Emma: [00:00:00] Welcome back to the Business BFF podcast. Today’s episode, we are talking about something I see way too often with brilliant, capable, growth-minded business owners, and it’s a sneaky trap of growing broke. You’ve got the sales, you’ve got the momentum, you’ve even got the team. Maybe you’ve even got a wait list, but you don’t have the profits to match. 

You are working harder than ever, and your business bank account still kind of feels like it’s a bit anemic. Frustrating, it’s confusing, and it’s also something we can fix. We dive in, I want you to have a think. When was the last time your business had its biggest month, but you still felt like you were chasing your tail financially? 

 Let’s dive in. 

Welcome to the business BFF, the podcast where fierce and fabulous [00:01:00] business women come together for the kind of real talk and honest advice only your besties would give. I’m your host Emma Bowdler, founder of The Women’s Accountant, and I’m here to help you navigate the wild world of business, finance, and life. 

Whether you are scaling up. Starting fresh or just need a pep talk from someone who gets it, you are in the right place. So grab your favourite bevy and get comfy. It’s time for a chat with your business BFFs. 

Emma: So this is a big one and it’s something that I see all too often. So I wanted to really start with, what do I mean when I say “growing broke”? So let’s start with defining that, because once you know what, what to look for, it’s a really easy thing to spot. So growing broke happens when your business grows in activity, but not in actual profit. So this could be more [00:02:00] clients, it could be more sales, it could be more team, more systems, more tech, more overheads, whatever that looks like. It’s just more. But what about your bottom line? So it’s flat, it’s worse than that and it’s going backwards into the red. Might even be dipping into your personal savings or just juggling bills to make payroll or to pay yourself. And here’s what makes this so sneaky. On the outside, things look good. You know, you are busy, your revenue is up. But your margins are vanishing and you are running a growth machine with no fuel in the tank. Now, I’ve worked with clients making six, seven figures who were still living week to week, and it’s not because they weren’t working hard, but it’s because the [00:03:00] structure of their business could not support that level of growth. Okay. So just have a think about that. There are four common reasons that you could be growing broke, and so let me break those down for you. And the first one is all around pricing. So your prices haven’t gone up. So here’s the thing. As your business evolves, your expenses do too. So that’s more tools. 

Maybe it’s more support, maybe it’s higher insurances, it’s software, it’s superannuation. You know, we saw that go up at the 1st of July. Wage increases, taxes. All of those things stack up. If your pricing has stayed the same since you started, or if you are still charging based on what felt safe or accessible, you are likely to be covering your client’s costs and your [00:04:00] own. 

That’s not generosity. That’s you slowly absorbing the financial weight of your entire business. So let’s think about that. So when was the last time that you reviewed your rates? And not from a place of fear, but a place of sustainability. Start factoring in your time off, your admin fees, your delivery time, and your future. What does that look like? Your pricing doesn’t include a buffer, then it’s not sustainable. The second thing that I see is that businesses absorb the rising costs. So, you know, we talk about cost of living and how that’s super hard. The cost of doing business is exactly the same. Everything is going up. Super, award wages, subscriptions, postage, packaging, whatever. Everything [00:05:00] has been, I guess, increased and it does year on year. Sometimes if it’s like Xero, they’ll do mid-year increases. So if you’ve been shouldering all of these quietly because you think you don’t wanna rock the boat with your clients, you are slowly leaking cash. Now, you know really good clients don’t expect you to stay the same price forever, especially when everything is changing. You really just need a plan to communicate those things to your clients and customers clearly. So general rule of thumb is a minimum price increase of the CPI index on your invoices or contracts year on year. More if the cost of business has gone up. And so to have a plan in place for gradual increases, those small steps can often feel less scary than one big leap or one big price [00:06:00] increase all at once. The third thing that I see is those extra sneaky expenses or forgotten subscriptions. This is a really big one and it’s something I am absolutely guilty of. So, you know, if you think about that $27 a month tool that you used once for your launch in 2002 and then forgot about, that by five or six months and suddenly you are spending hundreds, maybe even thousands of dollars a year on something that you are not even using. Subscriptions is a really big one for me. 

You need to audit it. You need to have a look, and you need to cull anything that’s not needed. Did this recently for a client who we had onboarded for, and it was actually her Xero subscription, and so when I dove into the file. She was playing, paying the Xero subscription for, I think it was about [00:07:00] 25 employees. 

She only had five. So while she had 25 back in the day, she’s only got five. So we were able to reduce that subscription down to what she needed, and I think we saved about, you know, 1500 or two grand just for the year. So have a look at those reports, if you go into your subscriptions and have a look at the account transactions, you’ll be able to identify some of those. A really great tip that we do is that we are time block to have a look at that. Every single quarter, every time I do my BAS, I will do a tech spring clean. Make sure that I’ve got the right subscriptions that I can cancel anything that’s not been used or even sometimes being able to consolidate some of those tools that all do the same job. Have a think about that, see how it sits for you. Another one [00:08:00] that I see really a lot of, again, absolutely guilty of this is reinvesting without a clear ROI. So this one might sting a bit for a few people because sometimes spending is emotional. What I mean by that is sometimes we can be investing in shiny upgrades. Whether it’s new branding or new website or new platforms, because it gives us that, this sense of momentum, even of progress to be honest. But if you are spending without a clear plan for how the investment will bring in more money or save significant amounts of time, then you’re not really investing. 

You are buffering that discomfort with business purchases. So before you hit buy, I want you to ask yourself, you know, what am I trying to [00:09:00] achieve by this? By purchasing this? How will it pay me back? Not emotionally, but financially. And what does that look like? You know, to use a Mel Brown example, you know, she’s really big on you know, not online shopping and, and all of those, no. Afterpay and that kind of thing. But one of the tips she had said is that if you put something in your cart to sleep on it, so give yourself 24 hours and then if it’s still something that you want to dive into, then. You know, then you might wanna consider it. What I also have for myself, and I do this with Emily, our practice manager, is I will always check in with her before I make big investments in my business. 

Because ultimately, you know, whatever we invest in needs to be good for the entire team. So part three of this one is all about conscious scaling. So [00:10:00] if growing broke is what is happening, then what’s the solution to that? And the solution to that is what we like to call conscious scaling. So it is all around that growth that is sustainable, it’s intentional, and it’s profitable, and here’s what it looks like in practice. So the first thing is to rebuild your pricing structure. Map out your packages, include the cost of delivery and the value that you bring. And don’t just match the market with this, match your reality. 

You know, there’s nothing more frustrating than seeing people have a really great offer that has got so much value than what a competitor does, and then just matching their prices. That’s not your reality, and that’s not what you are delivering. What would it look like if your pricing actually supported the life that you wanted to live and not just your [00:11:00] expenses? 

What does that look like? Second thing is to do a quarterly money audit. So, you know, check your tech stack, track your expenses, review every subscription, trim the fat and then reinvest that wisely if you need to. I know everybody doesn’t love budgeting, but the reality is, if you are not budgeting for the expenses in your business, then you are really just coming out with a pricing strategy that is like throwing spaghetti at the wall and hoping that it sticks. That is not strategic at all. The third thing I want you to consider is to know your cash conversion cycle. So this is the time between when you start the work and when the money lands in your bank account. So you know, think about delivery times, invoicing, delays, payment delays. If that is like 45 plus days, [00:12:00] then you are creating a cashflow pinch in every single transaction that you make. So what you can do to improve that is shorten those times. That could mean invoicing faster. It could be incentivising prompt payments. I have done that in, in accountancy practice that I owned previously. You know, we would offer clients a 5% discount if they paid within seven days. That could look like if you work in project space, it could look like invoicing before invoicing in the middle, and then invoicing at the end. So you are automatically pulling some of that income forward. Just have a think about your business structure and see what that looks like. fourth thing I want to talk about is updating your packages. So this one hits home for me personally. So are you still delivering your 2021 offer in [00:13:00] your 2025 business? And if the answer is yes to that. Would really encourage you to review it. It is time to re-scope the job and reprice the job because sometimes the package that you built was when you were in survival mode isn’t really for the business that you’re in now. Lots of things to think about there. So growing broke is one of those traps that creeps in quietly because growth feels good and it looks good. It validates your effort. But if you are not keeping your eye on your margins, then your business could be gaining traction and losing stability at the same time. The good news is. You can fix it with clarity, with systems and with confidence. 

Thanks for tuning into the business BFF. We hope you’ve [00:14:00] found this episode, equal parts, big hug and kick up the bum, all the things a bestie is good for. Remember, you’ve got this and we’ve got your back like only a BFF can. If you’ve loved what you’ve heard, be sure to subscribe, leave a review and share it with your fellow business besties. 

Don’t forget to follow us on social media at @thewomensaccountant for more tips, tricks, and behind-the-scenes fun. Until next time, keep being fierce and oh, so fabulous. 

Emma: If this episode had you nodding along and scribbling notes on the notebook beside you, then let us know by sending us a DM over at @thewomensaccountant on Insta, and be sure to pass it on to one of your biz besties who’s been doing all the things and still feels like the numbers don’t add up until next time. Here’s to growth that doesn’t cost you [00:15:00] peace, your profits, or your purpose.