Virtual CFO services for digital agencies
The following video prepared by our virtual cfo services division for digital agencies discusses the top level financials. We go over the key points you need to consider when looking at your profit and loss statement, or income statement, at the start of the year.
Understand your metrics.
For your company to be profitable, you must budget at the top level (company level) and production level (employee level). Preparing budgets can be a daunting task that involves substantial resources to create. However, you can create a more simplistic budget based off industry percentages. The simplistic budget will allow you to bring into your company’s analysis the financial metrics needed to obtain your year-end goal. This budget can be analyzed quickly each month and used as a barometer to determine if you are on track. While detailed budgets and updated forecasts should always be considered, these financial metrics give you a starting point.
In this video we will go over the top level. We cover:
- How production per employee is built into your overall profit and loss.
- How percentages come into play in your company.
- How to react to changes in the economy, such as having to pay more for production employees.
- What your overhead cost, based on total revenue, should be.
- Your net income, based on total revenue, needs to be a minimum of 10% to 'break even'
In the next video in this series, we will go over the budget process for your individual production employees. We will then link back into the revenue numbers. This will provide you will a complete example on budgeting at the production level and at the top level.
If you have any questions or feed back based on the video, please don’t hesitate to contact us at Hovlandforensic.com/contact or call us at 888.878.0047. Please see the following blogs for further information regarding fractional CFOs and Virtual CFOs.