Understanding Equity Funding and Profit-Loss Statements

Introduction 0:13

Ready to get the inside scoop on equity funding ? Tune in to TDJ Equity Funding Insiders podcast for an in-depth look at what it takes to access financial capital and maximize your investments . Funds are from experienced professionals , including bankers , underwriters , loan officers and industry experts , as they share their unfiltered stories and valuable lessons on securing funds .

Jacquelyn Jackson 0:47

Hello everyone, and thank you all for tuning in to our podcast today . Today we have a special guest , Dave Worden , a business strategist, and a growth expert . He's from Ohio . He's coming to us today to bring some information to understand the power of our profit and loss statements . I feel , as loan brokers , that it's so important . If you're in business , real estate, or business of any type , profit and loss statements are so important . What I like about what Dave brings is that he brings how important it is , why it's important, and what you need to be doing to make sure that it's how it should be . I like that, and that's why we wanted to make him a guest host today . So , if you would , into dive the knowledge and understanding that Dave had for us today and welcome him to our show . Welcome , dave , to our show today .

Dave Worden 1:45

Welcome . I'm glad to be here . Thanks for having me .

Jacquelyn Jackson 1:47

Okay , great If you would . Let's start off with telling a little bit about you and actually what you do as a business strategy and growth expert .

Dave Worden 1:56

Absolutely so . I help small business owners truly maximize their profitability and their capital , and we do that through implementation of various strategies and accountability . I have 15 years of financial , I think , then executive leadership and about seven years of small business consulting and strategy help as well , so we really help them focus on reaching that next level in their business that maybe they've been struggling to do by themselves .

Jacquelyn Jackson 2:28

Okay , and that's something that's definitely needed . I think business owners don't realize , and you notice too , what I'm about to say . A lot of businesses start out from the hill . They just having to be in the business . They try to do everything , they wearing all the hats and all of that , and they're actually just working and the business is moving , but at some point it's stagnant , and it's stagnant mainly because the strategy or the growth is not there . So that's where you come in , I believe so important for the company itself . So , in your industry , or in your knowledge of what you've known in the field , what is your association as far as with the funding industry ? How do you help them to get more funding in their business ?

Dave Worden 3:10

So we help our clients first put together that funding package with the financial statements . If they have a bookkeeper and accountant , we help formulate that , make sure their numbers look correct , and if they don't have a bookkeeper or accountant , we can help them pull together that funding package and a lot of that financial statement . Basic package is their balance sheet , so it gives an idea of their assets and their liabilities and their equity in their business . The income statement , which truly shows the activities and how well they're selling , and then what they're spending their money on in their business . And then their cash flow statement , so when they get cash in , where are they spending it ? Is it investing back in the business , is it for expenses or is it to pay down liabilities ? And then , or are they doing any financing activities as well ? So those three are the main financial statements that any small business should be looking to pull together to provide to a bank or a lender when they're looking to get funding .

Jacquelyn Jackson 4:07

Exactly . So let me say this too , based on what you were saying those three documents are really important and it used to be before COVID . We had only mainly the P and L's and the balance statement . It was after COVID we started getting more demands for the cash flow statements . So they're looking now at that cash flow statement and I know you probably would know what do you think the reason why they want to see cash flow now , compared to before ?

Dave Worden 4:32

just to to A lot of it for liquidity in terms of do you have enough available projected flows of in versus the outflows to make sure that you can afford any new principal and interest payments that you would be paying on any future debt ? A lot of times they may actually ask to for a projected P&L and then a projected cash flow statement . That's something else that could be presented , where you actually project the inflows so your revenue is coming into the business or any other proceeds from sales of assets , et cetera and then outflows so any payments of current debt and any projected expenses , to see if you actually can cash flow any new payments .

Jacquelyn Jackson 5:15

Payments as well , if you can afford another loan , that's true . So let me ask you this with you being the business strategy and growth expert , what part do you play ? So , as a business owner , you can come in . I know my CPA and my bookkeeper has all my financials , but I don't understand my financials . I don't know what I'm looking at . Is that something you can help me with ? Well , I can understand those three and how to use them and how to read , and if so , how would that work ?

Dave Worden 5:43

So we believe in partnering with your accountant and your bookkeeper to help you understand , for example , your P&L . So the main number you should be looking at is your gross profit margin . If you produce products for sale , this is going to tell you , out of every product you make , how much additional sales would go to your bottom line if all your expenses are covered . And if you don't have an understanding of your gross profit margin , this is where I would start helping you understand . One , what strategies can have a direct impact on increasing your gross profit margin . And two , if you're operating below or even at the industry standard for your business at the gross profit margin level , there's opportunities in there because the law of averages 50% of your competition is above that average . So you have a lot of capacity to add additional profit and positive cash flow to your business just by increasing your gross profit margin .

Jacquelyn Jackson 6:40

Okay . So that's basically what it's saying is , you can teach them how to learn those numbers which we tell them as loan brokers , that you should know if you can afford a loan or not , and you should be able to tell how much you can afford . A lot of people go to the bank and they apply and they like whatever you can give me , but that's not the way that should be . That tells us , that's a clear indication to a loan officer that you don't know your numbers , and that is going to be a red flag . People do not realize that . That you turn in and you fill out everything , the questions you ask them or the things you don't submit , or how you submit . It tells them how you run your business .

Jacquelyn Jackson 7:17

That's why it's great to have someone like us as a loan broker . I think that know how your lending package should get or should be , or have someone like you as a growth expert or strategist and business . You know how they need to be set up and what they need to do as well too , am I correct ? Because you'll know for it's not necessarily set up as much as it is how the company should look in order for it to be fundable . That's what I'm thinking , right .

Dave Worden 7:39

Okay , right , and we have worked with our clients to one get that financial packet put together where , if they're purchasing a loan , as you mentioned , they should go and actually understand what they're going to buy with the loan first , unless it's a line of credit , if they're going for a loan , you're asking for a specific dollar amount . So have quotes pulled together so that you can easily identify with your broker how much you need and then project out and prove to your broker if you pre-plan that you can afford those new payments that you're projecting out for that loan . That's a huge at least in my opinion a huge advantage when you're kind of working with somebody like myself , or even a bookkeeper and accountant , to pull that information together ahead of time . It makes you know your job as the broker is a heck of a lot easier .

Jacquelyn Jackson 8:33

And you need to have this type of information . Whether your company is bringing in $20,000 a year or $20 million a year , that's something I think is a myth that people believe . Well , I'm not making that much money , I don't need all this type of stuff , but you do , because they tell a story . They tell a story . If you learn it right , you'll know when your checkpoints are . You know in your business or , I guess , the goals you set for yourself . The numbers will tell you if you're there and because a lot of us do business on feelings and emotions and basically what other people tell us to do , but it's not necessary professional . I know you've had to clean up a lot of that when you see people . So , in your opinion , what do you see ? That's what is maybe your top information you can give a business when it comes to working with a business strategy and a growth expert like yourself .

Dave Worden 9:24

It's a good question . The number one idea would be to reach out to a business broker if you're looking for a good or a business strategy , and growth effort would be if you're trying to reach that next level and maybe you've been turned down for a couple loans or you've been trying to just increase your cash flow , getting a support system around you is integral piece to becoming successful as a small business owner . 95% or 90 to 95% of small businesses fail within the first five years because we as human beings think we can do it all alone . We try to go at it alone , but there's a reason why professional athletes and professional sports people , even actors or any professional at a high level , has an entire team of people around them to make sure that they're performing at the optimal level . It's really disparaging to me because a lot of small business owners believe that they don't need it when in reality they do .

Dave Worden 10:22

I know that because I had a small business about 16 years ago . I thought I knew it all . I was in my early 20s . If I would have known then what I know now about having a support system around you , I might not have failed at that business opportunity back then . It was a great learning experience because it allowed me to go in to the corporate world , learn a lot about leadership and business and now , helping small businesses over the last seven years , we can now give them that support system on a regular basis .

Jacquelyn Jackson 10:53

I know that is true because we've had clients come in to us that have worked with the business strategy or growth expert at some point in time and we can see the difference . We can see the difference in their paperwork , in their packaging and everything . We even had one that started out . She was just doing about $60,000 a year but she actually had a business strategy that came in when she started , when she first started her business , and she said they worked with her . She started out at $60,000 , $70,000 the next year and then in the time she implemented everything they had showed her to do , even saving her a lot of money . She wound up making $360,000 the next year . It was a big growth . She said that's why now she's one of our revenues that make $1.5 million a year and we give her a loan .

Jacquelyn Jackson 11:36

Basically , that's what she said she started and that's what we see . It's important . It's important how big you are , but you need to start that and that's something you need to have part of your business , like I said . So , being with the strategy and the growth expert , I guess we need to understand what do businesses usually get you guys mixed up with because your business is strategy ? How does that work . What is that going to do for my business ? I guess that's what I'm trying to get an understanding of , where our listeners can know how it works .

Dave Worden 12:03

Yeah , a lot of times we get confused with the consultant right and my analogy is great here . A consultant would be like a replacement player in a professional sports team , where they would actually come in and perform the plays right and actually act on the field .

Business Coaches' Role in Profitability

Dave Worden 12:22

We , as coaches , are on the sidelines . We help you with strategy , with game planning , with calling audibles when they need to or calling a timeout to help reanalyze the strategy that's going on in your business on a day-to-day basis . We will help with profitability , as you just mentioned in that great example .

Dave Worden 12:41

As a business coach , we help you with the strategy to put processes in place to ensure that you're profitable and by knowing your financial statement . Going back to the first part of our conversation , you can find profit , ability and cash flow just by understanding your numbers and either cutting costs or taking a look at your prices . A lot of small businesses that I come into contact with they haven't even looked at their pricing model in the last three to five years and right now , in 2023 , 2024 , we have a great opportunity as small business owners to really analyze our pricing , and as long as we have a valid reason for increasing our pricing , we can increase our prices , and that adds directly to the bottom line , as long as you're a profitable organization , because all your other expenses are already paid for .

Jacquelyn Jackson 13:33

Right , exactly .

Dave Worden 13:34

And the beauty of that is that you're not just adding money nearly willy to your top line . You have in probably the same . Three to four companies that I've talked to over the last three to five years have had price increases from their suppliers but they haven't touched their price because they feel like they have to be competitive . So it really impacts that bottom line and that percentage of gross profit and net profit that really can determine for an underwriter how positive or negative that loan is going to be for the future .

Jacquelyn Jackson 14:07

Right , right , and so I know just what you're saying . I understand a lot what you're saying , because we have people come in in business and they don't understand any of that . So my thing would be to ask you which I know some of them have thought of this as well , because we had someone ask us this is that , what do they have to look like in order for you to start working with them as a business ?

Dave Worden 14:31

You know , my focus is anybody under a million dollars of revenue that really wants to reach that next level .

Dave Worden 14:39

And I'm not even talking top line , I'm just saying , you know , I want a business owner who's motivated to become more profitable and they don't even necessarily have to be profitable today , but they've at least had a concept that's proven and they've had sales . So it could be anybody that's been in business for , you know , six to 12 months that has a high volume of sales , and they don't even have to be over a hundred thousand dollars of revenue to see impacts from the strategies that we implement . Just as you mentioned in your previous example , you're that client that you've seen was at sixty thousand dollars and now they're at three hundred and now they're over a million . So it's very , and the power of all these strategy implementations comes in the power of compounding growth and exponential growth . So you don't have to make hundred , two hundred percent changes in each one of the strategies to truly make a high impact . You can see really large impacts by having three to five percent increases across the forty strategies that we use in our software and our program .

Jacquelyn Jackson 15:41

Right , and you know , I think as owners we don't have time . A lot of times we should . We don't have time to work on our business because we're so busy working in our business . So I think it's great to have you guys and that's like I said . You're just another entity that I believe businesses need to know about and that's what our team was talking about , that we got to have this man on our podcast . I mean , look what he knows and how we know how people come in and they basically come in . They ragged it . They come in a raggedy , they really do . And so we realize and there's so much work we have to do but just for us to start introducing you guys and putting you guys out there is going to help a lot of us in the business Tremendous . That's why we are glad you're partnering with us .

Jacquelyn Jackson 16:20

And just so our listeners to know if you want to get in touch with Dave , we want you to get in touch with Dave . You can reach us . You can reach him as well Cause , like I said , we get everything to him . We have a TDJ equity funding insiders Facebook page that you guys can go to . We're going to try to load some stuff up for you , Ask any questions . If you need a , message us for him . You can do that as well , because we know what he has is something that we need Now in this field , if you don't mind

Business Strategy and Growth Experts

Jacquelyn Jackson 16:47

. What I want to go to is that what would you call a call of action for our listeners dealing with the strategy and the growth expert ? What would be a call of action you would say for them ?

Dave Worden 17:00

I would get your financials and understand where are you at with your gross profit margin and go out and compare it to your industry . If you are at or below your industry standard , your call to action needs to be to give in touch . Doesn't even have to be me , but find yourself a business strategy and growth expert and a business coach that you feel comfortable working with and truly , you know , transform your business , and it's right there in front of you . You have the ability to understand it and what's great about you know my business is . I believe wholeheartedly what I do and our strategies . I guarantee a 300% ROI and everything that I do at minimum .

Dave Worden 17:43

Right , okay , so anybody in our system has a wonderful proprietary software that can help you grow . That's my call to action for you . You have the ability and the greatest thing about it is that your coaching is essentially free as long as you're willing to do the work , because with that 300% ROI you're already paying for your coaching investment . You're already paying for that help . All you have to do is implement what we advise and what we , you know , kind of show you in terms of the strategies and you know , the choices , yours to see that huge transformational growth in your business .

Jacquelyn Jackson 18:18

Exactly and I know that is true from like clients . I told you we've seen that had growth and they said they work with a business strategist and they work with a growth expert . And that's what I'm saying . I just think that's something we didn't realize and if you don't know your numbers , that's your first sign that you need to reach out to someone like Dave you know , or like you say , a business strategist , because you can't keep running your businesses and don't know your numbers . You know that's what's important . Am I correct ? And like what I like about you too and what I found out ? The business strategy . They save money . They say the company money .

Jacquelyn Jackson 18:50

Like you said , if we haven't raised our head up as a owner to see the changes in prices and we still keep our prices the same , we're losing money , but we don't know how to adjust that , and if you don't know how to adjust it , that's where you think , that's where a business strategist come in and they help you to save money as well as make money , am I correct ? Okay , so yeah , so when it comes to that , explain that a little bit , how you help people save on 80N as well .

Dave Worden 19:15

So one of the big things we help them fully understand is where are they spending their money ? And the first test we do is we actually go through their profit and loss statement and go through line by line , you know , vendor by vendor , and understand is this a client producing expense ? If it's not , and it's just there because they thought that they should be spending on it , it's not actually leading to any top line or bottom line growth . We can eliminate it . We will help with a lot of employee relations . So how is your staffing levels compared to their productivity ? Do they have a lot of capacity ? We can help in that aspect as well , and a lot of that we do partner with some partners in our network that are more specialized , like an HR specialist , to handle the employee side .

Dave Worden 20:04

But there's ways to truly understand . Just in your P&L , go through it , find expenses that maybe , as you realize , you don't need anymore because it's not leading to new clients or it's not helping you with customer service . You don't need all those things in a life . And now , in today's subscription world , a lot of stuff we're finding are just subscriptions , recurring costs , right , that they didn't even know they were continuing to pay Exactly , and so that's where we can really help kind of save money when it comes to their P&L .

Jacquelyn Jackson 20:36

Right and I think that's just great for you all to come in and overview . Now I know I want to say this because my team that's back at the office made sure that doing this podcast , that I mentioned this . When it comes to financials and you need to turn those in for lending , you cannot and should not go to the website or Google and use a template for your profit and loss , because they don't understand that the profit and loss soul says way more than just numbers . Also , we tell people that and you can tell me if I'm wrong , but we , from dealing with our lenders , that we let people know your balance sheet needs to show your liabilities so you can't turn in a debt schedule and then it doesn't show in the financials . Am I correct ? Because it's not . It's no way you have to and I don't think people know that when they copy it from Google or wherever they get it from , what goes with that ?

Jacquelyn Jackson 21:33

And then you presented it to a lender and some of them , some of my listeners probably done it . You presented to a lender and guess what ? It's ? The died . It's the not , because they're already looking at whoa . This is not right . So even if you can't read it , the lenders can read it . So that's what I mean . Do you agree ? I mean , have you ran across that where people will think they can just do that , and why they can't just copy it off the internet ?

Dave Worden 22:00

Well , again , I , like yourself or I , would never suggest using anything off the internet , especially , you know , if , if you're a large organization , get yourself an accounting software . You know there's a lot of easy ones out there , free ones out there . If you're smaller and you're looking to save some money but invest in a bookkeeper a high quality- you know , definitely there's great ones out there .

Dave Worden 22:23

They're going to help make sure . You know everything in your financial statements needs to balance . There there's an entry on one side , one you have a debit accredit on any entry that goes into a financial on any side or the other , and they need to balance . When you just use an excel spreadsheet off the internet , it doesn't ensure that there's any balancing going on . So , like you said , you could have assets but zero . You know liabilities . The biggest thing when it comes to a balance sheet is your asset total should equal your liabilities plus your equity Exactly those two num . Those two should equal at the end of the day . If they don't , then you're out of balance and you're probably missing a debt balance . You know a loan balance , a credit card balance , something like that . That's that's not identified in that financial statement .

Jacquelyn Jackson 23:11

Right , and so that's why we tell you those numbers are . When people ask for that . It's not just piece of paper , guys , it is really seriously , tells a story about your company and and we're not saying that , uh , okay , you don't know this , you should notice where you should . But we're saying there are professional people that can help you . You know , ask for the help . You know ask , look for the understanding of what you need .

Jacquelyn Jackson 23:34

And because it's out here , there's no reason you can suck people business on our telemolice . You don't have to suffer by yourself . There is somebody professionally that can do what you need to have done . And it's not always about the money . I mean , you pay for it , but if you don't do it , you're going to pay for it anyway . Right , so it'll longer , absolutely . So that's what we basically trying to get people to understand that it's important to get these professional people in to help you with your company and help them grow . So the other thing we have we're about to wrap everything up Is it anything you think you would like to say for any type of final words of wisdom for businesses dealing with getting a business strategy and growth expert ?

Dave Worden 24:17

That's another great question . The biggest thing I would say is don't be afraid to ask for help . You know , a lot of people feel like , once they ask for help and they ask for that assistance , that they're less of a business owner or they are , they are less of an individual because they need support .

Jacquelyn Jackson 24:36

That's a good way to look at it .

Dave Worden 24:37

The most successful people in this world have huge support systems around us . So ask for support , ask for help , and a lot of times you'd be surprised with what's available to you out there at any given time . So that would be my number one thing is know your numbers first . If you don't have a bookkeeper accountant , go ahead and get yourself one . You can easily pull together a P&L in four simple steps . So grab your bank statements .

Dave Worden 25:07

The last 12 months , all your deposits in your bank statements are your revenue . All your withdrawals are your expenses . If and then you need to break down your expenses between cost of goods sold and operating , biggest way to identify that is if it goes up and it's related to a product that you provide or that you make and sell , it's a cost of good sold . Anything else is your operating expenses . It's the easiest way you can , quick way for a company without a bookkeeper and accountant to identify where they're at and to get a start at understanding where their numbers are . That's going to tell you your gross profit margin . That's going to tell you your net profit margin , where you can begin to do that comparison of comparing it to your industry to see are you at or below and do you have a lot of opportunity for improvement .

Jacquelyn Jackson 25:54

Exactly and all of that that you're saying . If they're going to try to get any type of substantial money , lending or funding , then you need to have that . You can't get around that and people are going to have to understand that . So one nugget that I would like to give to them , and if it's okay with you , is that if you want to have a consultant with Dave , you want to get in touch with Dave and talk to him . We strongly recommend it . Let us know , we'll get you guys with him and I think , like I say , you have programs that can help educate them on this , what we're talking about today , so it's not like we telling you about it . Hey , hey , hey , he actually have where you can actually take a course or you can go through some of his programs he have and he can work with you and help you , no matter how big or how small you are .

Jacquelyn Jackson 26:36

Okay , Just reach out and just call , ask for the help . That's the main thing . Okay , that is great . So I appreciate you coming out today . It was very informative . Like I told you every time I want to talk to you is so much and you have so much going on that you're there helping and you give a lot to people to understand what they need to understand in order to make it we don't have to suffer by ourselves , and that's right , because you , they have someone like you or that entity is available that they can actually get the hit , get the , get the help that they need . So I would like to thank you for coming . I definitely want to thank you for your insight and we are looking for you as being one that will come back and if there's anything else that you all think of and want to know again , reach out to us at podcast TDJ equity funded insiders . In the meantime , let's thank Dave . Thank you for coming in today and talking to us .

Dave Worden 27:31

We enjoyed you . Thank you for having me . It was an enjoyable conversation , jackie .

Jacquelyn Jackson 27:35

Okay , great , so we're going to have this . So you guys , if you need to reach out to us on our Facebook page TDJ equity funding insiders Facebook page or you can email us at podcast TDJ equity funding insidersnet . Until then , you guys , take care .

Introduction 27:54

We hope you enjoyed this episode of TDJ equity funding insiders podcast . If you'd like to be a guest or get in touch with us , please visit our website at TDJequityLLCnet . Forward slash podcast or email us at podcast at TDJ equity funding insidersnet . Until next time , take care .