Something in the world of floating have you stumped?
Show Highlights
Graham and Ashkahn break down the real truth about how closely they watch their budget for Float On on a monthly basis.
The truth is… not much. As it turns out, monthly expenses for float centers don’t have huge variations unlike businesses that rely on retail, for example. Graham and Ashkahn explain they developed a sense for what’s within reason.
Listen to Just the Audio
Transcription of this episode… (in case you prefer reading)
Ashkahn: Yeah, this is Ashkahn.
Graham: I am Graham.
Ashkahn: And boom, we got a fresh one, fresh one coming at you today. Just cooked it up, we got it all nice and prepped and the spices have been applied, it’s been marinating for a while, just about to put the garnish on. It’s really going to be a delicious episode today.
Graham: “How do you budget your center’s finances on a monthly basis?”
Ashkahn: When you say it like that it doesn’t really sound as delicious as I think I made it seem, but it’s a good question.
Graham: Think of it as fault of the dish.
Ashkahn: Budget.
Graham: Yeah, so we totally budget-
Ashkahn: Super carefully.
Graham: For everything.
Ashkahn: Every penny is accounted for. Here’s the thing, you’re running a small business so there’s just certain aspects of running a small business-
Graham: It’s a small small business too. In the realm of small businesses, it’s still smaller one most of the time.
Ashkahn: Physically small and you’re only in so big of a place.
Graham: Well below 50 employees.
Ashkahn: You may be kind of short-
Graham: Diminutive I think is …
Ashkahn: There’s just certain things that have to do with lost of information like this. Your finances and stuff like that, you kind of end up just internalizing, like a lot of people who run float centers out there-
Graham: Don’t even keep books. They just kind of keep track of it all in their head.
Ashkahn: Don’t pay your taxes.
Graham: Sort of emotional feeling about it.
Ashkahn: Obviously you’re keeping books and things like that, but oftentimes when we’re making budgetary decisions, we’re not necessarily checking our books. When I need to decide if we’re going to buy something that costs whatever, $1000, I don’t jump to QuickBooks and be like, “Okay, let me look through my profit and loss statement and see what makes sense and if we can afford this”. You kind of just build a feeling for it and you’re kind of like, “Okay”.
One of the nice things about running a float center is there’s a lot of consistency and expenses for a lot of the routine stuff. Your payroll is a huge expense and that’s only going to be that different from week to week or whatever you run your payroll. You kind of know how much payroll is going to be and you kind of know where you are in the payroll cycle and you kind of know you’re going to have to buy salt next month and that’s going to be a certain amount of money and you’re always buying kind of your ongoing supplies.
Graham: The cost per float is relatively low, so even the difference between months where you run 200 floats versus months where you run 800 floats, it’s really not going to be that different in terms of your expenses.
Ashkahn: I don’t know, with all sorts of small business things, I think at a certain point you have to just be like, “Is this where my time is best spent? Is it actually worthwhile to by business for me to be sitting down and making a carefully planned budget for myself every month or maybe should I spend that time trying to boost how many people are floating with me and be a little bit more loosey-goosey with my budgeting and trust my gut a little bit more about deciding what to purchase and what I can afford financially.
Graham: Another big part of this is we don’t have huge amounts of receivables or shipments that we have going out, we don’t have net 90 days either that customers are paying us with or we’re paying huge vendors with.
Ashkahn: We don’t have an inventory, it’s not like we have to buy a bunch of retail unless we have it in stock. We’re not going to be able to sell it. We’re not a department store where we have to keep track of all that stuff in such a more significant way.
Graham: The reason that a lot of businesses budget for things is because there’s a lot of these intangibles that aren’t money in your bank account that are going on. With a float center, to be honest, your bank account is a pretty good representation of how your business is doing. Most of the transactions happen and you’ll immediately have cash right there. You can account for things like gift cards that are outstanding, and different items like that which you’ll need to do in a financial sense, but for just figuring out if you have enough money in order to do a certain improvement to your center or buy a certain thing or get a new couch, or whatever it is. Those are the kinds of decisions where you just sort of look over how you’ve been doing the last four months and you’re like “Oh, either I can afford this or I can’t”.
That’s sort of it, it doesn’t get too complicated. Again, the key thing to finance is keeping your books up to date. We could do a whole ‘nother episode on what goes into that but-
Ashkahn: Maybe we will if you ask us.
Graham: If you’re very nice.
Ashkahn: That’s how this works.
Graham: And you submit a form on our website then we’ll answer that. For a budgeting, again, kind of like Ashkahn said, because our business isn’t so complicated, maybe you don’t spend too much time on that side of finances.
Ashkahn: Don’t go crazy, just keep it real, be cool. I mean, honestly, in seven years, very rarely have I almost never have I looked at QuickBooks specifically, or specifically our financial books that we use for sending in our accounts to make a specific purchasing decision.
Graham: I was giving him a crazy look from across the room, like “you’ve never looked at our books? What are you talking about?”
Ashkahn: Do we have that? Just assumed someone’s been doing that. We look at it more often when we’re making bigger decisions like should we give people raises or should we change the structure of our managers or should we offer health insurance?
We’re talking about big, ongoing the expenses, that’s when I’m like, “Okay, we should maybe sit down and crunch some numbers” and that’s the point that we’ll actually do little bit of math. For just purchasing something, even if it’s a big purchase, oftentimes your bank account really reflects reality. That’s the thing that Graham was saying, it’s not like you have these huge chunks of money that are outstandingly due to you because you sent out an invoice and they have 30 days to pay it or some huge chunk of money you’re paying out to some sort of supplier or anything like that that makes your bank account kind of deceiving.
Our bank accounts are every realistic indications of how much money we have and how much money we have to spend, as long as you know that payroll is going to come up at some point.
Graham: It’s never bad to have either money in the bank for things going wrong. If there’s one truism about float centers, it’s that things will break, your tanks will go down, you will need to spend money on repairs unexpectedly, so make sure you have a cushion or failing that, just getting a line of credit with your bank or something where on the flip side, where if you didn’t budget for something and now an emergency has come up and you need access to capital to do a repair or something, that you actually have that.
Ashkahn: Emergency repairs are just kind of slowly building up a cushion for potentially having to do renovation project or something like that. Really the main things that kind of keep in your mind.
Graham: Be sure to plan for all those things you didn’t even know to plan for, and you can’t go wrong.
Ashkahn: That’s the best advice. Expect the unexpected.
Graham: Alright, is that it?
Ashkahn: That’s it.
Graham: Okay, be cool. You know, be sure to head down to floattanksolutions.com–
Ashkahn: /podcast.
Graham: Check it out, see what-
Ashkahn: It’s nice. It’s a nice little spot.
Graham: See what you think. Alright, by everyone.
Ashkahn: Bye.
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What’s the Difference Between Loans and Investments? – DSP 178
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