How Cash Flows Through Our Company
Take a peak at how Fearless Foundry spends its money!
If you told me ten years ago that I was going to build a company that generated $1M+ in annual revenue, I would have thought you were full of shit.
Ten years ago, I was a single mother that was living on food stamps, struggling to make my next paycheck cover the costs of caring for my son.
Seven years ago, I exited the corporate world to start my first business. The goal was to create a company that meant more to me and provided the workplace I’d always wanted for myself and my future employees.
In 2019, I was practically a one-woman show. With the help of my beloved assistant Lauren, I did everything to grow and in the first year I brought in $174,707 in revenue. In 2020, the team grew to five full-time employees, and I hustled even harder to support our new staff and be able to begin offering benefits. We grossed $437,153 in revenue. In 2021, our team grew again. We now have 12 employees on payroll and several contractors we work with consistently. In our third year in business our revenue ballooned again to $904,307.
That last year? It was our least profitable year yet.
You might look at that number and wonder how that could be possible. $904,307 seems like a lot of cash flow. In order to run a company our size, with high-quality pay and benefits, it also requires a lot of cash outflow. In fact, our payroll alone runs us between $50-60,000 a month.
Curious to know where all that money goes as it flows through our business?
Let me break down a recent week for you.
Feb 18th starting balance: $13,119.05
Money Flowing In
Our business makes revenue in three primary ways:
Retainer creative marketing
Coaching services
Community membership groups
All our pricing is designed to be recurring in nature, therefore we receive funds from our clients and payment processors on different days throughout the month.
During this particular week, we brought in $23,482.40. Broken down, it looked like this:
Retainer marketing clients: $20,000
Coaching clients: $3,000
Community groups: $482.40
Money Flowing Out
Our business has dozens of operating expenses but our biggest ones are payroll and benefits. In this particular week, we were running payroll for a portion of our staff, and covering miscellaneous expenses that popped up due to staff traveling and recurring costs.
In this particular week, we spent $31,770.32. Broken down, it looked like this:
Payroll: -$21,737.33
Apps and online software: -$290.81
Food: -$551.11
Client gifts: -$420.74
Internet: -$93.73
Travel: -$46.28
Parking: -$65.63
Office supplies: -$60.07
401k match: -$4,616.26
Employee insurance: -$1,248.36
Professional services: -$2,640
In the end, we walked away from the week with $4,831.13. Our next payroll would be run a week later.
Starting balance: $23,482.40
Positive cash flow: $23,482.40
Negative cash flow: $31,770.32
—--------------------------
Ending balance: $4,831.13.
Moral of the story? Running a company of this size costs a lot of money. This year we’re projected to bring in between $1.2-1.4M in revenue, and we’ll likely spend most of that money on our staff and other business expenses.
Many people assume that once you grow your business to $1M+ in revenue that you’re sitting on a mountain of money. That might be the case in some industries or entities, particularly ones that have managed to keep their labor costs super low, but I believe in putting our people over profits. In my world of professional services, people are our most valuable asset, which is why we do our best to pay them accordingly.
If that means I’m not going to be living in a mansion, that’s fine by me. I aspire to live in a tiny house one day, anyways.
~ Madeline