Zero To A Hundred – Episode 34: Building A Thriving Business: Profit First Strategies With Lydia Merritt

Zero to a Hundred - Jarrod Guy Randolph | Lydia Merritt | Profit First

 

Accelerators! 🚀

Are your finances holding you back or propelling you forward? This week, we’re joined by Lydia Merritt, founder of MLP Accounting and Consulting, to dive deep into the secrets of stress-free entrepreneurship. From cleaning up your books to pricing strategies and using debt as a tool, Lydia shares actionable steps to help business owners become more profitable and less stressed. 🎯 Whether you’re starting out or scaling up, this episode is packed with practical insights to transform your business.

What’s on the Menu:

💼 How to raise your prices the right way—and when to do it.

🧾 Making finances your friend, not your fear.

🔑 How debt can be a tool, not a trap, for growth.

Why Tune In?

Lydia demystifies financial management and shares proven strategies to help entrepreneurs build a profitable business while keeping stress levels low. Get ready to take control of your financial future!

💬 Gem from Lydia:

“If you’re not making a profit, you’ve got a very expensive hobby. Focus on profitability first.”

Get in Touch with Lydia:

📧 Email her at Lydia@MLPAccounting.com or connect on Facebook and Instagram under Lydia Merritt.

Don’t miss out—hit that subscribe button and let’s take your business from zero to a hundred! 💥

 

Watch the episode here

 

Listen to the podcast here

 

 

Building A Thriving Business: Profit First Strategies With Lydia Merritt

In this episode, I am very excited to introduce our guest, Lydia Merritt, who is the Owner and Founder of MLP Accounting and Consulting. She has a BS in Accounting as well as being a certified public bookkeeper who works with clients across the US, educating them on how to grow their businesses and become more profitable, two of our favorite things. Some of the subjects that we are going to cover are going to be raising your prices, how to do it properly and when to do it, profit first, becoming a stress-free entrepreneur, and using debt as a tool to grow your business.

For those of you who do not know me, I am the Founder of BoxFi. We are the nation’s leading payment consultant, providing business growth solutions through payment processing. I’m excited to share the network that I’ve built over my entrepreneurial journey to help you grow your business and become more profitable. Ladies and gentlemen, let’s accelerate together.

 

Zero to a Hundred - Jarrod Guy Randolph | Lydia Merritt | Profit First

 

Lydia, it is great to have you on the show.

Thank you for having me, Jarrod. I appreciate the opportunity to talk to you about finances and how to help small business owners be more profitable.

Financial Fears: Why Business Owners Avoid Their Finances

You are the CFO extraordinaire and you work with a lot of SMBs, which are our audience members, helping them streamline their personal and business financials. Can you talk to me about some of the misconceptions that business owners have about their financials and how you help them clear that up?

A lot of times, business owners think about their financials in the system of, “It’s that thing that I need to do for taxes. I’ve got to do something with it. If I’ve got money in the bank, I must be doing good.” It’s those types of things. They’re looking at their financials maybe once a year or maybe not even. They may take their information to their tax preparer and be like, “Tell me what I owe,” and that’s about all they do.

Sometimes, I try to work with them to help them understand that this needs to be a more frequent topic. We need to look at this more frequently. This is a tool in your toolbox for you to be able to make financial decisions. When you don’t focus on financials, then you get that downside of you don’t know what you don’t know. You don’t know how bad it is. That can be a lot of the reasons why people avoid it. They’re afraid of it.

They’re afraid of numbers and seeing what the actual numbers will tell them. It’s scary. We try to take away the scary part for them and make them understand. First of all, it’s very common to be scared of your finances. It isn’t a monster. It is what you make of it but looking at it and giving it a name, that takes away the scariness of it and being able to see what is going on, what you’re doing, and figuring out how to use that then for your business rather than it being something scary. “I don’t know what to do with this over here.”

It's very common to be scared of your finances. It really isn't a monster. It is what you make of it. Share on X

Here’s a question for you. I’m a business owner. How many times should I be looking at my financials to make sure that everything is in order personally and as an individual? How frequently should I be looking at my financials with my CFO, CPA, or tax advisor?

As a business owner, you should minimally be looking at that once a month or once a quarter at the very least. If you’re a tiny business, you might be able to get away with once a quarter but most businesses need to do that at least once a month, see what is going on in their business, and sit down with their bookkeeper, CFO, or someone who can help walk them through those numbers and help them understand what they mean, where they are, what this means for their business, and what they can do with that information.

Decoding Your Financials: A Guide For Business Owners

When you’re sitting down with a client, especially with a new client, what is it that you’re going to be looking at in their financials to gauge their financial health?

First of all, we’re going to look at the debt-to-income ratio. We’re going to look and see how leveraged are they at the moment. Do they have a lot of debt and credit cards that they’re using? Are they financing their current expenses? Are they needing to take out loans to be able to make payroll? It’s those types of things. We’re going to look at all of that information that is typically going to be on the balance sheet.

Sometimes, it isn’t even being recorded because the owner doesn’t know that it needs to be recorded. If they don’t have a good bookkeeper, they’re not asking the question, “What are we making this payment for? Where’s this going? What is this attached to? If we have a loan, what asset is that paying for? Did we use that for inventory? Did we buy land? What’s happening here?”

The big thing that we look at is see debt-to-income ratio. “Where’s that? What is that coming in?” We also look at their current expense, the chores versus their income as well. It’s like their day-to-day expenses. Check to see, “Where are we when it comes to our breakeven? Are we close to breakeven? Have we over-extended ourselves in our expenses to where we’re not even breaking even every month?” We’ll check those and that information as well to make sure.

That can be a thing that might be adjusted with pricing or we would need to reduce expenses. It depends on the client’s situation but those are the things that we look at. We then will dig into, “What is the problem? If we’re overextended, is it a problem that we’re not charging enough for our product or service?” A lot of people don’t know how to calculate that out and figure out, “If I’m selling a product that costs me $6, I need to be making at least $8 to give me some profit there.”

They may not be thinking about, “I also have overhead on this. That is that extra $2. Maybe that overhead is $3 per product. I’m losing money on every item that I sell.” We work with them to help them understand how to look at all of the pieces that go into making a product or providing a service so that they can make sure that they’re pricing it appropriately to at least break even and get slightly above profit and then we start looking at how we fix those other areas. “Do we bring down our expenses? What areas can we cut? Are we using multiple pieces of software where one piece of software would do the trick?”

I have gone through a stage where I was looking and, conserving what software I am using and going, “For one, I noticed that I’m paying for Zoom but Google Meet does the same thing. It’s included in my Google Suite, which I’m already paying for. Why am I paying another cost for another piece of software? If this one is going to do the same thing, I’m going to do that.” We look for things like that where we can help our clients. For example, in my business, I need online video software so I can communicate with my clients and work with them. Do I need Zoom or can I use something else that’s already built in?

I want to talk about the expenses and stay on this topic. Let me jump in because this is important. Balancing operating expenses and the cost of creating your product or service can be a fine line for a lot of businesses. How often should a business owner be looking at their actual pricing? I feel like it’s secondary for a lot of business owners in terms of increasing their pricing.

I’ve had some of the merchants that we’ve worked with in my business say, “We haven’t increased our prices in eight years.” “I’m sorry. Inflation happens and it’s a real thing. What do you mean you haven’t increased your prices? That means your margins have gone down dramatically and you’re not making as much money as you did eight years ago.” What calculation do you put into place to raise your pricing? How frequently should you be looking at raising your pricing for your product or service?

A good rule of thumb is to look at what the current inflation numbers are doing and use that as a margin. If inflation is 5%, maybe we want to increase pricing by 6% annually as a rule of thumb to at least increase by that based on what’s currently going on in the world. Certain industries will have higher increases sometimes than others. We’re looking at maybe the construction industry. The cost of construction materials may have gone up quite dramatically and those can fluctuate very quickly.

With the construction industry, you’re probably going to want to look at your pricing on a more frequent basis than maybe another industry that has a more stable price ratio where your costs are a little bit more stabilized. At a bare minimum, look at it annually for sure, quarterly, depending on the industry you’re in, and the situation in the world.

Sometimes it’s a matter of how the situation in the world has changed. Back in 2020, the cost of construction materials skyrocketed because people weren’t able to get it and so many people were doing home projects because they were at home. They were, “I need an extra room in my house so I can work from home.” There were additional construction projects going on. The cost increases. What a lot of the construction people did was like, “I don’t know what the price is going to be from today to next week. I can give you that price when I get there. I can look at the numbers and see what that’s going to pay for me.”

Do you think there are other industries in terms of your business that you’ve seen that have pricing that fluctuates or have had a substantial increase in the cost of their goods to do business other than construction?

Anything where you’re doing importing pieces from overseas, that has seen an increase in the last couple of years. It’s going to see an increase in the next few years if you’re importing anything from overseas with the tariffs and stuff that is going to cause the price of goods to go up. That’s something that is predictable knowing what’s going on. I’ve heard a few people say that some of the industries have already prepared. We’re going to go ahead and buy as much as we can because we don’t know what the prices are going to be in the next months.

We want to get as much of the raw materials that we’re getting from other countries into our horses. In manufacturing, we’re seeing that a lot. I don’t know what other industries are off the top of my head. I know groceries. Everybody has seen and felt that the groceries have gone up at the store. I don’t know that there are very many small business owners that are working in that field that may be addressing seeing that increase a lot for them. I’m not real sure what’s on those.

We went from looking at what you need to do to increase pricing based on inflation to giving yourself a margin. Beyond the expenses, which we touched on, and ways in which you can reduce that, how important is it for a business owner to focus on profitability?

It’s very important. If you’re not making a profit, you’ve essentially got a very expensive hobby where you are spending a lot of time chasing money and trying to pay the bills. It gets very tiresome and exhausting when you’re in that position because you’re robbing Peter to pay Paul. It’s very exhausting for a business owner to be in that position because your personal and business lives are so intertwined. That means your personal and business finances are going to be very tight. It’s going to be a struggle.

 

Zero to a Hundred - Jarrod Guy Randolph | Lydia Merritt | Profit First

 

I feel like that’s where a lot of people are. They’re at that cusp where they’re right there by profitability but not making enough to be profitable at the end of the day. We work with them to help them see that and work with those things so that they can become profitable, have less stress in their life, and be able to pay their bills. It’s that weight of not having to deal with the debt collectors or work. It does come with its price because if you’re making a profit, Uncle Sam wants his cut on that. You have to balance that with, “I have an actual profitable company that has longevity.” A company is not going to be sustainable if it’s not making money over the long term.

As a business owner, you have to focus on profit first to run a real business. If not, it is a very expensive hobby and nobody wants it. I love that you said that because I do feel that. What I see is a lot of business owners are scared, frankly, to increase their pricing. They’re passing their fees to their customers, bearing the brunt of the increase of those costs of supplies and materials, making less money, and ultimately, becoming more frustrated. They’re not providing that top-level service that they could if they had a business that was profitable.

If you go to work every day, you’re miserable, not having a good time, don’t have good relationships with your employees, or don’t have money to invest in your business, what the heck are you doing as a business owner? You have to charge your customers what is appropriate for that product in the marketplace and stop being so scared to increase pricing. Frankly, to your point, you’ve got a very expensive hobby. If you’re not making a profit, then what are you doing? You’re not running a business.

You might as well shut it down and go work a 9:00 to 5:00 job. At least you can pay your bills.

The Profit First Method: A Modern Twist On Envelope Budgeting

When you’re working with one of your clients, how do you create a structure around helping them become more profitable and then having that balance in having enough money coming in personally, to operate the business, and grow the business?

We work with a system called Profit First. I’m not sure if you’re familiar with the book by Mike Michalowicz.

It’s not next to me but I did. I’m a big reader and I do a book review every single week. Profit First for my business was a game changer because I had never looked at taking my profits first but I’m going to let you dive into it.

You can correct me if you feel like this is a wrong analogy but I’ve always felt that what he does with that is take your basic budgeting principles and the principles of envelope budgeting and that system. Modernize and electronify it for the modern digital age. Make it practical for your business so that you’re taking that money and putting it into those separate buckets and envelopes, if you will, for-profit and owner’s pay. You’re operating expenses and taxes. You’ve got those four buckets that you’re putting money into and you’re able to keep track of where everything’s going.

Business owners are scared of their financial statements but also from necessity, we look at our bank balance to see if we’ve got money to go do something. I do it. You do it. I’m sure most business owners I’ve talked to don’t go and pull up their financial reports to see if they’ve got money to go do something. They look at the bank balance and go, “Do I have $700 that it’s going to cost me to do this thing? Yes, it’s in the bank account. I can do it.” That’s how we do it.

Have that set up in a way that it’s sheltering the money and put it aside so that you’re doing that. It’s also reminiscent of the pay-yourself-first model that a lot of us may have heard about when we were starting our first jobs. They were encouraging us to put money in our 401(k) or savings account directly from our paycheck. If you don’t see it and you get it moved over first, then you’re not going to necessarily miss it as much. There is that psychological piece to it.

We work on percentages to figure out based on industry and the income level of the client. We work with them to discover what percentage should go into each bucket. From there, we can look at, “This is what I want my owner’s pay to be. This is what the percentage is going to afford me currently. I can use that percentage to back into what my overall revenue needs to be if I want to be able to pay for my kid’s college or that dream boat or vacation home that I want. I can back into all of those numbers and build those up over time.”

We’re not necessarily going to be able to do that tomorrow but those are all nice goals to have that we can then work our way towards. I can look at that and say, “To pay my bills, I’m going to need X income.” That income is 20% of my overall sales so then I can back into, “How much do I need in sales by running those numbers backward?”

I want to stay on the profit first. First of all, I love that you brought that up. It’s my jam because I’ve never looked at my business this way. The concept of profit first is your revenue less profit equals your expenses. It’s not that you’re taking 20% or 30% out of your revenue as profit. It could be 2%. Let’s say your revenue is $100 a month. If you were to take 2% out of that so $2 a month and put it towards profit, you could run your business on $98 if you were able to run your business on $100.

Conceptually, it sets you up mentally at a place where you are starting to put money aside, which is an account that can grow. You can also grow your business. What I’d love to hear from you is since this is something that you focused on with your clients, maybe a success story or some of the challenges your clients typically face when first going into the mindset of profit first.

Profit First Success Stories: Real-Life Examples Of Financial Transformation

We get clients that start out and do not put anything aside. They don’t have savings. They stress about paying their tax bill every year. They start utilizing profit first so they’re putting that money aside. One of the biggest success stories that I can think of is we had a client who was thinking, “I’m still having a little trouble writing these expenses every month. That expense account keeps getting low.” His wife sat down with him. It was a husband and wife company and they were working together. She was like, “You’ve got to think about the fact before this was all we had. We still had that tax bill that was due.”

This is just the operating account. In their case, it was $12,000 in their tax account. When the tax bill came due, they were able to go in and write a check for the tax bill, stress-free, and pay that tax bill. They do not have to sit there and go, “Where’s the money coming from?” We’ve run our expenses down to zero again. They then looked at, “In our profit account, we’ve got this amount of money. We’re able to take the kids and go do a special fun thing with our quarterly dividend from the profit account. We’re paying our salaries. We’re getting paid.”

It clicked because they were able to see that and work on it. We start small building that muscle. We’re going to start with 2% and build up. We’re going to gradually increase that to where it’s something that we can do. We’re not going to jump in and be like, “You got to slash your expenses in half.” That’s not going to work. We do it like a physical trainer would have you start small and do small increments. These mental muscles need time and slow increments to start and change habits. We work with clients to help them do that.

Probably the most challenging thing that they have is keeping your hands out of the cookie jar so to speak. In his book, Mike Michalowicz stresses the idea of having those no-temptation accounts and moving that money to a different account where you can’t get to it. I 100% echo that. If you don’t, it’s sitting there and you’re like, “I need that thing,” or whatever it is. You dip into that account and pull it over. All you’re doing is spending a lot of time chasing money.

What’s funny is at one point in time, if I remember correctly because I’ve been an entrepreneur for many years, it was always like, “Streamline your accounts. Try to cut them down.” I’ve found that having multiple accounts is making me more accountable and paying attention to what is going in and out of every account. I have a third bank where I have that profit account and I put the money in it. That is something that I cannot touch.

It’s not calculated on any of my other numbers, which has helped me in the financial operations of my business. I like the concept of Michalowicz’s book Profit First. If you have not read it, read it. Go on LinkedIn. You can see that I did a book review on it. It’s incredible. It’s the concept of cash envelope budgeting. Post World War II, which would be my grandparents, they had an envelope with cash in it for mortgage, car payment, insurance, groceries, and cable. When that money was gone, it was gone.

Frankly, that is the generation who, as they have passed, are leaving money to their families. People now have no money to leave to their families. Their salaries were a tenth of what salaries are. Granted, expenses were much lower at that point in time as well but they put money away because they understood what budgeting was. I’d love to hear your thoughts on this, Lydia.

What I realized is that tangible touching that money. When you reach into that envelope and you’ve got $1,000 and all of a sudden, you only have $720, $500, and then $340, it changes the relationship that you have with money. Digital wallets and digital money have been incredibly negative for businesses because you’re not paying attention to what you’re doing financially.

 

Zero to a Hundred - Jarrod Guy Randolph | Lydia Merritt | Profit First

 

The Digital Dilemma: How To Stay Accountable In A Cashless World

It is in some aspects easier to spend because you don’t see it necessarily but I do think that we have a better tracking system. Every dollar is tracked when you’re running it through your banking system. As opposed to with cash, it’s easy to spend that cash and then forget what you spent it on. With the digital system, you’ve got that running total that tells you exactly what you spend it on. It helps you be able to track that a little bit more accurately in that aspect.

It’s a matter of making that correlation between digital money is real money. When my kids were little, we always heard to give them cash money for their allowance so that they could see it, spend it, and that sort of thing. There was a long time when they didn’t understand what a debit card or credit card was. Mommy swipes the card and Mommy gets the money. Can’t you just swipe the card and get more money?

We discovered a digital allowance system that we were able to use for our kids that gave them prepaid debit cards. The system is called FamZoo. It is the name of the card company we use. Green Dot is one that’s become very popular. The thing with those cards was I noticed my kids suddenly had an understanding because I was putting money on their card and then they were able to track on an app how much money was left and where that money went.

They suddenly got that concept of this is how digital money and the cards work. It was less questions about, “Why can’t mommy go get the magical money from the magic card?” They started understanding how cards and money work in that concept. It’s a matter of making sure that we remind ourselves that this is real money. This is happening whenever I spend this and also tracking that. That’s where the importance comes in. It’s tracking those balances and knowing, “I spent watching those numbers change,” whether it’s that physical cash or looking at the numbers on our balance on the app.

It's just a matter of making sure that we remind ourselves that digital money is real money. Share on X

I have to update some things on my account. This is not a pitch in any way but I use this group called Qube Money. This is my card. It’s a digital cash envelope budgeting. Let’s say I’ve got a $10,000 budget. It’s on the personal side. It’s not on the business side. I’ve encouraged the owner who was blessed to have on our show as a guest to do this for businesses also but I can budget my mortgage payment, car payment, gas, and groceries.

When I go to pump gas in my car, and let’s say I’ve got $150 for gas for the month, I open the app and click that I’m going to pump gas. I swipe the card. If $40 comes off for gas, then I have $110 left. It’s budgeted under my gas line item. It has been the coolest thing. This is why Profit First has been so helpful. It’s a very similar concept because you have separate accounts for everything.

It’s having that connection with your money. It sounds like that’s what you’re describing that you’ve done for your kids and even us, as adults, in my general generation. As an elder millennial, we didn’t necessarily have that same financial acumen. Over the years in my life in business, I’ve spent time educating myself so I can run a successful business and run my finances personally, successfully.

When I’m talking to some of my clients about these principles, they’re like, “I could put this in place for my personal.” I’m like, “Absolutely.” You can take information from your personal and translate it to your business. You can make this as complex or simple as you need it to be. There are people out there who are landscapers or I have some who are photographers. Their business fluctuates. They have busy seasons and off-seasons. For them, it’s very important that we create a drip account.

They put money during the busy season so they can pull out during the slow season. They can keep that steady payment to themselves, their staff, and their vendors to keep everyone happy over those slow seasons so that they’re not stressed about money going, “I’ve got two more months or another month before I’m able to get cash in my wallet. How do I pay my bills?” We work on situations with them to help them figure out what’s going to work best for them.

Stress-Free Finances: Strategies For Business Owners

There’s one thing that I want to stay on since you’re talking about a business that might be a seasonal business and creating that drip account. Figuring out what your financial plan is for your business and personal life can be incredibly overwhelming and cause a ton of stress. Most business owners are not stressed because they’re worried about the cost of goods or filling their restaurant or customers. They’re stressed because they don’t have those financial management tools in place. What are some of the key things that you can do and you would advise the owners that you work with to organize their lives and their mindset around reducing stress and still running a successful business?

One of the biggest stressors is the financials and being able to pay our bills. Sit down and figure out what our must-haves, must-pays, and the things we have to do to keep the restaurant doors open and keep the lights on at home. Figure out what those needs are, set goals to meet those needs, and make sure that we can meet those needs. It’s like Maslow’s hierarchy of needs.

Once we’ve got our shelter and basic needs taken care of, then we can worry about these other things. We can’t get to these higher levels of peace, safety, and love when we aren’t having our basic needs met. If we can get those basic foundations set and be like, “Yes, you can pay your bills with what you’re making right now.” In the worst-case scenario, with what you’re making now, you’re not going to be able to pay the bills so let’s make a plan to get to where we’re paying the bills.

Let’s dig a little bit deeper. For a typical business, that might work but let’s say that you have a business owner that comes to you and they’re in debt on $50,000, $100,000, or $250,000. How do you help business owners change their mindset, reduce their debt, and put money away? What would be the plan if you had someone who comes to you and they’re like, “Listen, I need help. This is my situation?”

We would sit down and work with them to see what we have on hand. What is here? What is our reality? Often the hardest part is sitting down and getting a reality check with a client. It’s hard to be honest with even ourselves about where we currently are sitting. That’s probably the hardest part. Once we get real about where we’re at and what the situation is, it sounds very simplistic in the fact that it is like, “This is what’s coming in, this is what’s going out, and this is what we can pay.”

We put a game plan together, that snowball. “What’s our possible debt snowball? Do we have $25 that we can throw at this debt? Where do we start? What’s the lowest interest that we can pay off first? Which creditors are going to work with us?” We’ll talk to creditors. I can’t personally but I’ll work with the business owner and help them talk to their creditors and help them figure out what to say and how to deal with the creditors. We can talk to them and figure out the game plan for paying off this debt.

The idea is to then create a plan that will get us from point A to point B, point B being we want to be debt-free and pay down X number of debts by this point and breaking that down into smaller steps that they can do over time. It’s like with any goal that we set and anything that we make. If you want to lose weight, you’ve got to eat less. If you want to eat less, exercise more essentially. If you want to pay down your debt, you’ve got to spend less and make more money. We look at the different ways that they can bring in more money and what we can do.

If you want to pay down your debt, spend less and make more money. Share on X

What is currently working for them in their business? What could we improve upon? Are there ways that we can bundle things? Can we change something to make a membership that makes it easier for clients to be recurring? We can look at everything from, “How many hours a week are you spending on this? Is there a way to get a second job if you need to?” If they’ve got debt that is overwhelming, that might be a reality for a few months, like for 6 to 12 months, to double up on the income so that we can get out from underneath the debt and creditors and get ourselves on the financial pudding.

Lydia, I want to thank you for what you said. Sometimes you need more income and that might mean a spouse working another job if you’re working in the company together. That might mean you for a period of time working another job to dig yourself out of the hole. You have to start somewhere and starting somewhere is acknowledging it. Come up with a plan and follow through on that plan.

Cut up your darn credit cards if you can because those are some of the things that kill a lot of businesses. Once you get to a certain level, it might not be as stressful. You might not have those issues. I love what you said. Sometimes you can’t overnight drive more income to your business and it might mean someone in your household is getting another job. That’s a great point.

Debt Management: Using Credit Cards As A Tool, Not A Crutch

I love what you said about credit cards because they can be a pain but also learning how to use them appropriately. Using them as a tool and not a crutch is often the biggest thing that we have to acknowledge and work with. I look at it this way. Food is good for me. If I don’t eat, my health is going to suffer long-term. My relationship with food has not always been a healthy relationship. I have often overeaten on sweets, pastries, or things like that that might also affect my health detrimentally.

Learning how to use debt appropriately and using that as a tool and not a crutch is often the biggest thing that we have to acknowledge. Share on X

There are ways that we can use that appropriately and credit cards can be used appropriately. That is something that I work with my clients too on how they use their debt. One of the tools that we use is using that as one of our envelopes, for example. We have a credit card maybe that’s maxed out. We’ve been paying minimum payments on that credit card. If we translate this credit card to our gas card, put our gas budget on this card every month, and pay the gas off or use it to buy our gas, what difference does that make to the credit card company?

Technically, nothing’s changed. For me, it’s freed up let’s say a $50 minimum payment that I’ve been making. I translated that into a $150 that I’m putting on that card. Suddenly, I’m paying more than my minimum to my credit card. I’m using the credit card and paying it off, which improves my credit rating with the credit card company.

Are there other ways that you can suggest that business owners use debt as a tool?

Yes. I like to recommend getting a credit card to do your basic subscriptions and things that you do on an annual basis or monthly basis where you have that payment automatically coming off. Put it on the credit card and pay the credit card off every month. If you can get one that gives you points, it’s even better because you can purchase things with that. Maybe it’s miles. I prefer the ones that let me buy gift cards but those are different things. I would then turn around and buy a gift card for Panera Bread or Starbucks that I could then use either as a gift to a client or use it when I go out to Starbucks or Panera to meet a client.

Different things like that are ways that you can use. It’s paying you to use the card. You’re not getting the interest and getting stuck on that. The things you have to watch out for are maxing them out every month, going above your credit limit, and those types of things. You want to keep within your credit limit. They recommend under 30% of the balance. If you have a $1,500 balance, you don’t want to spend more than $500 on that card at one time to keep it under that 30%.

It’s there in an emergency. I feel like sometimes we’re so scared about it and we feel so bad but sometimes, life happens. It’s not always good and easy. You get stuck. You have to do the emergency thing for a little while and then you dig yourself back out of the hole because that’s life. It does us no good to shame ourselves for getting into a bad place.

Preparing For Financial Success Within Your Business

Sometimes, you have to give yourself grace and keep moving. Before we go to our rapid-fire section, I’d love for you to talk to the audience about 2 or 3 things that they can do for 2024 to prepare for financial success within their business.

The first thing I would say is if you’re not tracking, start tracking. Find some tools to where you are tracking what you’re spending and when you’re spending. Figure out all of your expenses for the year, sit down, pull those numbers, and look at, “How much did we spend on software this year? How much did we spend on car maintenance,” if you’re using your vehicles in your business and those types of things. Go through those detailed numbers.

One of the areas that a lot of people don’t realize is bank fees, which will eat you alive. Late payments on credit cards, bounce checks, and anything where you go into overdraft with your bank account are going to hit you. You’re paying your bills. Life happens. You forget something and it bounces. If it happens a lot, you can end up with hundreds and thousands of dollars in fees. Set that payment to go earlier or set an automatic transfer from the savings maybe to keep a buffer zone in there if you get to those things. Those can save money but you can’t fix what you don’t acknowledge.

You can't fix what you don't acknowledge. Share on X

First of all, figure out what those finances are and where they’re at. Make a plan on a regular basis to sit down and go over these numbers with somebody to help you figure out a plan for what to do with that information. “How do I utilize this information?” Educate yourself, whether it’s reading a book or listening to a podcast. Talk with an accountant, a bookkeeper, or someone who knows your industry and business and help you work through those questions that you might have.

“What does this mean for my business? How can I reduce these costs? What can I do?” Work on that plan. Acknowledge where we’re at, create a plan, and then work on it. Make your most important meeting of the month. You’re sitting down figuring out your numbers and knowing what you’re going to do with those numbers.

Rapid Fire With Lydia: Coffee, Zombies, And George Washington

Lydia, are you ready for our rapid-fire section? This is the fun stuff. Give me quick answers here. Coffee or tea?

Tea.

It is a zombie apocalypse. You have to leave your home and protect your family. What will be your weapon of choice?

Gun.

What book would you recommend that our audience of entrepreneurs and business owners read to help advance their business?

Profit first, hands down.

Air five. I love that. Dead or alive, if you had the opportunity to have dinner with someone, who would it be?

George Washington.

The Founding Father. There we go. Let’s say that you are a small business and you’re doing $100 million in annual sales and Jarrod walks through your front door and hands you a $300,000 check. As their CFO, how would you advise them to invest that $300,000 to help grow their profits over the next 12 months?

First of all, I’d put it towards any debt that they have and reduce that. Second, put it in something that’s going to earn the highest interest rate that they can possibly get, put enough in there, and put some aside so that they can pay or use some of that money towards an advancement opportunity that they’ve been working towards.

Here’s our last question. Tell me two people in your life who have helped you get to where you are to build the level of success that you have in your business.

I would say probably my spouse because it took lots of patience and extra time with me being away, working, and doing things at late night. I’ve had some good close friends who work with me and encourage me along the way. Other business owners are very encouraging as well. We work together quite frequently.

Lydia, tell the audience where they can connect with you if they’d like to do so.

If you’d like to connect with me, you can find me on Facebook, Twitter, and Instagram under @LydiaMerritt. Breakaway Bookkeeping by Lydia is there as well. You can also email me at Lydia@MLPAccounting.com.

Lydia Merritt, thank you for joining us.

Thank you so much. It’s been a pleasure.

 

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About Lydia Merritt

Zero to a Hundred - Jarrod Guy Randolph | Lydia Merritt | Profit First

Lydia Merritt Owner & Founder, MLP Accounting & Consulting, LLC Tulsa, OK (Remote Services Nationwide)

Lydia Merritt is the founder and owner of MLP Accounting & Consulting, LLC, a fully remote accounting firm based in Tulsa, OK, serving clients across all 50 states. Lydia and her team are dedicated to educating and assisting small business owners in creating profitable and sustainable businesses through expert accounting and financial consulting. With a strong focus on client empowerment and business growth, MLP Accounting & Consulting takes pride in offering tailored solutions for every client.

Lydia holds a BS in Accounting and advanced certifications in both QuickBooks Online and Desktop. She is also a Certified Public Bookkeeper (CPB) and a Profit First Professional, specializing in the Profit First methodology to help businesses maximize their financial health. Her passion for financial education and strategic consulting has made her a trusted advisor to numerous small businesses looking to thrive.

Beyond her professional endeavors, Lydia is deeply committed to social justice. As an Enneagram 8, she is driven by a strong desire to right injustices and protect the vulnerable. When she’s not working, Lydia dedicates much of her time to volunteering for causes including foster care, child abuse prevention, sex trafficking awareness, women’s rights, and Black Lives Matter.

In her personal time, Lydia enjoys the quiet solitude of reading historical fiction or watching period dramas—especially Outlander. As an introvert, she values time to recharge, often curling up with a cup of chai tea and immersing herself in a captivating novel or film.