How To Maximise Your Business Value With Financial Projections

If you don't do, again, if you don't do the math, what will happen is it'll feel good. You'll go and you'll start spending some ad dollars and sales will jump. And you're like, man, I'm selling more. This is great.

But it's easy to, again, even just us internally, we've been doing Google AdWords ourselves for the last probably year and a half. And it's taken a lot of time to figure out, like, let's make sure that we're making gross profit on this. you're listening to the b2b growth think tank the show that brings you the virtual hot seat where each week my expert guests and i help another business leader by masterminding actionable solutions to a specific challenge they're currently trying to solve in their business so if you're looking for answers to a specific challenge that you're facing that if you could solve in the next 90 days would have a huge impact on your growth send it in to thinktank at thinklikeafish.

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Well, hello and welcome to the B2B Growth Think Tank. Now joining me today to talk business growth is someone who has built a successful business, helping over 40,000 businesses to see how making small changes can have a dramatic impact on revenue, cash flow and profitability. Now he does this as the co-founder of Projection Hub where since launching the company in 2012 with his brother so it's a bit of a family affair they provide software templates and consulting services to create financial projections for investors lenders and to help with internal planning of businesses now as cash flow and profit always win the day when it comes to our businesses it's vital to measure and track your numbers, finances and KPIs.

So that's not just to be able to accurately project your growth, but in doing so, what it also allows you to do is uncover some of those hidden opportunities that often with a small shift could give you a radical boost in your sales and profitability. So it's a subject I know that a lot of you are going to get some huge, huge benefit from. So I am absolutely delighted to welcome my guest today, Adam Hoxheimer to the show. Adam, how are you doing?

Hey, doing really well. Thank you for having me. Yeah, excited to have the conversation. Awesome.

Well, I think as I said, when we first spoke, it's not a name I'm going to forget, or at least the first name I'm not going to mispronounce. So yeah, I always find it almost a bit strange when I have to do an interview. I've had another Adam on here before, for example, and I have to say Adam this and Adam this like I'm talking to myself. It's like I'm doing a solo for a sec.

But anyway, so Adam, coming on to that. Let's say you were in front of an ideal client. How do you describe what you do and how you help them? Yeah, so a lot of our clients tend to be brand new startups, maybe in that planning phase.

And so they're trying to raise capital from investors or lenders. And typically what happens is they haven't already worked on projections because no one wants to do projections. At least most of us don't want to do them. And so, you know, the investor says, hey, send me your projections.

And they quickly panic and say, how do I do that? And that's where we come in. And so whether it's our software that can help you walk through that step by step or one of our industry specific Excel templates, we make that process a lot less painful for people. So I guess one of the things that maybe people are thinking is thinking, right, all the hearing financial projections and maybe it's like a few eyes glaze over and it's like, oh, what's that about or do I really need to do this or finance?

Why is it so important to get this right? Yeah, I mean, I'll talk it up from kind of two different sides. From the startup phase, you know, when you're starting a business, I mean, you're making a huge time commitment and probably putting in some of your own dollars or if you're signing your name on a loan, you know, you have personal risk. And so you want to make sure that you've actually done the math and figured out like, can this actually work?

And, and what is it going to take? Not just, you know, I think a lot of times, even just in simple businesses, or, you know, a coffee shop business, for example, and, you know, client does the numbers and realizes, I have to sell, you know, 500 cups of coffee every day to break even with the model that I have in place, it's like, yeah, oh, I don't know if I could do that. Maybe I shouldn't start this business. So on the startup side, I think that's really an area of focus and why you need to do it.

I've worked with a lot of existing businesses where they're thinking about starting new services or product lines. And really that's like a startup within their existing business. And so you're really looking at the same thing. Should we take away our focus from our core business?

Should we take dollars from that? And is it going to make sense? Even internally, you know, ourselves at Projection Hub, we've worked on projects where we're thinking, oh yeah, this will make sense. And then when we really run the numbers, it's like, boy, if we do this really well, it's going to hardly make a dent, you know?

And it's not really going to matter. And so that's what the projections help you figure out. Will it actually matter? Yeah.

And I guess that the beauty of thinking in a projection model with a projection model mindset is that the numbers will never lie. And I think that we as business owners, entrepreneurs, whatever we want to call ourselves, we are quite good at lying to ourselves sometimes. And I think that maybe one of the reasons why, how I reference the guys glazing over or it something that people don always want to necessarily do until you know a bank forces you to do it for example if it a loan required or an investor or something like that We don want to do it because maybe it kind of going to tell us that our baby's ugly or maybe it's going to sort of show us that our grand vision is not going to come to fruition as quickly as maybe we'd have thought.

I mean, what are some of the other common things that you've you've sort of found that people uncover in the process of doing this yeah that's a good question I think I think a lot of times it's that realizing how slow of a process it's probably going to be you know we when you're doing projections a lot of times what people will do is they'll just They'll do some Googling and they'll say, what is the average, you know, dental office do in revenue per year? And then they just kind of assume that they're magically going to get to that average, you know, right away or, you know, year one is an average year.

But in reality, you have to go acquire those customers. You got to acquire those patients. And that can be a long, slow build. and you know you may have operating expenses that you have to pay before you break even for quite a while and so i think that's that's one of the things that people often see that it could be a little bit discouraging but it's also really important to know going in so that you don't you know you don't run out of cash too soon well yeah because i mean cash flow is the number or lack of cash flow is the number one killer of the majority of businesses.

It's not something we all necessarily think about when we start because I guess the thing that makes us all start is the vision, the passion and all the rest of it and getting into the nitty gritty when it comes to things like cash flow. It doesn't always come to mind, but then reality bites, right? And do you find that there is a particular time when people start to look at projections seriously is it i mean you mentioned startup you mentioned existing um existing businesses are there common times when people really use these not maybe not necessarily just for say investment but for other areas of their business internal planning and and are you know what are the benefits of doing that Yeah, one area that we've seen people use it for planning, just in an existing business is when they're looking to maybe do a digital marketing campaign or really any kind of marketing campaign, because there's some costs associated with that.

And they need to go through the math to figure out, okay, if I spend this much to acquire a new customer, when do I break even on that? Should I keep paying Google for these ads or Facebook, for these Facebook ads? And when does it make sense? And when am I just, am I losing money or breaking even?

Because if you don't do, again, if you don't do the math, what will happen is it'll feel good. You'll go and you'll start spending some ad dollars and sales will jump. And you're like, man, selling more. This is great.

But it's easy to, again, even just us internally, we've been doing Google AdWords ourselves for the last probably year and a half. And, you know, it's taken a lot of time to figure out, like, let's make sure that we're making gross profit on this. So I think that's a good exercise. Yeah.

And I think what you touch on there is something that maybe we all know intuitively, but we don't always necessarily have a process for doing. And that is, it's measurement. It's understanding your numbers. It's kind of going, right, okay, well, what is my objective around, say, this project, your example of Google Ads?

It's like, right, well, what is my objective? How much am I willing to spend to acquire this client or customer? And am I achieving that? And it could well be looking further ahead as well within your projections, for example.

And it could well be looking at something like your lifetime value of a client and thinking, well, actually, I am willing to spend break even. I am willing to literally not make any money on my acquisition because I know on the back end I will make three to four additional sales over the course of the next six months to 12 months or something like that. That's strategy. That is a strategic use of the numbers and applying them to something like Google AdWords.

But I don't think it's always the way that it is applied. I think that it's a bit too easy sometimes to go, well, I just want to go and do some Google AdWords and I want some clients. And people spend too much time focusing on the wrong numbers like cost per lead. It's like, well, actually, it doesn't matter how much your cost per lead is.

It matters what your acquisition cost is, you know, in comparison to your, you know, your client value. So do you find any other sort of mistakes that people make when it comes to projections, whether it for a campaign type experience like that, or whether it's sort of projecting profits, revenues in general, are there anything that people tend to do that they really would be better off avoiding? Yeah, I mean, certainly it's a lot of times the projections come down to a series of assumptions that are conversion rates.

And we're trying to do the best that we can to find some industry standard conversion rates. but you know oftentimes if you haven't been doing it already and you don't know your conversion rates a lot of times people will say well I think surely I could get seven percent of people that come to the website to to buy my thing or you know sign up for the service or whatever and you know I think just hearing e-commerce conversion rates are like 1.7 percent or something along those lines So 1.

7 just sounds so bad. So, you know, everyone wants to put a higher number in that conversion rate. And if you put 7%, your projections are going to look way better than they probably are. So I think it's as many, as often as you can, trying to either from your own experience, know your actual conversion rate.

So can you measure what you've been doing? Know how often you convert a lead so that when you build it into the model, let's say you're hiring a new salesperson. And you might be, before you make that decision to hire, you might do some projections just to make sure you can do that. You can make the hire.

you better be using the right conversion rates you know as best you can so that's a mistake we see a lot and then you know it can it can have such a dramatic increase on your on your projections and really so some overconfidence yeah definitely and i i think that always i i think i trying to remember now back in you know back in my corporate days and we used to talk about forecasting and all the rest of it And one of our directors he would say well forecasting says more about the forecaster than the reality of achieving or something like that.

I can't remember exactly what it was. But when it comes to reality, as opposed to projection and forecasting, I mean, have you seen that there is a big disparity between the two? Yeah, that's interesting. We're actually going through a bit of a research project on our own right now.

We think we have enough data from clients that we've worked with on consulting projects in the past to be able to kind of aggregate some projection data. And what we want to try to figure out is how does that compare to some actual numbers for different industry types? So, you know, a B2B SaaS company, software as a service company, you know, what do they project when they're working with us versus what does an average B2B SaaS company do in year one, two, and three? Um, so I don't, I don't have that particular data yet.

I know just intuitively and just from seeing what our clients do. And it's always generally optimistic, you know, it's generally the projections are overly optimistic, um, at least in the first, first couple of years, oftentimes. So, and, and do you, do you think that's in a particular area or do you think it's across the board in terms of like what parts of the business do they kind of over estimate or or they're very very optimistic about are there any particular areas of the business you think that that happens in which can skew some of those those projections yeah I mean it's it can relate to um it's usually on the revenue side and the the drivers of you know if we if we're in the model and we say, okay, you're going to get some, you might be doing some paid ads, but you're going to get some word of mouth customers as well.

And, you know, most businesses don't go viral and like word of mouth marketing, you know, it's, it might be a long, slow slog for the first little while. And so I think that's, that's oftentimes what we see is overly optimistic is someone opens a a restaurant in a town of 50 000 and you and you see on the projections they are estimating 50 000 new new customers in the first year so they're thinking every person in town is gonna try out the restaurant in the first year yeah you know probably not right so i'm just you know some some things like that that we often see.

Yeah. So I want to shift gears ever so slightly and talk about, so you started in 2012 and you started with your brother. So as I sort of mentioned in the intro, there's a bit of a family affair thing going on. Curious to sort of know how that's gone, like working with family members and some people say never go into business with family, but you've obviously done it and you're still here and you're, you know, you've got stories to tell.

So how has that experience been? Yeah, I mean, it was kind of weird. I mean, when I started in 2012, I was probably 23. And so my background is accounting.

So I was kind of coming out from the finance, accounting, projection side of things. And my brother is a software developer. But at the time, he was a senior in high school. so he had not gone to to college yet and he was a self-taught software developer um and so he built out that first version but there was a whole bunch of stuff that you know he just didn't know what he didn't know yet because he had no formal training and so we we built out a an initial version that worked but it was we probably you know he probably custom coded things that there was just plugins for that he could have just used out of the box.

So anyway, as he went through college, got a software engineering degree, and I think when we got to the point where like, we're going to need to rebuild this projection of software from the ground up, he was like, yeah, I probably don't want to be the one to do. I've already built it once. it's just tough. I don't want to do it again.

So at that point we hired a outside firm that could really help us do it again from the ground up. And my brother, Brandon has been more of just a advisor on the, on the software side. And then actually last year, finally, I, I decided to just buy out his uh share of the company and he was looking to buy a house and it was like hey uh if i buy you out now you you'll have your down payment ready to go and you can get the house that you're that you're looking for and um so it it's been a it's been a good experience i i hope you would say the same i think i think you would say the same it was fun to work with him but also So, you know, I think he's got a good job that he enjoys these days.

Cool. Well, I mean, I always find it interesting. It's sort of, you know, obviously you've got the starting story, but how that dynamic works and all the rest of it. And you've been able to obviously, you know, buy out and, you know, help with the house buying and all that kind of thing.

So, yeah, that's pretty cool. And I'm interested in as well, sort of from obviously the start to where you are now, and obviously the business is going to have been through changes and iterations and, you know, even alluded to some of those there. But has there been anything sort of all the way through the business, like something that has been a constant, like a principle you've always stuck with or something that's guided you, whether it be you know from a business perspective or a personal perspective that's the sort of kept you going and and you've always kept in mind that this is a principle that we follow religiously or something like that yeah that's a good question i i think that um there's probably a principle that we've that we've learned along the way that maybe i should have done sooner i think so i'll i'll I'll touch on that.

We, you know, we started out, I wanted to build a software as a service business because I wanted that monthly recurring revenue. I thought that, you know, who wouldn't want that. Right. And I pushed and pushed to try to make projection of a software as a service business.

And, you know, if I would have just watched what our customers were doing and what our customers wanted I would have learned a lot sooner and saved myself a lot of time But you know projections are kind of a one for a specific point in time. You know, you don't necessarily need, maybe you should have ongoing projections, but that's not what entrepreneurs do. You know, that's what we found. So entrepreneurs work on projections when the bank asks for it, when the investor asks for it, or maybe if they're doing like annual planning or something like that, but it's not something they necessarily need every month.

And so they don't want to pay for something monthly if they're not really using it every month. And so I think that listening to the customer and just seeing what they've done. So we, we maybe three years ago started selling spreadsheet templates just the excel you know one-time cost it's an excel template um and you know that started selling and all of a sudden those those different templates were selling more and faster than the software and it's like it sounds cool to have a software tool but that's not what our customers wanted you know well the age-old principle with uh thinking like the fish not like the fisherman and um yeah getting into uh the mind of your client and actually spending a little time wandering in their shoes and and seeing how they're using the product and and and going from there i i think that that is a that's always a that's always a principle i i like to live by and apply and and help people see and understand and uh yeah sometimes uh you don't see it until you see it but um that's that's a really interesting way or an interesting example of coming to that conclusion and actually saying that maybe, you know, it's not falling in love with the product, it's falling in love with the customer and how they are using your thing, your product, your service, whatever it is, to solve a problem.

And you've rightly identified and found that the use case for what is, you know, what you provide isn't necessarily suited to the model you're trying to force onto someone, so you've adjusted it and i think that's an incredibly um you know good good way of sort of um yeah applying that principle so interesting so and when it comes to the growth of the business what's been some of the what have been some of the strategies that had the biggest impact on revenue growth on acquisition all that kind of thing what have what are some of the things that work for you?

Yeah. One of the things that we started probably about a year and a half ago, I guess prior to that, maybe two years or so ago now, we hired a CPA, an accountant that would build out these custom financial models for clients that have a more complicated model than either our software or maybe a template is just, you know, it's not specific enough for what they need. And so what we found is that partnering with other consultants, specifically pitch deck consultants, has been a really good partnership.

So we have clients that are trying to raise investment. they know they need a pitch deck to present to the investors. So they're going to these different pitch deck consultants. So we started reaching out to pitch deck consultants and saying, hey, do you have anyone that helps with financial projections?

Because, you know, the investor's probably going to ask for that too. And, you know, more times than not, they said, oh, no, we don't. And that'd be great. We could, they didn't see us as a competitor.

We don't do any pitch deck work. you know it was just a really mutually beneficial partnership and so that we've got probably i don't know maybe five to seven pitch deck consultants that just keep us regularly busy with custom modeling work so well i mean partnerships and complementary offers services products working with somebody like that and having a number of those partners i mean it's when you when you get something like that and you get it working it it becomes a no-brainer doesn't it because it's kind of like well it's as you say it's a regular flow of um you know interest sales clients whatever you want to call it and um that's interesting i mean i'd never even heard of a pitch deck consultant i mean i didn't even know that was a thing but i think that that in there is a bit of a lesson around if you're listening and thinking well how or you should be listening thinking how can I apply that thinking or that example because you might not work with a pitch deck consultant but it's like what other type of consultants are out there that could also have your ideal type clients within their within their client base or within their prospect list or whatever it may well be and how can you develop a relationship with them in order to see if there is anything that you can do that can add value on both sides and yeah partnerships one of my favorite ways of growing businesses and um and all the rest of it so i think that's a fantastic example as well so um that's cool so adam this has been um a really really interesting conversation and you know honestly as i've said you know finance sometimes the eyes can glaze over for some people and um i didn't think that that was going to be the case but i have thoroughly thoroughly enjoy the conversation because the the possibilities with this are huge so i want to say thank you very much for coming on sharing your uh your knowledge and all the rest of it and um if people want to get hold of you find out more see some of the templates what's the best way to uh to get in contact yeah our website's uh projectionhub.

com and then feel free to reach out to me uh adam at projectionhub.com is my email and be happy to connect with you there. Awesome. Well, thank you ever so much again and have an awesome rest of your day.

Yeah, thank you, Adam. So that's it for this episode. I hope you found it valuable. I hope you got some great ideas that you can take away and apply to your business to help you grow.

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