The Path to Financial Confidence in Solopreneurship

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In this episode of The Aspiring Solopreneur, Carly Ries and Joe Rando are joined by Danielle Hendon, a CPA and owner of 4 Corners CFO, with a refreshingly approachable vibe. Danielle breaks down intimidating money matters into digestible nuggets of wisdom, starting with what it means for a business to be “bankable.” Spoiler: It’s about setting yourself up for financial support before you need it!

Danielle spills the beans on why debt isn’t the villain it’s made out to be—it’s all about intention. With anecdotes, practical tips, and a framework for mastering your business finances, she guides solopreneurs on navigating cash flow, profit margins, and the dreaded accrual vs. cash accounting debate. 

Oh, and PSA: Stop asking your CPA for permission to run your business! Danielle believes in empowering solopreneurs to make informed decisions, not just follow advice blindly.

From why it’s okay to raise your rates (hello, inflation!) to uncovering your most profitable services, Danielle’s Reveal Your Path to Profit framework is the ultimate guide for financial clarity and success. And her favorite quote? “Everything is figureoutable.” Isn’t that the mantra every solopreneur needs?

Tune in, take notes, and maybe rethink those financial fears—you’ve got this!

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Connect with Danielle Hendon

• Access the Reveal Your Path To Profit freebie

Favorite Quote About Success:

"Everything is figureoutable." - Marie Forleo

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So, if you are lacking direction, having a hard time generating leads, or are having trouble keeping up with everything you have to do, or even just lonely running a company of one, click here to check out SoloSuite Intro!

About Danielle Hendon

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Episode Transcript

Carly Ries: Today, we're sitting down with Danielle Hendon, the powerhouse founder of Four Corners CFO. This episode is so great for solopreneurs like you because she demystifies the daunting world of finances and helps you discover actionable insights to make your business not just survive, but thrive. From what it truly means to be bankable to mastering cash flow, Danielle breaks it all down with clarity and humor. Plus, she shares her game changing, reveal your path to profit framework, where she gives solopreneurs the tools to confidently manage their money and focus on growth. So get ready to take some notes because this episode is packed with financial wisdom you can start using today.

You're listening to The Aspiring Solopreneur, the podcast for those just taking the bold step or even just thinking about taking that step into the world of solo entrepreneurship. My name is Carly Ries, and my co host, Joe Rando, and I are your guides to navigating this crazy, but awesome journey as a company of 1. We take pride in being part of LifeStarr, a digital hub dedicated to all aspects of solopreneurship that has empowered and educated countless solopreneurs looking to build a business that resonates with their life's ambitions. We help people work to live, not live to work. And if you're looking for a get rich quick scheme, this is not the show for you.

So if you're eager to gain valuable insights from industry experts on running a business the right way the first time around, or want to learn the missteps of solopreneurs who've paved the way before you, then stick around. We've got your back because flying solo in business doesn't mean you're alone. Okay. So Danielle, we just met a few minutes ago. And can I just say the energy you bring to a virtual room is so refreshing, so light.

And I just really appreciate that as somebody that's going to talk about money because you feel like sometimes it can be really intimidating for people. A lot of the jargon used, it just can be very overwhelming. So the fact that you showed up wearing a hoodie, ready to rock, I just really appreciate it. thank you so much for coming on the show.

Danielle Hendon: Thank you so much for having me. And honestly, when I started this business, I told my friends, I was like, I do not wanna be the CPA that nobody can talk to because nobody understands them.

Carly Ries: Yeah. Exactly. And so it's funny because the first question, and this was based off of just doing some due diligence that I wanted to ask you about because I think people might be confused about this. Let's just get to the, let's leave the jargon behind. And what does it mean for business to be bankable, and why do businesses need to be?

Danielle Hendon: So you don't have to be. You can completely be self funded with your own safety net, but that's hard. And a lot of times, especially as a solopreneur and especially when you're just starting out, you don't have a safety net. If you do, it's the safety net you need personally in order to get this business up and running so that you can become the business that you wanna be professionally. And to be bankable really just means that the banks will loan you money. I will start by saying if you do need to be bankable and you need to go find money, I would start with a credit union over the big major banks because you're going to be able to leverage your relationships and that smaller credit union vibe to have a little less red tape and get any kind of access to funding a little easier. It's also really important to have that safety net. And one of the first things I tell anybody who talks to me about debt or finances is to go get a line of credit. I don't care where you are in your business. If you don't think you're ever going to need it ever, that's the best time to go get it.

Because if you don't need it, then you are definitely more bankable than when you do need it, and you may not be able to get it at all.

Joe Rando: That is great advice. And I heard that first decades ago from an old man who was a business guy, a hotel guy, and he said when things are good, that's when you go to the banks and borrow the money because they won't give it to you when things are bad.

Danielle Hendon: And, I mean, there are resources. There are ways you can get things, but it's definitely a lot harder to do when you realize you need it. And there's this whole mindset that goes along with debt and with safety nets. And when a business is struggling and they really need to bring money in, all you can think about is money. You're revenue reaching everywhere, and you are not necessarily making the best decisions in your business.

But if you have a line of credit and a safety net that you can turn to, it gives you space and grace to take a step back and pivot and make decisions that are good for your business long term, not just for your bank account right now.

Joe Rando: Can I ask a question on unbankable before we leave that topic? So, you know, I've done bank stuff before, in different forms and with the exception of large commercial real estate deals. Anytime I've done anything with a revolving line of credit, something where we can draw down when we need it or any other kind of loan. It's always involved signing personally. Right?

Putting my own name on it as an individual so that if it doesn't get paid, they can come and, do whatever they do, take my house or whatever. And so when you talk about a business being bankable, is that 2 pronged? Is it individual and the business, or is it just the individual? if the individual's got good credit score, do they not care about the business, or how does that work?

Danielle Hendon: It is 2 pronged, but it is going to be very difficult for any small business owner to avoid that personal signing. I don't know that I've come across any bank or credit union that will grant that without you assuming personal liability for it, which honestly irritates the heck out of me because that's why we all went and got an LLC. Right? But so they will look at you personally for pretty much any small business, and your business needs to be in good shape. A lot of the key things that a bank is gonna look at is going to be your cash flow.

Are you bringing money in? Not just your revenue. A lot of business owners know their revenue, but are you actually collecting on that revenue? But on the reverse side of that, do you have a bunch of receivables? One of my favorite scenarios to pitch a line of credit to a business owner is when you've got a difference between when you have to spend the money and when you get to collect the money.

A lot of times, you are spending money to get a job done whether it's people or materials, and you may not collect on that for at least 30, sometimes 60, and good lord, I've seen it all the way up to a 180 days. It can be a really long span, and that can break your entire business.

Joe Rando: I do wanna dig in on a point you just made. So you said cash flow, and I totally agree that that's what it should be. But I had an experience with 1 business. Our cash flow was very good, But because we were using accrual accounting, not to get into, jargon, but, you know, the idea of not recognizing the money when it comes in so much as when it's due and the payables when they're payable and lining those things up. And it's a very common way to do accounting for a lot of businesses.

And we had positive cash flow and negative income.

As we were growing. So we were recognizing the income. We get paid a year for the year in advance, recognize the revenue, recognize the expenses over the year, and grow. But gee whiz, we could manage to show a loss on paper, which was nice for tax purposes, completely legit, and yet the bank's brains melted.

Danielle Hendon: Oh, yeah. They're gonna wanna see how bad they come.

Joe Rando: You know, so it wasn't about cash flow. It was about income. So I think the point I'm trying to make here in a long winded way is it might be a safe bet to use cash accounting at least in the early days because, otherwise, you might find it to be a hard argument.

Danielle Hendon: Well and that goes beyond just the bankable perspective. having a CPA background, I can go night and day and all over on accrual accounting. But I will tell you most of our clients are actually cash basis because it's what they know. You know your bank account. And as a business owner, it's almost always the first thing you turn to is your bank account.

So if we can make your budget and your finances align with that cash basis model, which we can, it makes more sense to a small business owner as they're moving through that process. It is also to do true accrual accounting, full blown accrual accounting can be very expensive and not necessarily cost beneficial to a small business owner.

Joe Rando: Thank you.

Carly Ries: Well, speaking of, just what's beneficial for a small business owner, We were talking about debt. What is the difference between using debt to your advantage and drowning in it and not using it to your advantage?

Danielle Hendon: The one word that makes all the difference in the world is intention. If you enter into debt with intentionality and a purpose, then there is likely a return on that investment in mind when you're doing it. If you are swiping your credit card just to pay the bills because your bank account's empty, then you are not intentionally entering to into that debt. You are unintentionally just swiping. But I do wanna make sure that people listening are really clear.

We definitely live in a debt averse, environment right now. Personal finance is all about being debt free. Debt is one of my favorite tools for a business owner for a lot of different reasons, and it's almost necessary for sustainability and growth. And we do a lot of work with some of our clients to get beyond that. I have one client where it was literally, can we just get a credit card?

And I promise I will be here with you, and we will pay it off every month, but you have to get comfortable using other funding than just your own business, or it severely limits your ability to grow.

Carly Ries: Yeah. That's a good point. But how often do you see that versus people being like, bring on the den. Let me just spend everything.

Danielle Hendon: You Would actually be surprised. I see a lot of people doing really well in their business and have never thought about getting a line of credit. They often use credit cards. We all know how great points can be, and track that stuff down. And you can pay it off, and it doesn't feel like debt if you pay it off every month. But there are a lot of people that are afraid to go take on a conventional loan or a line of credit because just like you said, Joe, you put your personal name on that stuff, and it feels like you're breaking past that LLC protection that we all have.

And you're like, don't wanna put that at risk. I have a very entrepreneurial husband. I was not meant to be the entrepreneur of the family. It just happened to be the way things landed, and I used to always tell him being the more conservative one. I was like, you can do whatever you want, but you can't put this house at risk.

I don't care what you do, but you're not putting the house at risk. And that's the mentality that some people do go into this with is I don't wanna personally sign anything.

Joe Rando: I don't either. Sometimes you have to.

Carly Ries: Well, I'm glad you're on today because we have a lot of solopreneurs. They're just going in blindly. They don't have a clue what to do with their money to grow anything like that related to finances. So they really rely on people like you. They rely on their CPA, but you have a little bit of a controversial opinion for small business owners.

And that is that you are not a fan of business owners needing to ask their CPA, quote, unquote, permission to invest. So can you explain that, and what is the alternative to that for some of these people?

Danielle Hendon: So your CPA should be a sounding board for you. It is absolutely someone you wanna talk to, but I can't stand when business owners feel like they need permission to do something in their business. You might need help understanding what the the story that the numbers are telling you so that you can make an informed decision, and you should always make an informed decision. But the decision at the end of the day is yours, not your CPA's. It is not their business.

They are not nearly as invested or in tune with your business as you are.

Joe Rando: Yeah. I wanna just, second that motion. I mean, if they were, you know, entrepreneurs, they'd be entrepreneurs, not CPAs. And they have a job to do. And sometimes their job is to warn you about things that maybe risks that you wanna take.

And I wanna expand that to lawyers too. And lawyers are you know, I've been lucky enough to find a few lawyers in my life that were actually dealmakers. But there are an awful lot of lawyers out there that will happily have a deal die because you know, they don't want anybody pointing them and saying you did that wrong, and just will lure the heck out of it to the point where you don't make a deal.

Danielle Hendon: Oh, and CPAs can especially when it comes to tax strategy. There is a gray space in tax strategy, and we don't personally do taxes at Four Corners, but we have a lot of really great CPA friends that do, and you can run the gamut. You could have a CPA that tells you I'm not writing off a single meal, and you could have a CPA that's like, give me all the receipts. I don't care. We're writing off your car.

Like, you can run such a broad spectrum, and you've gotta find someone that can do what I like to call the ethically gray area. You wanna take advantage of everything you can, but you want it to be defensible, and you want it to be something that isn't going to get you in trouble at the end of the day.

Joe Rando: Absolutely. Now that's the thing that some of them wanna be so careful that it hurts you.

Danielle Hendon: And nothing against CPAs. I am one, and I will tell you even with one of my clients recently who sold the most profitable part of her business, and I was like, are you, really sure this is what we wanna do? And she was like, oh, yeah. We're gonna go do this and this and she's thriving. It is the best decision she ever made.

But I am sometimes gonna be like, are we sure that's what we wanna do? But you, at the end of the day, have to be the one that makes that decision because you know your business and you know yourself better than anybody else.

Carly Ries: Well while I agree on being able to make your own decisions and being your own boss and everything, I do want your guidance on something, which I think would be helpful for other solopreneurs. And that is again, for people that are just like, I don't know what I'm doing. What are some specific tasks that should be completed regularly to help keep business finances healthy, whether you outsource it to yourself or whatnot?

Danielle Hendon: I'm gonna run through a few that technically fall under the radar of bookkeeping, but I'm going to say this and also say please don't do your own. There are so many bookkeepers out there and they have such a broad range of prices. It is never worth your hour to do it yourself and figure it out versus paying somebody who already knows how to do it and can do it so much quicker and so much better than you probably can. That being said, when someone else is doing your books, the very first thing you should do before you even begin to look at any reports is make sure that your balance sheet is reconciled. And that is a section in your bookkeeping, whether it's QuickBooks, Xero, whatever it is you're keeping your numbers in, that shows you and I'm gonna date myself in this.

It's essentially balancing your checkbook, but for your business. It makes sure that everything that hit your bank account and your credit cards is also showing up correctly in your books. Nothing's being double counted. Nothing's missing. You wanna be looking at complete numbers before you run a single report.

So that would be the very first thing I would look at. The second thing I would say, I don't care how good or bad you think your business is doing. You have to look at how your business is doing, and that means running those reports. Whether your bookkeeper runs them and sends them to you or you get in and run them yourself, you should know what your p and l looks like, your income statement, your profit and loss, whichever term applies to your system. You should also know what your balance sheet looks like, and the balance sheet is probably one of the least looked at financial statements for any business owner, but it is the health of your business is sitting on that balance sheet.

So make sure everything's reconciled. Take a look at the numbers. And then when you are looking at those numbers, there's a couple of things that you should check-in on. 1st, if you do have a budget, I'm a firm fan of budget to actuals every single month. It's what tells the story of your business financially.

Your budget is not meant to be met. Your budget is meant to give you an understanding of why things are happening and what's happening. So if you have a budget, check your budget to actuals. If you do not, I want you to check these couple of other things, and this is kind of helping you understand the profit levers in your business. But what are your profit margins by product or service?

And notice I did not say what is your profit margin singularly. You have to know what your profit margins are by each of your products or services, and that should be easy for you to find on your p and l. If all you have is one line item in the p and l that says sales, you're losing half the story. So know your profit margin by product or service, and then know what that net income number is because it is a driving factor in a lot of financial decisions externally and internally. You may have great profit margins, but then you are bloated in all of the operating expenses and you're actually losing money.

The third is on your balance sheet and making sure that cash and receivables and payables all stay relatively similar if not improve. So an improvement in cash month over month means it's growing. An improvement in receivables month over month means it's reducing. It's giving you more cash, less receivables. And then improvement in payables is also going to be a reduction.

We don't wanna have a whole bunch of stuff outstanding in payables that are going to cause cash flow problems later. So if you were just all you are gonna do is look at your numbers, those are the things that I would recommend looking at first.

Carly Ries: Okay. So somebody is like, I've looked at all of this. I'm looking at my profit margins. I've done everything I can to cut what I can and trim down as much as possible, and it's still not making a difference. What advice do you have for them?

Danielle Hendon: If they have trimmed everything they thought is possible, I'm going to venture. It's normally in that operating expense section of things. You're trimming your cell phone costs. You're trimming your insurance costs. You're trimming your software costs.

You're cutting any subscriptions you don't need. That is actually only one of 3 key profit levers that you can pull in any business. So if you've done that one, you're on track. It's great. You've done 1 third of it.

The other 2 thirds sit in that top half where you've got revenue and cost of goods sold. And I like to call cost of goods sold our revenue generating costs because people can get very easily confused, especially if you're a service based business owner. You do not have 100% profit margins. You don't. You still have to do work.

And if someone was going to come in and replace the work that you're doing down the road, you have to pay them a reasonable wage to do so. So while this is not necessarily full blown accrual or allocations or anything like that, I wanna see you put all of your revenue generating costs. And if that includes yourself, then that is your salary. I wanna see that up in your cost of goods sold because that's what helps you decide what that profit margin really is. Because those 2 other profit levers involve, a, raising your rates, because let's be honest, we are in an inflationary period.

I don't know how many emails I got from different software companies this summer that they were raising rates. Everybody's raising rates, and I would venture you could raise your rates 10% and not even see anything budge in terms of clients. That being said, there is a mindset hurdle here where people are afraid to raise rates and lose clients. What I like to tell people in that scenario is literally just do the math. If you're a service provider and you're spending, let's say, 5 hours on a client and you've got 10 of them, if you lose one of them, you've actually just gained back 5 hours.

And if you raised 10%, you're basically covering the cost of the one you lost. So do the math, raising your rates, and especially at something like 10%, you're not gonna see a lot of people bulk or push back. The other profit lever is what we were just talking about in understanding your most profitable products and services. You have got to know your profit margin, which is revenue minus cost of goods sold by product or service, not just one lump sum. And when you know what your most profitable is, you go market the heck out of that thing.

That's the one we wanna sell the most of. You wanna shift the balance of what you're selling so that you are selling more of the most profitable and less of the least profitable. And then without selling anything extra, if you have the same number of clients, you are automatically gonna have more profit that way.

Carly Ries: Yes. Such good information. Okay, Danielle. You've given us so much, so I want you to kinda do a little bit of a shameless plug that still includes some great information. You have a big business framework that you use that can help small business owners generate and maintain operational profit.

So plug away. What is this?

Danielle Hendon: Okay. So it is our reveal your path to profit framework, and we do this in group formats. We do it in a course format. We do it individually 1 on 1 with clients once a month going through all 6 parts. It basically takes you from balance sheet to budget and cash flow.

We start with the balance sheet. We make sure everything reconciles. Then we dive into your revenue, and we understand what are those revenue streams, what are the revenue generating costs, and what are the profit margins, and making sure that your bookkeeper has your reporting set up so that you can easily see that and make sense of it. And then we dive into all of those other operating expenses, the things we first think about when it comes to cutting costs. But we do things a little bit differently on the expense review.

We put everything in 1 of 3 buckets. You either have a required cost. So for any business owner I know, cell phone and Internet are absolute necessities today. You can't run a business without them. It's required.

You have what I like to call the personal perks, the things your tax CPA or EA has recommended that you run through the business, but they don't really add value to the business. They add value to the business owner. My favorite example, and I put myself on blast here all the time, my kids are on my payroll. They have defensible jobs in the business. They do not add a lick of value to the business, but it's a great tax perk.

So that is a personal perk. And then the very last one is investment. So if it's not required and it's not a personal perk, every single dollar you spend outside of that is an investment in your business. And we take time to work with those clients to go through and figure out what is the return on that investment in time, money, or both. And if it's not doing any of those, why are we spending it?

So making sure that every dollar you spend, if it's not absolutely required, is giving you a return on investment. And if we still don't hit, we run different profit measures of how much goes where. If we're still not hitting the level that we want to, you circle back to those required costs and you kick the tires, and you think outside of the box. When's the last time we shopped this around? How could we get to this end result differently?

Because at the end of the day, a required cost isn't actually a required cost. It's the result of that cost that's required and how can we get there differently. So going through that exercise, meanwhile, my team on the back end is, like, okay. How are we gonna model revenue? How are we gonna forecast expenses?

How often is everything happening? Because in part 4, we're gonna put together a budget, and we are gonna go line by line and do what I call bottom up budgeting. We are going to budget every transaction that you know that you're going to have. I wanna see the cell phone in the budget. I wanna see the Internet in the budget.

Because when I go to try to tell the story of your numbers, I need to know exactly what's missing or what went over or where things came in at. So you bottom up budget, and most accounting systems are not gonna let you do this. So if you're doing it for yourself, I recommend keeping it in Excel sheet so that you know what goes into the number that you put into your budget. You're gonna usually put a budget by account. So put that budget in, but then know what that number is based on.

Was it how much was the cell phone? How much was the Internet? How much was the meals? All of those things. And then once we have a budget, we get to do my favorite part, which is budget to actuals for the very first time.

And that is truly where you get to understand what your business is telling you financially. It's where you get to compare revenue to what we expected revenue to be. And if revenue came in over, I wanna know what we did and how and why and how do we do it again. If expenses are coming over, we then get an opportunity to say, do we need to adjust the budget? Is this a new expense with a good return?

Or, do we need to make an adjustment in the business because we overspent on something that is not giving us a return? And making sure that we really understand what that looks like. Last but not least, and I I hate that this is last because so many of our clients come to us and this is the pain point, and it's cash flow. But to truly get a good cash flow forecast, you have to build out those financial expectations first. If you don't have them and if somebody tells you they can give you a cash flow forecast without a budget, I'm gonna be honest, they're lying to you, or they're not going to give you the best cash flow forecast that you can get.

They might be able to analyze your cash and give you a bunch of trends, but it's not gonna give you a true picture long term of what that's gonna look like over time. So we take the budget and we turn it into a cash flow forecast that looks just like your budget. It is not the cash flow statements that business owners know and hate. It is literally gonna say this is what we're expecting in sales. This is what payroll is gonna cost.

This is what all your other expenses sitting on the credit card are gonna cost next month when you pay it. And bake in that timing. If you've got those 30 days, 60 day, 90 day terms that we talked about, you need that timing to show up in your cash flow. You also have to put the things that will not show up in your budget on your cash flow like you would a budget. I wanna see profit distributions.

I wanna see the payments on our debt. I wanna see the savings for taxes so that you're not surprised in April, and make sure that we've got all of that set up so that you are on the path for success. And then after that 6 part framework, whether with us or on your own, you can go through that budget to actuals and budget updating every single month to tell the story of your business and move forward.

Carly Ries: Danielle, this framework is so thorough. Where can people find out more about it, as well as you in general?

Danielle Hendon: So we are gonna have a freebie that is, it's a reveal your path to profit freebie. It literally just goes through those same six parts I told you in a little bit more detail, and it'll be on a landing page just for you guys on our website. So the number 4, not the word, 4cornerscfo.com/tas

Carly Ries: Awesome. Perfect. Well, I want to end the show asking you a question that we ask all of our guests, and that is what is your favorite quote about success?

Danielle Hendon: I'm gonna have to go with Marie Forleo, and everything is figureoutable. Because like I said, I was not the destined entrepreneur in our family, and when I started this, I was definitely your risk averse type a personality, and I have had to learn that everything is figureoutable. And the other one that I tell myself, and I don't know if it's famous anywhere, is that failure is only the option if I stop trying.

Carly Ries: Oh, such great Cool. Great quotes. They're going up on the wall, Joe. The imaginary wall where I keep all of our quotes. Well, Danielle, thank you so much for coming on the show today.

This was wonderful. I really appreciate it. I'm sure our listeners do too. And speaking of our listeners, thank you so much for tuning in. As usual, please give us that 5 star review.

Subscribe on your favorite platform, YouTube, you name it. We just really appreciate the support, and we will see you next time on The Aspiring Solopreneur. Take care. You may be going solo in business, but that doesn't mean you're alone. In fact, millions of people are in your shoes, running a one person business and figuring it out as they go.

So why not connect with them and learn from each other's successes and failures? At LifeStarr, we're creating a one person business community where you can go to meet and get advice from other solopreneurs. Be sure to join in on the conversations at community.lifestarr.com.