Financial Success in Your Consulting Business

Financial Success in Your Consulting Business

How to create more financial success in your consulting business. 👇

So many consultants don’t know their numbers enough to know what they should be doing next. But if you want your business to be profitable as well as joyful, you need to be fluent with the numbers in your business.

Tune into this episode of Profitable Joyful Consulting with Hannah Smolinski, a CPA and founder of virtual agency Clara CFO Group, providing small businesses with financial clarity and profit maximization strategies, to learn simple, accessible financial tips for consultants.

Key areas discussed in this episode

  • 0:00 Introduction
  • 1:46 How Hannah helped a two-person consulting firm go from working hard and just barely covering expenses to growing 75% in the first year of working together and building the agency of their dreams
  • 4:57 The financial strategy work Hannah does for consultants
  • 5:57 The financial ideas, concepts, and concerns consultants should be thinking about at the $500k a year level
  • 8:34 Specific numbers you should be looking at every single month – including the number to keep in mind when you’re trying to make decisions about your business
  • 11:45 The way to create flexibility in your finances and business
  • 14:52 How to allocate enough to pay your taxes
  • 17:39 Hannah’s first recommended step into hiring labor 
  • 18:41 When it makes sense to bring things in-house and switch from contractors to employees
  • 21:47 When you should absolutely not hire employees
  • 23:17 How you know if you’re pricing your services correctly
  • 24:12 The ideal ratio of payment to contractors versus price to your clients
  • 25:04 Cost of goods sold (COGS) for consultants
  • 28:30 The problem with overdelivering and undervaluing
  • 26:26 What people should think about before hiring a CFO
  • 32:19 How Hannah started and grew her YouTube channel in a short amount of time
  • 36:39 Hannah’s experience with YouTube shorts
  • 39:32 How giving away what you know helps you grow your business
  • 41:42 Remembering the value you bring to the table

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Podcast Transcript

Samantha Hartley: Hey, it’s Samantha Hartley of the Profitable Joyful Consulting Podcast. This is season 12 and we are talking about consulting skills and successes and how to be more successful in your consulting business. All the shows this season are focused on success factors and we can’t talk enough about financial skills. Learning the financial skills that you need to be fluent in within your business. And for that, I have brought on a guest today.

Hannah Smolinski. She’s a CPA and the founder of Clara CFO Group, a virtual CFO agency providing small businesses with financial clarity and profit maximization strategies. Her experience working for one of the world’s largest accounting firms inspired her to make corporate expertise accessible to small business owners through fractional CFO services. She also hosts a YouTube channel with over 35,000 subscribers and uses the platform to help small businesses achieve financial success. Please help me in welcoming Hannah Smolinski.

Hannah, welcome.

Hannah Smolinkski: Hi. Well, thank you so much for having me. I’m excited to be here today. 

Samantha Hartley: I’m a big fan of your YouTube channel. You have the most helpful reels. There’s everything that someone would want to find out about running a business from the financial aspect is in your videos as far as I’ve seen. So I just have a million questions for you, but what I wanted to start with is stories of transformation. So if you could demonstrate, model, share with us what you do through a story of a client that you’ve worked with and what things were like before, then what you did for them and what was the transformation that occurred. 

Hannah Smolinkski: Yeah, I’d love to share. So we provide CFO services and that’s on a 1 to 1 level. That’s largely what we do in the agency. So I have a story from somebody who came to me during 2020, during a very difficult year for a lot of consultants. This firm came to me and it was actually just the two owners, co-owners, 50-50%, and they were the ones who were doing all the work. They were doing strategy consulting for mostly nonprofit and some companies, but a lot of nonprofit organizations they were working for. But what was happening is they were working really, really hard and just barely covering their expenses. And actually they were a little bit in a loss position. 

So I know this is not exactly what we want. That’s not what I want. That’s not what you want for anybody. So what we did is we started to break down, “What are they doing?” And we addressed the first problem, which was pricing. They were clearly not pricing themselves correctly because they were working really, really hard and not having anything to show for it. So that’s a really good indicator that there’s not a good pricing model. 

So we worked through that and then we started to work through, “Okay, what do you guys really want with your business?” “Do you want it to be just the two of you, or do you actually want to grow?” Then they decided that they wanted to be a boutique agency. They don’t want to be 100 to 200 people. They love the idea of running a business that had about ten people in it, that they were doing really great work in the world, but they could still control quality and be really involved. So we started to essentially build that agency. And so we’ve been starting to identify positions, what we can outsource right away, and they started to bring on full time employees. We really love that model of when you can build a business on full time employees rather than just piecing together labor with contractors here and there. So we were able to do that and that created a lot of labor efficiency for them. 

So they were able to grow 75% in the first year that we started working together and then super exciting as they just landed a couple million dollar projects. So we are loving that for them and really starting to figure out how we get the next two or three people in the door. And it’s actually become a problem where it’s not revenue that’s a problem anymore, but it’s actually how do we find the right team members and bring them on? So we’re redirecting marketing dollars. Instead of driving marketing dollars towards new customers, we’re actually driving marketing dollars towards getting great people and keeping and retaining them and putting financial resources there. 

Samantha Hartley: So awesome. 

Hannah Smolinkski: Yeah, I love it, it’s exactly what we want. We’re building their business to be really what they want at the end of the day. And they’re starting to see the financial returns on everything that they’re doing. 

Samantha Hartley: Terrific. I’m sure others will hear so much and recognize so much of the common issues that are happening with everybody. And you’re working at a very high strategic level with them if you’re looking at moving marketing dollars and investing in a team instead. So that’s the fractional CFO service you provide, right? 

Hannah Smolinkski: Correct. So we’re doing fractional CFO, which we call that like it’s only strategy. So we do financial strategy. We’re not doing the bookkeeping for our clients. We’re not preparing their tax returns. We make sure that they have great people in place for those services, but we’re not doing that work. We focus on that work that is done, “Now what?” And that’s where we step in, where we say, “Great, that’s what happened, now how do we translate what happened into what are the next strategic steps that we make?” And that’s a lot of hiring decisions. Doing return on investment calculations, we are always looking at profitability. Is there a business segment that’s not profitable or one that’s more profitable that we really need to dive into, return on marketing, all of that kind of stuff? 

Samantha Hartley: So those are great areas, “Can we afford to hire? Is my marketing actually profitable? Is the business itself even profitable?” You and I had talked about this a little bit earlier, the idea of where a lot of my clients are, I call them on the Path to 2 million. So some come in in the low six figures and some are already in the 1 to 2 million. But if we just concentrated on somewhere in the middle, about five hundred thousand. What are the concerns of business owners, or what should they be? The financial ideas and concepts that they should be thinking about in the $500,000 a year level? 

Hannah Smolinkski: That’s a really good question. One of the things that I’m seeing is, first of all people are not knowing their numbers enough to know what they should be doing next. So I always recommend, at the very base level, start to really get familiar with your numbers. And you don’t have to be an Excel Wizard. You don’t have to love every single financial report. I always say, “It doesn’t have to be complicated.” Just to be able to know your numbers and get really familiar with what your revenue is, which is the very top line, all the money coming in. Then what is the bottom line? That’s the profit. What do you have at the end of the day? And, getting really familiar with what that looks like and then understanding, is it enough? Because what we’re finding more often than not is that profit is not high enough at that revenue level and it’s a challenging place to be actually.

So I just recently spoke to a group of entrepreneurs that was in the space between $250K to $1M in annual revenue is a difficult place to be. You at least have a couple of people on your team and you probably have a lot of polls on where your money should go. You have a lot of people saying, “Hey, I’ll help you over here, I’m the solution over here.” “Or maybe if you just invest more in marketing, it’ll fix all your problems.”

So you have a lot of places to go and things that you could be putting your money in. But it’s really about how do you put your money towards something that’s going to be the most efficient for you and will produce the most value on the other end? So that can be kind of hard. Sometimes there needs to be some trial and error. So keeping an eye on things and hopefully meeting with somebody monthly who can help you before you get down a path where you spent tons and tons of money that isn’t producing a return would be a good thing to do. But I think getting comfortable and understanding your numbers first is like a really great foundation. 

Samantha Hartley: So what numbers, you said revenue and profit, but like what specific numbers should I be looking at every single month, for example? 

Hannah Smolinkski: Top line revenue is obviously a great number. We like that. 

Samantha Hartley: I feel like most of us know that number because that’s the one that’s kind of easy. And even if you don’t have any skills at all, you can look at your bank statement and be like, “Here were the deposits for this month.” And I don’t say that to be insulting. I just feel like that’s the one that’s accessible to us. Even though I do talk to people a lot of times you don’t really know what the revenue is. But anyway, let’s assume that’s the one. 

Hannah Smolinkski: Then the next thing we would be looking at is to understand your monthly expenses. What do you have to be spending every single month? And you might call this a burn rate, you might call it, OpEx. You might hear people say, “What’s your op expense?” That means what does your business need to operate? Do you have rent? Do you have utilities? What’s your software cost every single month? Do you have employees? And if so, is that like $10,000 a month? Is it $15,000 a month? It’s really good to know, what is your spend? Because then you know what is my break even?

Like if my spend is $25,000 a month in my business, I have to bring in at least $25,000 a month, or I’m going into the red. Your monthly expenses are a really good number to keep in mind when you’re trying to make decisions about your business. Or if you’re trying to say, “Can I bring on this marketing consultant who is going to cost me $5,000 a month that’s bringing up my OpEx from 25 to 30.

What does that mean?” That means I’m gonna need to be making at least another $5,000, but hopefully that would be amplified to 10 to 15 at least if you are bringing on that much extra marketing expense. But it’s really good to keep that number in mind, “What is my flat?” You can average it out. “What is the average monthly spend that I need to make?” 

Another thing is your profit percentage. Profit percentage is taking your profit and dividing it by your revenue number. For a service-based consulting business, you need to be looking at a minimum of 15% to 20%.

Samantha Hartley: Okay. 

Hannah Smolinkski: And that’s before you’re already factoring in a salary for yourself at that point in time. 

Samantha Hartley: So you were considering yourself an operating expense, or a salary and team expenses separate from OpEx? 

Hannah Smolinkski: I consider an operating expense because you would be paying it regardless of what’s happening. So you’re going to be paying yourself a salary or you’re going to be paying your team a salary. Now some people might say, “Okay, let’s put this up in direct labor.” And that’s considered the cost of goods sold if we want to get into accounting nitty gritty. But most small business owners don’t separate out their finances that way. And all of their payroll is going to be sitting in operating expenses.

So I like to make sure that you have a high profit percentage, at least 15%, and now 10% is considered the new breakeven. If you read Greg Crabtree, his Simple Numbers book is really great for anybody who’s looking to increase their finance knowledge. His book is wonderful. He considers 10% the new breakeven. And I would agree because you need to have some flexibility and the only way you have flexibility is by creating profit in your business. 

Samantha Hartley: So a break even is no longer how we hit zero. It’s 10% of usual revenues, 10% of operating expenses, what’s that10%? 

Hannah Smolinkski: Yeah, 10% of profit. So that would be like at the end of the day, revenue comes in and you need to have at least 10% leftover after paying all of your expenses. And the reason that you need that is because profit has to do a lot of work for you. 

Samantha Hartley: Yeah. 

Hannah Smolinkski: So profit needs to cover any kind of owner’s draw that you take from the business. If you are paying yourself a W-2, if you have any kind of additional shareholder’s distribution, you need to be able to pay yourself out a profit. You also need to be able to pay taxes, and taxes come up first, right? We got to pay the man. And then any kind of reinvestments you want to make into the business, or let’s say you want to redo your website and you need to redo that every three years. Or maybe you have a big asset you need to purchase for some reason, or you want to make a down payment on a building eventually in your business. All of that needs to come from, the only way it comes is through profit. 

Then you need to have savings. If you don’t have cash savings that comes from profit and then any debt repayments that comes from profit. Your profit really needs to be working hard for you. So what I find is that people are typically not focused on profit and they have a bare minimum. And then at the end of the day they’re like, “Wow, I might have $1,000,000 business, but I still don’t have any money.” That’s what we don’t want. 

Samantha Hartley: Well that’s why we’re talking to you, because I’ve talked to many people and I’m working with consultants. So it feels like everything that we do is so profitable because we don’t have a fleet of cars or the building or overhead like. So a lot of those overhead expenses are not the case. But I’ve worked with so many consultants who are running almost all of their personal development through the business. So it isn’t just marketing consulting, it’s life coaching, which is a totally valid expense because the better you are as a person, the better your business is. 

I think their idea is as long as they don’t overspend, the total amount that I have, then I’m doing okay. And as you’re saying, you’re saying 10%. And I’m like, “Oh, I think we need way, way, way more profit than that.” You know, like 30, 40, 50 for a service business, for a consulting business. I’m so glad you mentioned paying yourself a salary. Certainly a thing for most of my clients that by $500,000 who are paying themselves a salary. I feel like the place where we get caught up is not allocating enough to taxes. And so is that something that we should rely on the CPA to do, or is that something that you’re helping your clients to do? 

Hannah Smolinkski: I do help my clients estimate what they need for taxes, and I actually have a really great download that I’d be happy to share with your audience for kind of planning for their estimated tax payments. But it does kind of back into, what is your profit and then what is your estimated tax rate. And you can usually figure that out from your prior effective tax rate. So it might be somewhere between 20% and 25% with any kind of, significant tax profit or any significant profit. But you might be in a $1,000,000 profit situation, you might need to bump it up. That’s where you might need to have a conversation with your CPA.

But estimate taxes, you want to keep an eye out because they can really come and hit you. And if you’ve taken all of the profit out of the business as a distribution, you are going to be responsible for coming up with all of that cash. And what I like to do with clients is to have them save the money for taxes in the business and have that be a separate activity. Then what their draw is that can go straight into their personal bank account and they can spend it as they want. I hate for them to take it home and then they have to hope that it’s going to be enough that maybe at the end of the year it’s going to pay their tax bill. So we do savings in the business and we usually set up a separate tax savings account for that. 

Samantha Hartley: Yeah, I want to emphasize that it’s something that I’ve done in my business in the last year. It made 100% of a difference because I’m an S corp. So once that money had come through and was in our personal accounts, I was regarding it as something entirely different. Then when money is in my business account, I just have a different point of view when I’m working there. 

Earlier in the season, I did an episode on financial literacy, some very basic things that I taught myself because I wanted my listeners to hear the non-expert version of this stuff. I’m very gratified to hear you repeating some of these things. So paying yourself a salary and not commingling your accounts, having distinct business and personal accounts, and not letting those get intermingled in any way whatsoever. The formality of keeping those separate at every level of your business, and again, it seems like the kind of thing that’s a baby beginner’s mistake. I’m like, “No, I’ve seen that at very, very high levels.” I’ve seen people co-mingling their money. It’s like, “Well the business didn’t have enough money, or I didn’t have enough money, so I had to dip into.”

So my clients and listeners of the show will know what you’ve touched on, one of the things that I’m very big about, which is not hiring employees too soon. So you were emphasizing the value of hiring employees. So I’d love for you to talk about your point of view on that. 

Hannah Smolinkski: Yeah. I would say most of the time the first step into hiring labor is going to be hiring a contractor. That’s almost always what I see and that’s what I did myself. I hired a VA when I first needed some administrative help. I wasn’t really sure exactly what I needed so I just started outsourcing some tasks. So I did that myself and then I needed a little bit of bookkeeping help for a client. So I hired a contractor to do that. I started moving people more into employee roles, mostly because I like the idea of having more control over what exactly they do and their set processes. And there’s a lot of legal formalities between what is a contractor and what is an employee. 

But one thing I’m starting to see, as you grow to this multiple hundred thousand dollars into the millions of dollars level, you need to be reliant on your labor. And the thing with contractors is that typically they’re running their own businesses. You’re actually not their first priority.

Samantha Hartley: You should not be. Yes, with any contractor, their business should be their first priority. 

Hannah Smolinkski: It’s their first priority. So I see people who have potentially a lot of churn with contractors. Then from a financial perspective you’re also paying a higher rate for the work that they’re doing because you’re baking in their profit margins and their overhead into the rate that you are paying them. So what we’re starting to see, and I work with some marketing agencies and this happens a lot in marketing agencies, is if we move a role internally, we’re getting three or four times the capacity for the same price.

When I hear capacity, that tells me I can go out and sell more services. So that’s where I see there’s a switch. You might be building your company for a certain amount of time, but there will come a time that the volume makes sense to bring it internal, switch it to employees, and then all of a sudden you’ve got the capacity to really amp up that agency. Again, that’s if you’re growing an agency or like a consulting service business that you want to have a lot of billable hours that you can go out and sell more work. 

Samantha Hartley: Great distinctions. So first of all, legally there’s a very big difference between contractors and employees and everybody has to do their homework on that because I can not get into that. And I know California is very strict about it, so if you’re out there, you’re going to know your own rules. But it has a lot to do with whether the contractor has other employees, and all of those things that you mentioned. But I think the piece that’s super interesting and the example that you use of marketing people is, marketing skills are super marketable on the open market. And so it makes total sense that marketing people are going to be disproportionately expensive if they are doing work for you. And if you are going to take that asset of a person and then bill them out and create more revenue from them, then that totally makes sense. 

I’m surprised because a lot of the benefits that you have to pay for make that person more expensive in some ways than contracting. I can imagine if you’re an agency and that’s a full time role. There are plenty of people that I’m working with who have consultants and they bring those consultants on staff, or they have other team members who are only working for them, for their clients and they really want that kind of dedication and focus. What I’ve always said is do not hire employees when you’re still struggling to pay your current bills and especially to pay a salary to yourself. Again, believe it or not, I’ve worked with businesses that were as large as $600,000 a year, and the owners were still struggling to pay themselves consistently. But you know that employee always gets paid. 

Hannah Smolinkski: Yeah

Samantha Hartley: Make sure that you can always pay yourself first and that you have the ability. Also make sure you have a really clear plan for how you are going to maximize and monetize those employees before you bring them on. 

Hannah Smolinkski: Yeah, I would agree. I think that you probably would want to look at your labor force currently and see what roles that’s actually happening, that’s maybe being done by two or three contractors, and ask, “How can you leverage that one, or those two, or three contractors with those dollars into an employee role?” And then I would also question in that situation, you say, like if the individual is actually pricing themselves correctly because if they’re not paying themselves a salary, they could potentially not be pricing services high enough to cover the cost of the contractors, and actually cover the cost of their salary. So I would push back on pricing too and say maybe there’s a pricing problem on that side because if you’re pricing correctly, you should be able to pay all of your contractors, pay yourself and still have profit at the end of the day. 

Samantha Hartley: And that is correct. That is the first thing I did with that client who I was like, “Whoa, way, way under pricing, also doing too much work.” This is a classic thing that women consultants do is over-delivering for what they’re being paid. 

Hannah Smolinkski: Yes. 

Samantha Hartley: And yet still under charging. I’m like, “Do not do this much work.” Stop doing this custom work. You can codify this work and have a system. So we put in place signature systems, then we raise prices, and we also let go of that employee. But that’s a story for another day. You have people pulling their weight and any time there’s stress around paying bills, it usually has to do with that person actually isn’t showing up and isn’t being valuable. Sometimes that’s our fault because we don’t know how to maximize that resource. And sometimes it’s like, “You pulled in a full time employee too early in the process.” 

Hannah Smolinkski: Yeah, I can share one of the best ratios, that if you want to calculate a measure to see how efficient are your employees being, or how efficient is your labor is, you will calculate something called the labor efficiency ratio. That’s where you take your gross margin and divide it by your total labor costs. So that might be the people you’re paying on payroll and also those contractors that are staff augmentation contractors. It might not include your bookkeeper, or the one time graphic designer you hired for a logo. But anybody who’s doing labor in your business over and over again, and that number should always be, if you want to stay profitable, it should be two or more. So what that means essentially at the end of the day is that for every dollar of labor, you need to bring in $2 of revenue. 

Samantha Hartley: I call that Neiman Marcus markup, although Neiman Marcus might be more like a thousand. So “keystone” when you double the price. So the contractor is $50 an hour, I bill my client at $100 an hour. 

Hannah Smolinkski: At a minimum. 

Samantha Hartley: So you’re saying that’s at a minimum? 

Hannah Smolinkski: At a minimum. Because what you also factor in is any admin time where you can pay for your contractor that maybe is not a direct 1 to 1 billable hour. Like, “Are they joining team meetings or are they doing stuff that’s like maybe outside of that?” So you need to factor in a fully loaded rate that might also include admin team members, or people who are not direct client service. You need to be factoring in all of those additional hours. So real basic, and I know that you’re not a huge proponent of like dollar per hour, probably more value based pricing, but at a very minimum, we’d want to see for every dollar of labor we’re getting $2 of gross margin coming back. That means, probably not a lot of your clients have the cost of goods sold, but if you did, you would take out the cost of goods sold from revenue and that’s gross margin. 

Samantha Hartley: I do that with ourselves and with our team just from a cost standpoint. Even if I’m doing a value based price engagement and it’s $10,000 a month, if I put in like a thousand hours, which is mathematically impossible. But my point is, if you put in that many hours, which a lot of people do, you’re like, “Hold on, am I underwater in this?” So what I’ll always have my clients do is figure out how many hours they think this is going to take, and do you think the client will exceed this? And always build in a little buffer. Because as I always say, I’m a time optimist. And I think things take less time than they end up taking. Actually, they take a lot of time. So we need to be a time pessimist when we’re predicting how much time we’re going to spend on something.

Especially if it’s you, and then it’s your whole team when you’re figuring out, “How much is this even going to cost us”? Even though that may be unrelated from what the value is to the client, if you’re not figuring out what the cost of goods sold is, meaning how much time I’m going to spend, how much time my team is going to spend, what other things might we include in that?

Hannah Smolinkski: Beginning of direct billable costs that you might have. Like if you are flying to go visit a client or doing a presentation, are you factoring in your travel costs? Anything like if you’re preparing a presentation that might have printing costs, or something like materials and space. 

Samantha Hartley: Yeah, exactly. So then that is all going to be your cost of goods sold. I’m really glad you brought up that term because I feel like for a lot of us in consulting, we feel like, “Oh, that’s not me, I don’t have widgets that are incorporated into this.” But your time, you want to make sure that you know realistically what you’re spending. And so even though we are not tracking an hourly rate for ourselves, I want you to know that internally, like I don’t show up for less than $1,000 an hour. If that’s your number, then make sure that if this is a $10,000 a month engagement, you’re not working more than 10 hours a month, which is totally possible. It can be you as the head of the pyramid strategically working for 4 hours a month, and then your team comes in and does that for less. But then what are you billing the team at? And so you get some ideas.

Then when we get to this profit margin thing that you were talking about earlier, Hannah we can figure out a profit margin on how much normally am I profiting when I go in and do these retainer engagements, or is my team working too much? And then the profit margin goes down because they’re over delivering. And again, I bring this up because women consultants are chronic over delivers and we don’t trust that what we promise is plenty already. It can be hard to raise the price if you’re chronically over delivering because you feel like, “Oh my God, I’m already really doing as much as I can do.” So definitely watch out for that dynamic. 

Hannah Smolinkski: Yeah. And that is really true over delivering and then undervaluing or kind of the two main problems. And so then we’re working ourselves to death and then we’re not saying that the change in our bank accounts, which is not what we want. We want to build wealth. 

Samantha Hartley: Exactly. So there have been fractional HR people for a really long time. Since I left corporate I have heard about that. But I feel like fractional CFO is a new concept and it’s a service that’s accessible to smaller businesses than might think they need a CFO. So what’s a good situation for someone to be thinking about before they get a CFO? 

Hannah Smolinkski: Yeah. I think my first question, or I guess what people can ask themselves is, “What questions do they want to know about their numbers?” You might be able to go to your bookkeeper, or you can go to your CPA and if you say, “Hey, I want to know how profitable I am?” Your bookkeeper or your CPA can tell you how profitable you are. But you might get started asking questions like, “Hey, I want to hire somebody, what can I pay them and can I afford to pay them, and will I have enough money at the end of the year if I bring on this role?” That’s where you’re going to start to get the blank stares. And somebody’s saying, “I don’t think I can help you with that,” because it starts to get into forecasting. That’s where you start to need to have future answers on your current financial decisions. Or you’re trying to look at the future and predict what’s happening in the future.

Typical CPAs and bookkeepers are focused on historical. When you start to move your gaze towards the future, that’s where you might want to just engage a CFO. And I think lots of CFOs have ways that you can work with them in different variations. I would never recommend somebody who’s just starting their business to hire a retainer CFO. I mean, I’m sure we can get a return on investment on it, but at the same time it might not make sense for that to be the first place you put your dollars. You might be able to book a one time strategy session with a CFO that can help you plan, and get your pricing right from the beginning so that you’re not working for a year with nothing to show for it. So there’s lots of different ways that you can work with people. So I think seeking out what works for right now is probably a good way to go. Then you can figure out, “Hey, I want to be able to eventually hire a CFO,” and then you can determine at what point in time that is. 

Samantha Hartley: Yeah. What do I need to do in order to be able to afford someone who does what you do, and have it makes sense for the business?

I’m super grateful for this conversation because I think it’s so important and every year I’m on even more of a mission to help more women be financially literate and successful in their businesses. I know you and I have talked about that, and now one of the tools that you have used to that end has been your YouTube channel. When I went and looked at it I was just amazed at your subscriber count and things like that. So even though it’s a little bit of a diversion, I would love to hear you talk a little bit about how you grew it, and why did you start a YouTube channel? What made you think of that? Then how did you grow it in such a short amount of time? 

Hannah Smolinkski: Yeah, YouTube has been a fun journey. I actually started the channel in 2018 but didn’t really do much with it. So it was at the beginning of 2020 when I was like, I actually had one video that had 7,000 views or something. It felt like a lot to me and I had probably like 50 subscribers at the beginning of 2020, and maybe even less than that, it might have been like 25. I was like, you know this one video got 7,000 views and I got a few affiliate sales off of it, and it made me think I should make some more YouTube videos. Maybe that would be an interesting thing to do for people, and maybe it’s a great marketing channel for me eventually. 

Then I had thrown a couple of videos up on some profitability stuff. Then the pandemic hit March 2020 and with that all of the stimulus packages came out. The paycheck protection program and the economic injury disaster loan. Those two programs were extremely confusing for people. And more than that, the PPP was first come, first serve. I had been working with these small businesses and my clients were in a fortunate position to have somebody on their team who was aware of this stuff. But I knew the vast, vast majority of small business owners would have never known about something if somebody didn’t say something to them. 

Bookkeepers and CPAs were not even knowing, they were in the middle of tax season and March is like the busiest time ever for CPAs. So they didn’t even want to touch PPP because they were trying to get tax returns done. It was a very interesting time to have all this come out. So I just did a webinar with a friend and we were like, “Hey, let’s just post on YouTube and tell everybody we know, get the word out like, you guys need this money.” Then after one YouTube video, it was like, “Oh, this is getting used, more questions were coming up, and then more guidance was coming out, and then more guidance and more questions and more guidance.”

Then it just became like, this is my public service at this point in time to tell people about this program. And it felt very gratifying because I was helping people very directly and they’re like, “Oh my gosh, I never would have known about this had I not watched your video, I got $150,000 to save my business.” The stuff that was game changing for so many people. Even people who were getting $5,000, $10,000 was a game changing for them. So that was driving all of that. It was really just making an impact. And that was a core value in our businesses, making sure that we are helping people actually change their financial futures and their financial outcome. And YouTube’s been just an incredible place to do that. So that’s how the channel grew really fast as it was helping. I mean, that’s really what it was at the end of the day. 

Samantha Hartley: Yep, I love it. I really love it. I love when we talked about this the other day, just sincerely answering questions that people have. I think so often when people are thinking about content, they overthink it like, “What are the frequently asked questions?” And I’m like, “No, don’t be afraid to give away information because it’s a commodity.” You are the unique resource in that you are the brand, you are the differentiator. Information is out there so share all your information.

Your channel is so resource-rich. How many videos do you have up there now? 

Hannah Smolinkski: It’s probably like 250. I don’t know. I’m not exactly sure how many I have, but it’s definitely over 200. 

Samantha Hartley: She has tons and tons of really good information. It’s a one stop shop, it’s just a really great resource. I really wanted you to share that so hopefully others who are experts in their area will be encouraged to make that content for those users who are out there, and who are looking for information and they’re searching for it. 

YouTube is a huge search channel. You probably do titles according to, or topics according to what people are searching for so that they’re keyword rich and people can find you. I noticed that you have been recently adding some reels. So the short form YouTube, YouTube shorts is what they’re called. So how are those for you? 

Hannah Smolinkski: Those are actually great. So I don’t monetize or anything. What I like about YouTube shorts is they can just be really quick thoughts. You just throw them out and people will view them. I think what they are doing right now, I think YouTube is recognizing and wanting to promote people who are using shorts. So I think a couple of shorts actually boosted a video I had that made it go semi viral, so viral for me. And the amazing part is it’s actually one that I get a lot of affiliate sales from now.

So it’s interesting because it’s driving ads and it’s helping a lot of people get set up with accounting systems because that’s the number one thing, a lot of people aren’t even tracking their numbers in the accounting system. So I think YouTube shorts actually drove that traffic a little bit. But they’re great because they can answer a question, like you can have a real quick, easy question. I just did that with something and it was like, “Oh, it’s maybe not the answer you want to hear, but it is the answer.” 

Samantha Hartley: Hannah’s referring to a short that I commented on the other day. The question was, “Do you have to keep credit card receipts or is the statement good enough for the IRS?” The unhappy answer was, “Yes, you still do need to keep receipts.” I thought your example was amazing, if it’s from Amazon your credit card is just going to show stuff coming from Amazon, as mine does constantly and some of that is business purchases, but some of those are personal, and we don’t want to be co-mingling our accounts. So it’s going to be very hard to go in there and figure out what the difference is.

I was very unhappy with that answer, just as I was unhappy with my new CPA, who when I said, “Do I really need to keep any receipts at all, or isn’t my bank statement just plenty?” And she was like, “No, you have to take pictures of everything.” I was like, “Oh, dreadful, dreadful.” But if that’s like the heaviest part of owning a business, then so be it. But it was short, it was to the point and it was helpful, and you had a great example there. So I really do love YouTube shorts as a medium and it’s an easy way to just get in there and get started with making videos. 

Hannah Smolinkski: Yeah, absolutely. I think all the platforms are giving an opportunity for that. If you’re on TikTok, if you’re on Instagram, there’s lots and lots of opportunities, even on Facebook you can do that. So there’s a lot of opportunity. 

I’ll go swinging back to your comment about giving away information. I think giving away what you know creates a spirit of generosity that comes back to you. It develops a lot of trust with your audience. One thing that’s been cool about YouTube is it does grow the consulting side of my business as well. So people will be like, “Hey, I watched your video on the EIDL loan and thought, I understand this person, this might be somebody that I could trust to help me with my finances.” I’ve gotten some really wonderful long term clients out of doing something that I never thought would bring clients my way, but it definitely is.

Samantha Hartley: You’re great at it. I want to hear what’s a good way for everyone to keep in touch with you, but I definitely want everyone to go take a look at your YouTube channel.

Hannah Smolinkski: Yeah. So it’s at Clara CFO Group and you can find us there everywhere, but on YouTube type in Clara CFO you should be finding us there. And yeah, we’d love to have you subscribe. We typically do weekly videos and then the shorts are a little more ad hoc. Sometimes I just got done with a workout and I had a thought and the great thing about shorts too is they don’t have to be professionally edited. You can just turn on your video and start talking and answer a question. 

Samantha Hartley: So that is exactly what I want everyone to be doing. Don’t overthink it. Don’t overproduce it. What people connect to is you.

Super great information, Hannah, any last words of wisdom or advice for our listeners? 

Hannah Smolinkski: I just keep encouraging you guys to keep doing what you love and act in integrity with the work that you’re doing. As you are able to serve more people,keep going but also recognize your value. I think that’s the other thing, sometimes you’re going to be the last person to probably fully understand the value of what you’re bringing to the table. So if you need help with someone else pointing out the value, hire that help out and say, “Hey, what is this?” Because sometimes as business owners, we get in our way and where we become the biggest problem of being able to charge what we’re actually worth. So I would encourage you guys to get help with that if you need it 

Samantha Hartley: Definitely. Thank you so much, Hannah. I super enjoyed it, I love, love this topic. The more we can break it down and simplify it and make it accessible and available to consultants who need this stuff. 

Hannah Smolinkski: Thank you so much for being willing to have this conversation and for reiterating it over and over with your audience because it is a very, very important one. So thank you for having me. 

Samantha Hartley: Awesome. And with that, Hannah and I are wishing you a Profitable and Joyful Consulting Business.

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