Where does your retail profit really go?

Cyndi Thomason first took up accounting after leaving her corporate job to homeschool her daughter. “I was looking for something to get my brain engaged when a friend asked me to help her with some records. After a few years of helping friends, I realized there was more opportunity there,” says the founder of bookskeep, an accounting firm specializing in e-commerce business. She is also the founder of Your Profit Team, where Thomason and her team provide CFO e-commerce business advising, cash flow forecasting and Profit First consulting.

Today, Thomason oversees 25 accountants, all of whom work flexible hours, many of them women juggling caretaking for children or elderly parents. She shares with us the principles that lead to successful businesses. Spoiler: It’s really as simple as saving your money.

—Interview by Marcy Medina, edited by Bianca Prieto

What’s the number one pain point for your clients, and how do you help them solve it?

One of the major things they struggle with is cash flow because of the need to buy inventory and the seasonality of the business. Those challenges really lend themselves well to Profit First (an accounting methodology founded by Mike Michalowicz that encourages business owners to take a percentage of their revenue for profit before covering expenses) and I help them get ahead of the demand for cash by setting funds aside in their Profit First accounts. It really is that simple. It’s just hard to do. People get in their own way, even when they understand the laws of economics. The accountability piece is the secret to making it work.

 What’s the second-biggest issue for retailers?

They say, “I know I am profitable, but I don’t know where my money is. They have profits on paper, but the bank account doesn’t show it and they don’t understand what they’re doing wrong.  I would suggest taking bank statements from three to four months back and looking at where the dollars are going. Look at what the beginning and ending balance is, and if it’s getting smaller, it means you are spending beyond what you are taking in and you need to start looking at expenses you can do without. It’s one of our easiest wins. We find on average $1,800 a month is what we can come up with.

How do you help with demand planning? 

We rely on a client’s expertise for predicting sales, but if they know the answer or can give us some parameters, we can come up with a model to grow 10% or 20%. A lot of projections are based on heavy Q4 sales, so in January they are flush and the tendency is to pay off all the debt or buy new computers for everybody. We help them understand that this much money needs to go into building new products, buying new inventory. You need those funds for that growth, and your interest is cheaper than what you might get spending that money now. Set it aside for the future rather than being reactionary.

What is your Women-owned  Ecommerce Brands (WEB) group about?

It’s about more than just business ownership; we are asked to wear a lot of different hats, so it’s a place where we can get online and support each other with work, life, kids and parents. That’s why I created the policy for our team around flexible hours. There’s a lot of rigidity in a lot of businesses, and I wanted to create something that gives women flexibility to do all the other things they have in their lives.

 What’s your best advice for small business owners?

It depends on what you are trying to create. Either you want a job that covers the cost of living your life or you want to build a business that can run without you and that you can sell. If that’s your motivation, you have to plan a way to work yourself out of these tasks. It’s about finding people to do the stuff that you’re doing. When I made the decision to start bookskeep, I took myself out of the "doing" role and built myself into a "designing" role.

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The SKUpe is curated and written by Marcy Medina and edited by Bianca Prieto.