
- [24:35]
Unknown Host
What about your if, if you're in partnership, if you're your household income obviously is going to have an impact on that too. So would you be like say that you have a spouse that earns a high income or if you have a spouse that does not earn a high income, you know, if whatever the role is, would your advice on switching over to an S Corp change in any way?
- [25:05]
Danielle Hayden
You know, for our family situation, my opinion actually doesn't change. So when we work with our clients we do work independently between the business and then the family. So when we look at the bookkeeping and our stance on S Corp status, tax reserves, saving for taxes, we really want to look at the business as an entity by itself. Here's why. Today you might not be thinking about selling your business but you know, maybe in three years somebody comes along with a really attractive offer or your health changes, your family's health changes, something changes and you decide that you want to sell your business or you need to take on investment dollars are alone. By having your business completely separate from your, from your personal, we're able to look at the business as its own entity, as its own individual almost. And I want you to make that decision to become an escort because your business can afford to pay you that there's going to be tax savings for, for the the business, your tax accountant can then look at the whole picture as a, as a personal situation. I don't believe I've ever seen where becoming an S Corp actually affected, negatively impacted that your personal tax return.
- [26:32]
Unknown Host
Good to know. Well, I know like I kind of teased in our, in our APA group that we have finally found an accounting firm, a bookkeeping firm that we are excited to partner with. This has been a long time coming and we, when I, and I didn't even know that you used to be a hairstylist. Which like is the cherry on the cake. It makes, it makes it even better. But I think that, you know, there's a lot of things about the way that you operate your company about the relationship piece. I also, you know, I, I love men. I think men are great and very intelligent. But I think in a business, in an industry where we're over 90 women and it's such a taboo subject, sometimes it's really nice to be able to talk to another woman about these types of things. You know, it's you, your guard is let down a little bit. And so I'm really, really excited to officially bring you guys on as a partner of ADO Aesthetics. And we've got some really awesome partner discounts available inside of apa. So Danielle, do you want to share just a little bit more about where our listeners can find you and follow you if they want to get more information from you?
- [27:54]
Danielle Hayden
Yeah. Kickstartaccountinginc.com gift there is some beautiful downloads in that that link. Kickstartaccount Inc.com is our website. You can come book a discovery call. We love relationships. We have long term relationships with our clients and we can have an open conversation. So wherever you're at in in your business, come both the discovery call. My team is even nicer than than I am there this amazing welcoming team. We have a team chat and as we were recording I'm watching them celebrate clients wins. Every Friday that that chat gets really active just celebrating our clients because oftentimes we don't have anybody else to celebrate with. So our team likes to celebrate with our clients and loves to be there for them when things aren't going well. So come book the discovery call. Have an amazing team that's excited to be of service to you. Kickstart Accounting on Instagram is where we hang out and then business the books is our podcast where we talk about how to use your numbers to make business to make better business decisions every single week.
- [29:14]
Unknown Host
Love it. Thank you so so much. Be sure to follow Danielle and kickstart accounting, and you're welcome. This was a lot of work to find. It's a lot of work, but we're really excited. So thank you guys for listening, and we'll catch you on the next episode.