Episode 40

Mastering Financial Management for Window Treatment Businesses with Michelle Williams

In This Episode

  • Learn why understanding how money moves through your business is crucial for growth and stability, and how to implement effective financial planning.
  • Discover how to align your marketing budget with clear financial goals and target audience insights to maximize ROI.
  • Understand the importance of tracking key financial metrics to measure the effectiveness of your marketing efforts and ensure your business is thriving.

Guest Profile: Michelle Williams

Michele Williams is the dynamic owner of Scarlet Thread Consulting and Metrique Solutions, specializing in empowering creative professionals in the design industry. She offers strategic business coaching and financial analytics, helping interior designers, workrooms, and window covering professionals navigate the complexities of entrepreneurship. Through Scarlet Thread Consulting, Michele provides tailored coaching to achieve financial clarity and operational efficiency. Metrique Solutions offers technology-driven software to optimize pricing strategies and enhance profitability. Michele’s work transforms businesses and inspires growth in the design community.

Key Takeaways

In this insightful podcast episode, Michelle Williams, owner of Scarlet Thread Consulting and Metric Solutions, shares her expertise on financial management for window treatment and awning businesses. Key takeaways include:

  • The importance of understanding how money flows through your business.
  • Implementing a profit-first approach to ensure sustainability.
  • Strategies for effective budgeting and marketing spend.
  • Tools and resources for better financial management.
  • Preparing for and handling financial setbacks.

Understanding the Basics of Financial Management

The Fundamental Principles

Michelle emphasizes the critical importance of understanding how money moves through your business. This includes:

  1. Identifying primary revenue streams.
  2. Understanding cash flow patterns.
  3. Knowing your cost of goods and operating expenses.

She stresses that many businesses fail due to poor cash flow management, highlighting the need for a solid grasp of these fundamentals.

Implementing a Profit-First Approach

Michelle advocates for a “bottom-up” financial approach:

  1. Determine desired profit after taxes.
  2. Account for taxes and savings.
  3. Calculate necessary operating expenses.
  4. Work upwards to determine required sales.

This method ensures that profit isn’t an afterthought but a planned component of your business model.

Effective Budgeting and Marketing Strategies

Creating a Marketing Budget

Michelle suggests:

  • Conservative businesses: 6-8% of gross profit for maintenance.
  • Growth-focused businesses: 8-20% of gross profit.
  • She cautions against exceeding 20% to maintain overall financial health.

Measuring Marketing ROI

To effectively measure marketing ROI:

  1. Set clear expectations for each marketing activity.
  2. Track relevant metrics (e.g., website clicks, lead generation).
  3. Understand the cost per lead and return on investment.

Michelle emphasizes the importance of giving marketing efforts enough time to show results before making decisions.

Tools and Resources for Financial Management

Michelle recommends:

  1. Accounting software (e.g., QuickBooks, FreshBooks)
  2. Customer Relationship Management (CRM) systems
  3. Financial dashboard tools like Metric Solutions

These tools help track financial data, manage customer information, and provide insights for decision-making.

Preparing for Financial Setbacks

To minimize and handle financial setbacks:

  1. Create separate bank accounts for different business purposes.
  2. Save for unexpected expenses and taxes.
  3. Plan ahead for hiring and expansion costs.
  4. Develop contingency plans for various scenarios.

Effective financial management is crucial for the success and sustainability of window treatment and awning businesses. By implementing these strategies and using the right tools, you can make informed decisions, optimize your marketing spend, and build a more resilient business.

Other Notes/Links:

To learn more about Michelle Williams visit:

Scarlet Thread Consulting

pssst…. want to be a guest on the show?

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Transcript

Will Hanke – WTMP (00:00)
All right, hello, everyone. Welcome to another episode of Marketing Panes, the podcast where we talk with real window treatment and awning service providers and business owners about their successes and struggles related to marketing their business. Today, we have a service provider who I’ve known for many years. We’ve always bumped into each other at IWCE, and I’m very happy to finally have Michelle Williams on the podcast today.

Michelle Williams is the dynamic owner of Scarlet Thread Consulting and Metric Solutions, specializing in empowering creative professionals in the design industry. She offers strategic business coaching and financial analytics, helping interior designers, workrooms, and window covering professionals navigate the complexities of entrepreneurship. Through Scarlet Thread Consulting,

Michelle provides tailored coaching to achieve financial clarity and operational efficiency. Metric Solutions offers technology -driven software to optimize pricing strategies and enhance profitability. Those sounds like things that people would be interested in. Michelle’s work transforms businesses and inspires growth in the design community. Michelle, thank you so much for being on today.

Michelle Williams (01:17)
It’s my pleasure. Thanks for having me, Will.

Will Hanke – WTMP (01:20)
Yeah, very excited to kind of jump in and learn some stuff, especially on the finance side. I think that’s always a struggle for small business owners along the different stages of growth. All right. Well, so let’s jump right in. Why don’t you tell me a little bit about your background and how you became an expert in financial management for businesses?

Michelle Williams (01:31)
Sure.

Yeah, so my background, I started in software development for Dun & Bradstreet software and built financial software. So all the way back in the day, back in the 80s when the dot com was booming and everything was moving in that direction.

Yeah, so I was building accounts, payable general ledger, purchasing inventory. I think even before I really knew what they meant in the real world, I mean, I had an idea of what they meant for sure, but I had not owned my own companies at that point. And so I knew the accounting behind them and why it worked together and how they worked together in the touch points. And then after about 10 years of that, I came home to raise my children. had a little boy that was one and a little boy that was three and a half.

And believe it or not within about, I’m going to say about a year of being home. In that year, I did all the window treatments in my own home, made them all. We had just bought a new home and my neighbors started ringing the doorbell and asking me to make window coverings for them. So I jumped right in with my good old plastic Costco table and my home sewing machine. And I started making window treatments, custom window treatments until I started figuring out, know.

Will Hanke – WTMP (02:54)
you

Michelle Williams (03:01)
the better ways to do it and the right ways to do it. And then of course I’m in the homes and they’re asking me to sell them blind shade shutters and I’m gonna say yes. If I’m already at the window, I’m gonna treat the window. And so long story short, I found myself in a position of not making the money that I wanted or needed to make because I was so excited about the doing that I wasn’t paying attention to the marketing, to the pricing, to the…

you know, the nuance of running the business. was, if you’ve ever read the book, E. Mithre Visited, I’m sure you have, I was very much the technician who built the business and was staying the technician. And I had not looked at the management, the entrepreneurial, you know, the visionary. I had not even looked at those things. I just found myself in the doing of the business. And in that doing, I wasn’t making the money that I needed to make. And so long story short, my husband said to me on a tear -filled call,

that said we owe money so that I can work for rich people. He said, you know what you’re doing. Like you know the pieces is you’re just not looking at your business the way that you looked at the million dollar budgets that you rent. I mean, I build a project accounting system. I was the development manager. I’m building a two and a half year project accounting system. So it wasn’t that I didn’t understand it. I wasn’t applying it. And it’s interesting, Will, I hear that a lot from people that actually have business degrees or finance degrees or even marketing degrees.

Will Hanke – WTMP (04:00)
You

Thank

Michelle Williams (04:26)
There’s one thing about learning it in school and even doing it for a large corporation, it’s a different mindset to come back and do it on at that point what was really a micro business for me. And so that kind of led me down the path of looking at where am I acting like a hobbyist? Where am I acting like a business owner? Where do I need to shift some of the things that I’m doing? Where do I need to gather control?

If I’m going to do this, I was making six figures. I’m going to make the money or I’m going to go back to work. Like this doesn’t make any sense to me. And so to make a long story even shorter, I learned how to do it. I started putting in best practices, taking everything that I learned on a macro, moving it to a micro. And then I started teaching it and sharing it with other people because once you have that aha, you can’t hold it back. can’t, I was watching other professionals who were

super smart and super gifted and they weren’t making the money and I was like, well, let me tell you what to look, let me tell you what to track, let me tell you how to do it. Have you considered this? Have you considered that? And then over time, they started putting those things into practice and implementing those. And then I started teaching classes about it and traveling the United States to teach it.

Will Hanke – WTMP (05:43)
That’s awesome. I think that story resonates with a lot of our listeners, you know, that you did it yourself and suddenly you found yourself doing it for others. And maybe there’s a business here, right?

Michelle Williams (05:54)
Right. And you know, we want to serve our clients well. I mean, we’re all in business, hopefully, to serve our clients well. And in that serving, sometimes what I found was we weren’t serving our own business as well. And I use the term often fair and reasonable. And so to be fair and reasonable to the client means I also have to be fair and reasonable to my business so that we’ll be there the next time they come back to do the next room or the next home or the next project. And that’s what many of us are doing.

Will Hanke – WTMP (06:23)
Yeah, yeah, that’s definitely a good part of running a business. What do they say, working in the business versus working on the business? Right, you know, that’s obviously very important. And a lot of people jump into working in the business. They’re on the ladder, you know, the phone’s ringing maybe, and they’re not able to answer the phone or, you know, those kind of things. So getting those systems in place is huge.

Michelle Williams (06:47)
Yeah, and you know, that’s exactly what I did. I was working in the business, but if we don’t work on it, then the business can’t work for us. And so just to bring you up to where I am today and what I do, I ran a window treatment company for 16 years. I was one of the managers and owners for a short period of the Custom Home Furnishings Academy in Charlotte, North Carolina, where we taught installation for window coverings. We taught sales.

Will Hanke – WTMP (07:14)
Okay.

Michelle Williams (07:15)
We taught all of that. put out a magazine and then did all those things. Education. Then we sold that company and I started my coaching and consulting company. Started my podcast, Profit is a Choice in 2018 and then started Matric Solutions in 2021, which is a compilation of all of the spreadsheets and all of the things that I had been teaching in financials.

all the way back since like 2007. So it’s one dashboard that we can use to keep up with all the things we need to run a company.

Will Hanke – WTMP (07:48)
Love it. Yeah. So who is your target audience for your business?

Michelle Williams (07:53)
Yeah, so I’ve used the term quite often interior design and I do that just because I see it as an umbrella for all of these home services that were really coming in to design areas and aspects of their home to make it better, whether it’s at the window in the full room or some, you know, small piece or part of that. So I would say that for Scarlet Thread Consulting, my ideal client would be any business within that industry. For Matric Solutions, it’s a bit broader.

It is not industry specific, it is small business specific. So I am looking at supporting businesses that are like 10 million and under in that particular sector. So it’s any small business that offers a product or service that’s in that 10 million and under range.

Will Hanke – WTMP (08:39)
Got it. And for that, they would be people that are struggling with finances, don’t understand exactly what they’re trying to accomplish and you help them get there.

Michelle Williams (08:50)
Yeah, so I would say not even just struggling, but even maybe wanting to combine a lot of financial applications. So for example, we’re not QuickBooks and we’re not taking the place of that financial management, but many business owners, when you start getting up into the hundreds of thousands and you start hiring people and you’re trying to figure out, for example, what are the KPIs that I’m managing to? Where do I give bonuses? What are the commission structures look like?

What does it cost for me to have a person or have them on site? We have all these disparate kind of spreadsheets everywhere. Matrice Solutions pulls that all together. And so in one dashboard, you’re able to look at it and see, you know, here’s the money that I have coming in, here are the KPIs that I have, here’s what I’m trying to plan for, here’s the budget I’m aiming against, here’s the plan and here’s the projections and just everything that you need.

that goes past what you would get. It’s the work that we should all be doing with the financial data, but we never have time to do it so we don’t look at it. So then we aren’t using our data, if you will, for decision making. We’re trying to make a decision from a gut feeling after taking a quick glance at a P &L, a balance sheet, or a bank account. And what we’re trying to do is say, it doesn’t just have to be a gut reaction. We can use empirical data along with a gut reaction so that you can make these decisions with more ease.

Will Hanke – WTMP (10:16)
Yeah, if they even look at the P &L or that, like you said, gut, a lot of people will just make their decisions straight from that.

Michelle Williams (10:23)
Right, but a lot of people don’t look at it, well, because they don’t even understand it. And so what we’ve done is put it into a visual format so that you can look at a pie chart and have an understanding. You can look at this is up or this is down, this is compared to this number, this is why you care. We boil a lot of it down to five anchor points, which is your total revenue.

your cost of goods, your gross profit, your expenses and your net income. Because if I can look at those five numbers and if they are following in the realm that I need them to follow, I might not even need to dig deeper. But a lot of times we’re so overwhelmed with all these black and white numbers on a page that we don’t even know what we’re looking at. And we’re trying to say, wait a minute, tell us these few things. This is what you need to look at. Here are the three numbers or the five numbers or the comparison so that you can not have to worry about

There’s even been some data that is now coming out that they’re telling some financial people, don’t send people all the P &Ls and balance sheets. They don’t know how to read them. They don’t know what they’re doing with them. So to send it just is almost like a checkbox. I wanted to make it so that we have data that is usable, but not too much. And that’s what we were seeing. And it had to be beautiful and it had to be accessible or people don’t use it because they have the data. We just don’t use the data.

Will Hanke – WTMP (11:40)
Yeah, it reminds me of I always say a joke when I’m speaking about Google Analytics a lot of business owners will log in see the pretty graphs and they’ll be like, okay It looks like something’s happening and then they’ll log out and have no idea, you know where where they are, know from that standpoint

Michelle Williams (11:59)
Right, but I bet if you took somebody and said, let me show you the three things to look at in your Google Analytics every month, look here. If these three things are in, you know, within this range or meet this number or whatever it is that you’re measuring, you’re good. Keep going. If one of threes are out. Yeah, I always left. That’s why in our cars we have the dashboard.

Will Hanke – WTMP (12:12)
Yeah. Right.

Michelle Williams (12:18)
Because I can promise you we’re not running out and checking that oil from that dipstick all the time. We’re waiting on that to tell me it’s time to check the oil. That’s why they put the little sticker in our cars, change your oil, because we’re not going to do it and remember it. We’ve got to have the flashing lights and the reminders that what we’re looking at or what we’re doing is working with us or against us. And so that’s what Matrique is. We kind of look at it as the motherboard of the financials of the company so that we know what we’re looking at.

Will Hanke – WTMP (12:46)
That’s awesome. Yeah, I love it. So how do you position yourself in the eyes of your customers?

Michelle Williams (12:51)
So we position ourselves truly is from the Madrid perspective of trying to stand in that gap between you’re running the business and you have a financial piece of software. The gap is we don’t know what to do with the data to manage the day -to -day operations. And we want to help you take this data to create a decision -making rubric, if you will, for the day -to -day. So whether it’s marketing, whether it’s HR and hiring or building out operations,

Everything we do takes money. Like that’s what’s making our businesses go round, right? And so whether it’s on an ad spend or whether it is money that we’re spending to host an event or whether it’s money that we’re spending to take a client to lunch, all of those things come back from a marketing perspective and hit the financial budgets. And so if we don’t know how to spend that money in a well thought out way, we can spend money.

I’m chasing things that don’t matter.

Will Hanke – WTMP (13:50)
Makes sense, yeah. So thank you for explaining that. So I want to, as you know, this is a marketing podcast, right? I like to always kind of have a marketing spin on things. But so I want to ask some questions and I know that you can handle everything related to the business. And of course, I’m going to ask for the marketing piece as well. So before we get started with that, let’s talk about just some financing, financial planning basics. Like what are the fundamental

financial principles that window treatment and awning business owners should understand to effectively grow their business.

Michelle Williams (14:27)
Well, I think first is always having a really solid understanding of how money moves through your business. Meaning, what is it that you’re selling? What are your primary revenue streams? What is the money that comes in over what time period? So that sets goals and budgets and that kind of thing. Knowing how that money goes out the door. Does it go out through cost of goods or cost of service and sale? Or does it go out through operating expenses?

knowing how much money it takes to run a company every month, knowing how much you’re going to spend on marketing or ads and what type of marketing. So it’s really about knowing how money comes in, how money flows out. That’s number one. I think a lot of companies, you know, I think it’s like 85 % of businesses fail because they don’t keep up with cash flow and cash management. They don’t understand the money in and out. And I see people on occasion, I won’t say it’s all the time, but they’re spending more than they make.

because they don’t truly understand the cost of running the business and then the cost of the sale. And that’s even separate, and I’m talking about the cost of the fulfilling of the sale. Forget that there’s a whole conversation about the cost of getting the lead and converting the lead. Like that’s a whole separate cost that can be wrapped up under operating expenses, right? Under the marketing and advertising section. But just knowing what we can expect out of the numbers, having money saved, knowing what…

what the turnover is in a company, whether it’s time, money, people, knowing what it costs to implement a new idea, knowing what it costs to break into a new market. I think sometimes I know I did it. I jumped in and was doing the business. I was so busy as technician that I wasn’t taking the time to understand that managerial and entrepreneurial role of what does it take to keep this going or to pay myself and to pay my people.

to compete in a market space. And so just really understanding, it sounds like a lot. I I wish I could boil it down to say, here’s two numbers you need to know, but it’s a bit deeper than that to really be able to be a lasting business.

Will Hanke – WTMP (16:36)
Yeah, think early on, even in my business, I was in the mindset of if I can spend more than I’m making to grow my business, like I’m reinvesting. And I know that’s a dumb way to think about it. But I think a lot of people think that way.

Michelle Williams (16:53)
It is, I think really coming into it with a plan, I’ll tell you what I found to be most helpful is the businesses that I talk to, we do what I call bottom up financials. And I’ve run it twice on my podcast. It’s backwards financials for the win is the title. And in that, what we start with is tell me how much money you want to make after taxes. Tell me how much we’re going to be paying in taxes. Give me your effective tax rate. Tell me how much you want to save and profit in the company. And then how much other do you need to run the company?

from a profit standpoint. Then we can work our way up to figure out what the sales need to be. In other words, having profit, I’m profit first certified, but having profit and paying ourselves shouldn’t be a if there’s any leftover. It has to be planned for. I mean, there is no big corporation that’s thinking, let’s let everybody come to work today and see if we have any leftover to pay them. We wouldn’t go work for a company like that.

Will Hanke – WTMP (17:46)
Right.

Michelle Williams (17:48)
So why we are allowing ourselves, I’m not talking that first year or so when you’re figuring it out, but why we go year after year after year, not making the money that we need to make, that’s a planning issue.

Will Hanke – WTMP (18:01)
Yeah, you’re right. should have followed that up with the fact that I read Profit First, the book, and it really changed my outlook on business, right? Because you’re basically doing it in reverse. So it’s awesome that you’re Profit First certified. I love to hear that.

Michelle Williams (18:17)
Yeah, because if we do it the other way, then we’re willing to spin, spin, spin, spin, take what’s left over. But if we say this is the profit that we need to make the business sustainable, right? Because profitability is sustainability. Here’s what I need to make it sustainable. Here’s what I need to pay myself to take care of my family so that I can keep coming to work to do this. This is what I need to plan for for retirement, because if I worked for another company, they would give that to me. Here’s what I need to do, you know, to bonus my people or to give

you know, extra benefits to my people, then you can start walking up, what does it cost to keep the business going with advertising, marketing, you know, all the things that we need to do. And then what is it that I need as gross profit? And then it will immediately tell you what the sales need to be. So then we can craft a business that works for us versus going out and just selling indiscriminately to anybody with breath and a checkbook and wondering why it doesn’t work out at the end of the day. Cause I’ve done that and it doesn’t work.

Will Hanke – WTMP (19:13)
Yeah. Right. Yeah. Well, let’s talk about the budgeting piece specifically for marketing since you mentioned that. How can small businesses that are in our industry manage a budget, create a plan around marketing their business?

Michelle Williams (19:19)
Okay.

So first I want to just thank you for asking that question because I have had people say to me before, Michelle, you’re so focused on financials, so I’m focused on marketing and I don’t know how they go together. And my thought is I don’t know how to break them apart. I don’t know how to pull financials and marketing apart. I don’t know how to pull financials out of anything that we’re doing in business. It has to be a part of it. And so one of the things I would say is being very clear on the type of business that we’re building.

being very clear on who our ideal client is and our ideal product and the ideal space we’re gonna sell in, because if not, any money that we spend could be spent in the wrong direction, not having a return on investment and causing a problem. So the more clear we can be on who we are and who we serve and how we serve them, the better off any money that we spend will be. The next thing is, when I mentioned kind of whether you’re doing top -down financials or bottom -up financials,

knowing kind of what that sales goal is. Because that’s going to start to give you an idea of how much money I need to spend when you start figuring out what does it cost you to get a lead or to get a client, right? But we have to kind of know how much am I trying to get and how much money do I have that I can budget towards some type of marketing activity. Another piece we need to know is what are the marketing activities that our business is involved in? Like to me, I see your website as marketing activity.

I see it as an app, if you put advertising and marketing kind of all together, it is a marketing and advertising activity. So whether it’s a build of a website or it is the SEO behind a website or whether it’s just keeping up with it to keep it up to date, that is a calling card for us. That’s that store, that online storefront that is so important and how people see us.

looking at where are our people hanging out? I always say, where are your idle clients hanging out? Because that’s where you need to go. If they’re all hanging out at Neiman Marcus, we need to get out of Walmart. Like they’re not gonna be there, right? And if they are, they don’t want you to recognize them. So they’ve got a hat and dark glasses on. So, you know, if they’re hanging out in social media, we need to be in social media. If they’re hanging out on a Google search, we need to make sure that we’re searchable. So it’s about really dialing in.

Will Hanke – WTMP (21:28)
Thanks

Michelle Williams (21:46)
to where do I need to be, how much do I need to allow the marketing and advertising to work, and where are the people hanging out. Then we can start to budget an amount that we wanna put towards that so that we can see if it’s going to work.

Will Hanke – WTMP (22:05)
I love it. Yeah. You reminded me of a book I read probably four or five years ago by a guy named Dale Furtwengler. He wrote a book called Pricing for Profit, and he used that similar comparison of are you trying to sell to Walmart? Are you trying to sell to Neiman Marcus? You know, that kind of thing. And then your pricing should fit that particular model. interesting. Really great book, by the way. So.

Michelle Williams (22:32)
Yeah, that is a good one. I’ll make one comment on that. Well, I talked to a couple people last week and it was interesting, you know, when you start to see things show up multiple times and you’re like, okay, I had two different people tell me last week that they had given invoices to other business owners. So they were like trade coming into other business owners. And then that business owner was going to show it to their client.

and both business owners gave them back their invoices and told them to go mark it up because the level of client that they had, they could not hand them that invoice. It would be considered too low and therefore not enough value and quality. So one of them was told to double, the other was told to mark it up by 30 % and resubmit before they could hand it off. And that’s important for us to really think about who are we serving.

Will Hanke – WTMP (23:05)
Yeah.

Michelle Williams (23:19)
What are the expectations that they have? And for some, if they’re not price buyers, Now, a price buyer is gonna look at the low price all day long. But if somebody is buying on value and quality, they are expecting a higher price to go with that value and quality. And if we don’t give it…

They start to think something’s wrong with what they don’t think I’ve got a bargain. They think this is a lower quality value or service that we’re getting. And so really getting into the psyche and the mindset of who we’re selling to and how we’re trying to position ourselves in the market makes a big deal.

Will Hanke – WTMP (23:51)
Yeah, yeah, very good point there. What financial metrics should businesses track to measure the ROI of their marketing efforts and how could they use that data to make better decisions?

Michelle Williams (24:06)
Well, first, I think it’s being very clear on where you’re marketing and knowing we like I’m always of the opinion and will you probably have a lot of great insight on this as well, since this is kind of like you’re like the marketing piece is really important for you. But knowing what our expectations are when we market in an area, I think quite often we go in and we’re told to market there, but we don’t have an expectation. Like if I’m putting an ad somewhere.

What is my expectation for that ad? What am I wanting it to do? Because if I don’t know, how can I really compare it against a return on the investment? Or what am I tracking? Even knowing what we’re tracking, and there can be so many marketing metrics to be tracked. And I’ll tell you, that is not my number one place to play. But I know that if we go in to do anything, we have to have an expected outcome and we measure against the expected outcome.

And so for me, if I’m trying to just get somebody to get eyes on a site, I might check how many clicks, how many times did they go to my website? Like, am I just trying to create a familiarity? Now I can start to look at what is the cost to get somebody just to become familiar with me, right? So if I’m building my full, let’s say, marketing budget, you’ll hear percentages all over the place. I’m pretty conservative, and I would like to say that if we’re looking at just maybe maintaining a business,

Now I personally look at marketing as a percentage of gross profit, not as a percentage of sales, because some things that we’re selling, can distort because we’re so product based very often. So I usually say somewhere in that 6 to 8 % is just maintaining. It’s just kind of staying where you are. In a growth model, we can see 8, 10, 12, 15, even up to 20%.

Rarely do I want marketing budgets to go over 20 % simply because 20% % if that was marketing, 10 % and under is usually rent, 30 % is people. We are eating up the money that we have very quickly to run the company and then remember back to that profit and hello pay me owner, that starts to diminish. So we really have to look at that.

Will Hanke – WTMP (26:09)
Great.

Michelle Williams (26:13)
The other thing I’ll say is I always suggest when it comes to marketing especially for smaller companies that are just getting started I always ask the question do you have more time or do you have more money? Because let’s not forget both are currencies, right? One we spend in a checkbook or a bank account one we spend on a calendar So if I’ve got somebody new to business and they’re like I’ve got more time than money I’m gonna be go glad hand go network go everywhere you can

put out flyers, put out hangers, do everything you can that is super low cost. If they come back and tell me I’ve got more money than time because we’re busy and we’re scaling and we’re building, I’m gonna be go put your money out there then, right? Go run your ads and do the things that you need to do. And then in the middle, there’s a balancing act between what you want and what you have time and money for. So even just kind of understanding the dynamic there will help you with spending money.

Will Hanke – WTMP (27:08)
Yeah, yeah, really good. When it comes to like cash flow and handling the money that you are making, what are some strategies around managing that that businesses can sustain without, you know, jeopardizing their financial health?

Michelle Williams (27:23)
Well, first off, I am a big proponent, because I am profit first, of having a separate bank account to manage some of these things. So I really encourage my clients to have what I call a cost of goods account, so that when you sell that blind shade, shutter, window treatment, sofa, I don’t care what it is you sell, the money that they paid you to cover the cost of that good,

and maybe the sales tax goes into a bank account that is separate from the operating account of the business. Therefore, those funds don’t get commingled. So that way we know that we always have the money to pay for the product or the service that that person purchased. And then the profit from that, that’s a bigger conversation on when do we recognize profit, but the profit then can flow into an account that can be allocated to cover.

the day -to -day business expenses. So when we talked about cash flow, it’s about knowing how money comes in and goes out. The other thing I would say is take a large down payment. 75 % to 100 % down payment is what I prefer. I can’t go to Home Depot and order anything special for me that they’re not going to charge me for in advance.

And so where it used to be years ago when I started back in 2000, was 50 % was very much common if you got a deposit at all. And now most designers and most window treatment specialists are 75 to 100 % because the majority of the costs come up front. know, the cost that comes at the end, which is primarily their installation, you don’t want 50 % sitting on the back of the installation if something goes wrong.

I’d rather 10 to 25 % be sitting on the heavy lifting of the install. And so really trying to figure out how to move the cash upfront so that you have more cash flow as you’re working to get the things done. Cause you’re paying office staff and to order the product or receive the product and check the product and pack the product and all these other things. And if not, you’re going to be paying for that upfront before you get the money on the backend.

Will Hanke – WTMP (29:31)
Yeah, I think people always look at me crazy when I tell them I have six bank accounts, you know, at the same bank, right? Because everything’s coming into one and it’s almost like the envelope thing, right? You you put stuff in different envelopes, same concept. Yeah.

Michelle Williams (29:38)
Yes, thanks.

That’s exactly what it’s like. So it’s interesting because in the last couple of months, I’ve spoken to people that did not hold out sales tax appropriately. So then they got hit with sales tax issues. I’ve had some that didn’t hold out federal taxes and state taxes appropriately. So then they got hit with that. I’ve had some that have been

hit with a co -mingling of funds because they didn’t take a large enough down payment or somebody didn’t pay them because of some small thing. And so then it’s created this cascading effect where they’ve had to borrow money from one place to pay it back in another. And now they’re behind that eight ball and they’re waiting on the sale of the next thing to make up for the payment of the back thing. I’ve got some where they’ve not paid off all the product and the…

The credit cards are too high. And so now there’s a credit card bill for work that’s already done and paid for that they’ve got to now pay off with profit from the next job. I’ve seen every single bit of it and probably 10 other ways to screw it all up. And so the thing is, if we’re not allocating our money appropriately, here’s another big one I’ve seen, Will. I’ve seen well -meaning coaches tell people that they should be spending 20 % of their gross profit on marketing.

And the people are out there just spending this on marketing without understanding the revenue that it is supposed to generate. And so what’s happened is they’ve now blown through all of their savings because they were told to go spend it. That’s like the equivalent of being told, here’s your estimated tax payment to the government, but not being told based on you making this amount of money and having this in that profit, right? These numbers are correlated. And so if we are only looking at the metric of

I’ve got to spend 10 % or 8%. We’ve got to look at it and how it fits into the larger puzzle and what is the revenue that is supposed to be generated by that 20 % or whatever the percentage is so that I can keep spending it. If not, we will blow through any savings that we have very quickly with very little to show for it.

Will Hanke – WTMP (31:41)
Yeah. Yeah. I have a lot of conversations with business owners that’ll call because obviously we came on the radar, right? They need marketing. They realize that. part of that discovery call is, did you spend money on Google ads or Facebook ads? And I’d say I’d say 60 % of the time, maybe it’s, yeah, we tried it. It didn’t work. And and

Obviously it works, right? We do it for a lot of businesses and we do it well. And I think it does come down to, from a KPI standpoint, cost per lead. How much was each lead that you got, as you mentioned earlier? And then, did you put a dollar in and a quarter came out, or did you put a dollar in and $10 came out?

Michelle Williams (32:31)
That’s true, it’s true. But here’s the thing, first of all, we have to have an idea back to what we said earlier about what you’re measuring, and then we have to measure it. But we also have to do some testing to realize when is it working? Because sometimes we pull the plug too easy, right, or too quickly, and we haven’t given it time, or we’re doing A -B testing, or split testing, or some type of testing, and we’ve not even given that a chance to work. There is some…

Will Hanke – WTMP (32:47)
Okay.

Michelle Williams (32:56)
trial and error at the very beginning of almost any marketing that we do. I think about it like this. I used to go fishing with my dad all the time. I still love to go fishing with my dad. And one of the things that we’ve always talked about is you have to use the right bait for the right season for the fish you’re trying to catch and the water source that you’re fishing. And so what I look at marketing is a very similar exercise. You know, am I in freshwater? Am I in saltwater? What fish am I trying to catch?

Are they closer to the shore or in deeper water? Like, do they come to the top or do they go to the bottom? What are they doing? What are their activities? What foods do they eat? Well, it’s the same thing when we’re going after people. So for us to start figuring out what that is, we got to cast out a few times to see if they’re biting today, to see if they’re going to catch what we’re putting out. And if not, then we might need to adjust and try again. If we just say it doesn’t work without the adjustment or we’re just…

scattering food out there that no fish wants, then it’s not going to work. And so there, has to be a thoughtful process for marketing. I would say spending on the plan behind the marketing before you market, just like anything. really big on creating a strategy and a plan and then adding in the money. So before we start marketing, we got to have a plan and then we execute the plan. We manage and measure the plan and we allocate money to the plan.

Will Hanke – WTMP (34:23)
Yeah, yeah, very, very interesting. Thank you. When it comes to profit, right now we’ve got a business that maybe is profiting a little bit and we’re considering reinvesting some of that back into, let’s say marketing. What would be some indicators that suggest it’s the right time to do that?

Michelle Williams (34:44)
Well, first I would suggest that if the money is additional and that you’re not losing the ability to pay for other things that are absolutely necessary. Like I’m not going to take money that’s going to keep the rent paid to be able to do it. So truly profit, right? It might be, I’m going to be looking at the industry. I’m going to be looking at the economy to say what is happening right now. Does it make sense?

Will Hanke – WTMP (35:01)
Yeah, yeah.

Michelle Williams (35:12)
I would also be looking at things of am I willing to spend more money or put more money in and am I putting it into a known venture or am I putting it in so that I can go do that testing of the waters somewhere else? Like what is it that I’m really putting the money in for? And then I would also have a limit. How much am I willing to put in so that I can see if it’s going to pay off? Because at some point as the owner we can’t take so much out of our home for so long.

There’s only a small amount of time that we can do that. And it may even be, well, I’ve seen it where we just need one extra big whole house and we will be where we need. So it becomes a very limited amount of marketing to get that. But it becomes smart money to spend when you know what the cost of the lead is, you know that you’re marketing in an area that works for you, you know the messaging of what you’re saying. It becomes less risky. I’m not into taking profit and throwing it into a risky venture.

of scattering to try to hope something sticks. That’s not a good use of it. think when it’s a well thought out marketing plan, then it can be very useful. But we also talk about in Profit First, not doing so much plow back, right? Where we’re taking the money and plowing it back in. At some point, we have to make payment to the owners of the company. And many are being paid out of that additional net profit.

Will Hanke – WTMP (36:36)
Yeah, yeah, very important. So when it comes to some tools like that, we’ve obviously mentioned Profit First, definitely a book worth starting with. What are some tools and resources that you could recommend to help window treatment and awning companies better manage their financials?

Michelle Williams (36:47)
Mm

Yeah, well, one is going to be use some type of software like QuickBooks, FreshBooks, SageZero, something like that. So using an accounting software package, I think is instrumental in good financial health. I know that I’ve spoken to some companies, even million dollar companies that are still running things through Excel, and that blows me away. not that I don’t think that Excel has some good information, but I think that it’s hard to really be able to measure that and be able to

run reports in a certain way. So I would encourage those companies that maybe started with that moving to a more well thought out accounting package. The second I would say is certainly using a CRM to make sure that you can keep up with the cost of the leads and the conversion rates and kind of that detailed marketing information so that you know how to continue the spend.

And then third, would say I would use something like Matric Solutions that we built because it simply allows you to pull some of that information together to make decisions and helps you set the KPIs and the measurements to be able to manage against. Now we do not measure the marketing data. That’s what a CRM is for. But we measure the financial data that would correlate with that marketing data.

But even if nothing else just start looking at the numbers. There are numbers all over our businesses, right? Being able to look at those numbers and recognize that they’re giving us information that if we use it appropriately we can literally change the direction of our company whether it’s not just on the marketing side, know marketing starts early early on with who we are and how we present ourselves but marketing ends with how we in that job and how we

complete that installation and how we show up and what we do because that’s going to determine whether that word of mouth buzz is going to continue and whether they’re going to come back. And so really looking at the client journey all the way through and measuring their satisfaction from the beginning to the end and the lifetime value of that client, are they going to call you back again and again and again? I just really think that so often we don’t look, the numbers can be overwhelming and I don’t.

I don’t disagree with that, but even choosing and selecting a few KPIs that are going to get us closer to where we want to go and then building with a strategy will start to give you an indication of what other numbers and where to look to really be able to manage effectively.

Will Hanke – WTMP (39:26)
Yeah, yeah. And a good CRM will track, obviously, that other piece. We’ve built out, our CRM is called Lead Boomerang, and we’ve built it out specifically for the window treatment and awning industry. But you could see, like I said earlier, I put a dollar in and $10 came out. You can get that data and know that, OK, this worked. We did money mailer and it didn’t work. We did Yelp ads and we broke even. So you can get that kind of data from.

from those kinds of systems too. Yeah. So one last question, maybe not the most exciting question, but I think it’s something that comes up, and that’s financial setbacks. You mentioned a couple of businesses that maybe didn’t put some money aside to pay their federal taxes, right? How can businesses prepare and handle those unexpected financial setbacks that could really

Michelle Williams (39:57)
Exactly, exactly.

Yep.

Will Hanke – WTMP (40:23)
kind of obviously impact their marketing strategy, but just their entire business.

Michelle Williams (40:27)
Yeah, well the first I would say is to minimize the setbacks. And so what do I mean by that? The more that we are not looking or having our arms around the numbers in a company, the more we are opening up the opportunity for setbacks, right? So what that means is knowing how money comes in and out, telling every dollar where to go, creating the bank accounts, whether it’s 2, 4, 6, 8, 10, but creating bank accounts with specific uses.

and the money goes in there and it is only used for that item. Saving for the rainy day, not spending more in the business, just like in our home. If we spend more than we make, we’re going to be upside down. And the more that we don’t have money in savings and the more that we’re not saving money for these unexpected setbacks, the more we’re in trouble. The more that we can make sure that we are tax compliant.

whether that is sales tax, state tax, federal tax, self -employment tax, whatever taxes are coming our way, property taxes, making certain that we know what those implications are and that we’re covering for them. And then another I would say that gets a lot of us is saving money to hire because just walking out and hiring somebody without any money and savings to be able to have a three -month onboard ramp for that person is going to potentially cost us because

it is rare that we would hire somebody that it did not take resources from you the owner or from somebody else in the company to get them on boarded and up to speed. So I usually suggest that we’re saving three months in advance of that salary so that we don’t feel so badly when it’s they’re not hitting the ground running on day one that they’ve got a little bit of a slower ramp to that. So even just creating the strategy to think ahead. I always ask that if you’ve built a strategic plan

Give a dollar amount to every single thing on the plan and then ask where that dollar is accounted for in your budget, in your income, in your net profit, wherever it is supposed to show up, making certain that it is in there. So the more that we can acknowledge and plan for and then have kind of that contingency plan, the better off we can be to handle those setbacks.

Will Hanke – WTMP (42:41)
Yeah, yeah. I love that you said that. I always look at, you know, the money as each dollar is a little soldier that can go out and either goof off and waste your money or you can go out and do something to bring back other soldiers. Right. I don’t. Yeah. Yeah. So I love that that analogy. Well, Michelle, thank you so much for your time today. I really appreciate all your insights. I I I’ve admitted before.

Michelle Williams (42:56)
That’s exactly right.

Will Hanke – WTMP (43:09)
that I didn’t get into the whole finance part of my business probably until seven, eight years ago. And prior to that, I was just trying to buy groceries, you know, and just making it. And once I kind of got into the world of, okay, I need to focus and understand where my soldiers are going, right? It really, really changed my business. So I really appreciate all of your insights today.

Michelle Williams (43:35)
You’re welcome Will. Thank you for having me.

Will Hanke – WTMP (43:37)
Yeah, so if people want to learn more about Scarlet Thread or Matric, where can they go to find more information?

Michelle Williams (43:45)
Yes, so the websites are scarletthreadconsulting.com and metriquesolutions.com And I know you’ll probably put that in the show notes. It’s M-E -T -R -I -Q -U -E. And then you can find us on Instagram at scarletthreadatl and Metrique Solutions and on Facebook as well and also on LinkedIn.

Will Hanke – WTMP (43:53)
Of course. Yeah.

Awesome. So you’re all over the place. That’s great. I love to hear that. Which is a whole other conversation, right? Getting all those pieces in play as well. Yeah.

Michelle Williams (44:06)
all over the place. Yep.

It’s been years. It’s not a it’s not something that happens quickly, but I’ve got a team and it’s been years. I’ll put it that way.

Will Hanke – WTMP (44:18)
Yeah. Yeah. Yeah. Well, thank you again for your time. I really do appreciate it. If you’re a listener and you enjoyed this episode, please subscribe. We’ve got a lot more awesome experts like Michelle. And if you want to learn more, make sure to visit our show notes page to get the links to Michelle’s different platforms. And thank you again, Michelle. Hope you all have a fantastic day.

Michelle Williams (44:45)
Thank you, Will.

Will Hanke – WTMP (44:45)
Awesome. That was great.

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