Know Your Numbers: How to Build a Profitable Business with Jo Simpson

Your Dream Business

In this episode of Your Dream Business Podcast, I’m joined by the brilliant Jo Simpson, a financial educator and founder of the Financial Growth Academy. Together, we dive into the essential world of business finance—breaking down key financial terms like revenue, gross profit, and net profit in a way that’s practical and easy to understand. Jo shares her own candid money journey and introduces the Profit First methodology, a revolutionary approach that flips the traditional model by encouraging entrepreneurs to pay themselves first. We also explore how to turn business income into personal wealth, manage costs strategically, and plan for long-term financial success. If you're ready to take control of your numbers and build a more profitable, sustainable business, this episode is packed with insight and encouragement.

KEY TAKEAWAYS COVERED IN THE PODCAST

1. Knowing your numbers builds business confidence. – Understanding financial terms like revenue, gross profit, and net profit is essential for making smart business decisions.
2. Profit First helps you pay yourself first. – Jo explains how this method ensures your business supports your life—not the other way around.
3. Strategic expense management protects your bottom line. – Learn how to manage business costs wisely and plan for growth with retained profit.
4. Personal wealth starts with business discipline. – Discover how to convert your business income into lasting personal wealth and financial freedom.
5. Money mindset matters. – Jo opens up about the emotional impact of finances and how reframing your approach can empower better choices.

If you enjoyed this episode then please feel free to go and share it on your social media or head over to Apple podcasts or Spotify and give me a review, I would be so very grateful. Connect with Jo on Website, Instagram Connect with Teresa on Website, (Grow, Launch, Sell), Sign up to Teresa's email list, Instagram, LinkedIn, or Facebook

Transcript

Teresa: One of the things that can make or break your business is the finance. If you're not making enough money, if you're making the money, but it's going out the door as fast as it's coming in, or if you just don't know how to manage cash flow, there's no judgment here, by the way, because just because we have businesses doesn't mean that we automatically know about this stuff, which is why this episode is so important for anybody in business. Jo Simpson and I go right back to basics in terms of the finance of our business. How to make sure that we not only make money in our business, but we keep the money. Welcome to the Your Dream Business podcast. I'm your host Teresa Heath Wareing an international bestselling author, award-winning speaker, TEDx speaker, certified coach, and the host of this number one ranked podcast. I am so excited to guide you on the journey of creating a business and life that you not only love, but one that perfectly aligns with you and the season of life that. In [00:01:00] each episode, I'll share with you easy, actionable, and insightful strategies to grow your online business. Plus we'll be diving into some mindset, tools and strategies that keep you focused, motivated, and are going to stop you from getting in your own way. So if you're a course creator, membership owner, or coach, you are in the right place. Let's get started. Hello, and welcome back to another episode of the Your Dream Business Podcast. As always, I am your host Teresa Heath Wareing, and I hope, you are good. So this week we have an interview and it's a subject that I am learning to love. Okay. One of the things I am rubbish at in my business is the finance side, which can I just be honest here? I think sometimes when we start a business, we expect from ourselves that we should be brilliant at all of the various bits. The finance, the marketing, the selling, the content creating the all the stuff, right? And. [00:02:00] The truth is we are not. 'cause if I was really good at that stuff, I probably would've gone into business doing that thing and I went into business doing marketing because that's what I'm really good at. So I've tried not to beat myself up anymore that I'm not great at the finance thing, but I have also owned the fact that I have to be good at it or I not even good at it. I have to be able to manage it. One of the big problems I have in my business is, or one of the big problems I have generally in running a business is that in the past I've seen money in my account and gone brilliant and have not thought, well, what's coming in in the next 2, 3, 4 months? As I've talked very openly in the past, when I got sober in 2023, I basically kept my business at the level. It was from an expenses point of view, but I didn't have the money coming in that I should have, and I got myself into a bit of trouble, not serious trouble, just not in a place that I wanted to be. So that's why I wanted to. Really focus on [00:03:00] learning the finance side, understanding the finance side, knowing what it I've gotta do with it so that I can get much better at this. And one of the things that I did to do this was enter the world of Jo Simpson. Let me read her bio and then I'll tell you why and how I got into the world with Jo. So since setting up her business consultancy and accounting practice back in 2002, Jo has helped hundreds of entrepreneurs create and scale their businesses. Jo's passion to support ambitious entrepreneurs to build businesses that are profitable. That was in all capitals, FYI. All whilst living a life they love as an accredited profit, first professional, and a multi-business owner, Jo has taken all of her knowledge and expertise and created a range of courses and memberships and Bespoke Mastermind and launched these to the online world in 2016 in the form of the Financial Growth Academy. Since then, Jo has worked with some of the fastest scaling highest net worth online entrepreneurs in the uk, and that has allowed her to bring more value to her program. Jo's mission [00:04:00] is simple. She wants to help thousands of entrepreneurs overcome their fear of finance and become the most profitable version they can be. That should half explain why I entered Jo's world. But basically, as Jo says in her bio, she is in the online world. She understands the online world. She works with people in the online world. And also the other thing that you're going to hear in this interview is Jo is very honest about her own relationship with money and her own finance journey. And I think when someone is excellent at something, it's really good to hear when they're not excellent at something, if you know what I mean. Like when. So, for instance, I am good at marketing. That's what I do. But sometimes my own marketing can be terrible and I don't post on social media consistently or whatever it might be. And sometimes it's good to hear that even the people who get paid to help with these things can also struggle themselves, especially when it comes to money and finance, because I also think it's a very, it's a very emotive subject and not one that we are [00:05:00] taught to talk about a lot. I get Jo to take us right back to basics, so. This is for you if A, you need to know the basics, which I think even if you do need to know them or even if you do know them, I think it's a great reminder for those who know them as to what they are actually are. And then some of the ways in which she's helping people get super confidence with money, but also encouraging people to be happy about paying tax. And I know that might sound a bit jarring, but listen to what Jo has to say. It's super, super interesting. I said I went into her world 'cause I knew she would be the person to help me get a grip of the money side, but also she is as ambitious. Herself and for me, which is awesome. She's also one of the most connected women I know, which is crazy. She seems to know everyone. Anyway, I had to have Jo on. She is super lovely. I love it to bit very grateful that I am in her world, and I [00:06:00] really think you're gonna enjoy this episode, even if you think, oh, it's finance. It might not be my thing. Jo manages to make it feel fun and enjoyable. So enjoy this episode and here is the lovely Jo. Jo, welcome to the podcast. Jo: Thank you for having me. Teresa: I am very excited to have you. You, I have known about you for a long time, and then about six-ish months ago, I decided to take the leap and join your world and basically because I am the worst at money, right? There are many reasons why I'm so grateful to be in your world, but one of them is that you are the queen of getting us organized. So today, if you are listening this and you're like, Ooh, I hate this conversation, then. You're right, you're in the right place. 'cause if I can cope with it, you can cope with it. And it is something we all need to get really good at. So we're gonna start basic, and we're going to start with what are the main things, [00:07:00] the main words in our business that we should know and understand when it comes to money, like profit and revenue and those sort of things. Jo: Okay, so firstly, so many people tell me that they're bad with money and I get told that all the time, or I'm bad with numbers or I'm not very good at accounts, or I don't wanna look at any of that. So just like you said there, let's go back to the absolute basics of what actually money is in your business. 'cause Interesting. The people who always tell me that they're bad with money or they're not very good at the finances and things, tends to be people who want to make money. Teresa: True. Mm-hmm. Yes. Yes. I want more of it. Okay. Not very good at it. Jo: Okay. So the first one to talk about is the sales. So basically the sales, which could also be called revenue. It can be called turnover. We tend to use the term turnover in the UK because that's an accounting term. Revenue is more popular outside of the uk, so sales, revenue, turnover. That is the, the [00:08:00] sales that I raised in your business in a set period of time. So that is invoices that you've raised. Payments that you've got coming in via stripe or anything like that. One of the most basic terms that people get wrong with turnover and sales is that they might focus on a a longer period of time. So where I would call turnover, let's use turnover for this. Turnover for me is everything you've invoiced in a period of time. So in an accounting year, everything that you've invoiced and everything that's come in. Where it gets slightly more confusing is that a lot of people, particularly in the online space, like to use the term sales and that's not actually what they've invoiced out or received in yet. That could be if that client stays with them four, three years or four years. So when you see, you know, some of the sweeping statements of, mm-hmm I've just had a hundred K sales day, that could be somebody has taken on a client that is committed to working for them. For two years, three years. So [00:09:00] use that term loosely. So turnover for me is the sales or the revenue that is coming in in a set period of time. Teresa: See, that's how I view it. And when I view sales, that's how I would talk about. Mm-hmm. I guess now, although you say that, like if someone did a part payment, see this is the thing, right? So let's say I was looking at someone's launch Yep. And someone did. There was a part payment involved where they could pay over three or pay over six. I would look at the launch as to how much they sold, not necessarily the money that came in at that point, Jo: which is absolutely fine. Yes, that is absolutely fine. So that is turnover. That is not what cash received is. So you have a terminology you've got is actual cash received. Yeah. So there is absolutely no problem at all with using that terminology for if you had a launch. Let's use two examples. I'm gonna use the launch method as an example. Launch and you or you were managing a launch for a client and the total sales value of that launch, it could be a a six month program. Mm-hmm. With say, [00:10:00] 12 month payment plans, you could take that amount of money and say, that was a hundred thousand pounds. A hundred thousand pounds. That is your turnover. That is your revenue sales for that launch. Yeah. In accounting terms, you would only declare it. In the time that you would actually get the money in. So in accounting terms, because imagine if May was the beginning of your financial year. Mm-hmm. And April, you'd turn a launch on the 30th of April. We wouldn't be declaring that whole hundred thousand pounds on the 30th of April because you would then be paying tax on it. So you would then accrue over that. So that is fine. So that's one example. Sales can be used to total up the sales. Total can be for what you have done a launch for. And a lot of online people will do this, so they will now, and they're getting better at it where they'll say, my launch was a hundred thousand in online sales, and then they'll put in brackets, not cash received. Teresa: Mm-hmm. Jo: Where there can be a slight difference with that would be, and I'll use myself as an example, if you came onto me as an accounting client. And I quoted you an [00:11:00] amount of money that it was gonna be a monthly fee that I was gonna be charging you. So it's no different to a payment plan, but as long as we do a good job, you should stay with us for as long as that you're in business. Mm-hmm. So if I look at, uh, when I first started my business, the first five clients I start with are still clients today. Mm-hmm. And that was 23 years ago. So if I look at sales yeah, for that, then that is a totally different figure. So I have seen other accountants, I've seen other people say, I've had a hundred case sales day, and it could be that because they're expecting that client to stay with them for 3, 4, 5 years. So that's the first terminology that I think, yeah, can get misconstrued. So just making sure that you are looking at the right. Figure. So that's why I use turnover, sales revenue for a set period is the terminal, yes. That I would use for that. Yeah, Teresa: that's good. Okay. Does that make sense? So what? Yeah, perfect. So let's talk profit. Okay. So we're getting ahead of ourselves. Oh, are we? Sorry, I jumping the wrong way. Okay. You absolutely not. Jo: [00:12:00] So your sales revenue and turnover is obviously the money that's coming in. You've got one thing before. We get to profit and profit, you've got two types of profit. You've got gross profit. Mm-hmm. Also known as gp. This is very accounting chat now. Okay. And then you've got the final one, which is net profit. So gross profits for most people is not relevant because in the online space, all the costs that you have are overhead and they're all flexible. For a product-based business, gross profit would be applicable. So that means if you are selling. For example, a Stanley Cup, 'cause I've got one in my hand. Yeah. The gross profit would be how much you sell that Stanley Cup for minus the cost of the Stanley Cup, minus the cost of sending that out to the customer and minus all the bank charges and all the things that go with that. And. It is the most common mistake that people make if they move from a online business or a service-based business to a product-based business. They don't account for the gross profit. [00:13:00] So that is the cost involved in actually carrying out the sale because you're gross. So Teresa: would that be for an online business? And I'm glad that I am dumb with this because I'm asking all the stupid questions. Would that be, so for instance, I use Kajabi. Yeah. So is Kajabi. That would be class the same. Jo: So, and I'm glad you've asked that because it is something that, particularly in my trade as accountants, we have a very sort of set accounting principles and I have argued this discussion with quite a few other, I'm gonna use the word argue, other accountants about what the cost of sale is. Yeah. So obviously if you use Kajabi, I use FEA, create that is a cost which I have to host my memberships. Yeah. Everything I do through that, I could not run my online business without it. No. Teresa: However, Jo: could I go to somewhere else? Could I actually just say, right, we're not doing this anymore. I'm just gonna have a WhatsApp group and mm-hmm. I'm gonna put out a Google Doc so it's not actually a cost of sale. Okay. Where I argue a cost of sale would be is if [00:14:00] you, for example, brought me in to do some sessions and you were gonna pay me as a coach within your membership, right? Or with any of that, that is a cost of sale. So that's the most common one. If you bring coaches, consultants, or anything like that into your online business to carry out a job so that you can make the sale. Okay. Again, it can be argued. There's no, there's very gray reason in this because it could be stopped. IEU could run that program or course without me in it, so it could be argued. The one that I feel very strongly goes into cost of sales, which is not accounting principles, normally is advertising. So Facebook ads. So I have a lot of clients who sell digital products, and a lot of these clients do these purely through Facebook ads that they wouldn't have sold that without it. Mm-hmm. So to me, the sale minus the...