Knowing your Numbers with Stephanie Cannon

Welcome to this strategic travel entrepreneur. My name is Rita Perez. Hello. I've been a travel advisor for over ten years and I'm navigating this winding road of entrepreneurship with you. I created this podcast because I wanted to share all the things I've learned from leaders both in and out of our industry that I really wish I would have known way back then. But, alas, the important thing is I'm aware of them now, and I want you to be too. Ready for this week's show? Let's jump in. Hi, everyone.

Welcome back to the podcast. So nice to have you again. It has been quite some time, but we have another guest on the podcast. Woo hoo. Stephanie is a former CPA, small business accountant, and corporate financial analyst who left her career to follow her own love of travel. She has combined her love and passion for travel with extensive knowledge of numbers to simplify the financials of her business. She believes numbers tell a story. They are a true indication of the health of any business.

The key is knowing what numbers to monitor, how to capture the data, and how to use the data to grow your profit. Knowing your numbers can transform your business from inside out. Stephanie is committed to helping the dedicated travel advisor to become a profitable travel CEO by knowing and loving their numbers with ease. So they are empowered to go grow their travel business with confidence while spending less time behind the scenes to make it happen. Welcome, Stephanie.

Hi, Rita. Thank you for having me. I'm excited to be here.

Yeah. I am I mean, this is a topic that I think everybody needs to know about. It is definitely something I wish I knew way back when when I first started my travel business is the focus on the numbers. And I will say I'm not perfect on it, but I'm starting to get a little bit better here and there. So how can knowing our numbers like help guide us in our travel businesses?

Yeah. So one of the things and I'll, you know, I'll dish a little bit on myself here. But, you know, even being formally educated in accounting and finance and having all that experience from the beginning, I didn't look at my numbers. Like, it's, you know, we jump into a new travel business. We wanna get clients. We wanna help clients.

Yep.

We wanna see money start coming in, and that's what we focus on. But once I figured out some of the key metrics and kind of set up a process Mhmm. To be able to do that, it really helped kinda, like, light the pathway Okay. Of how to get to where I wanted to go quicker. Okay. So knowing your numbers really tells you where you are in your business, what's working, what's not working, and it can also give you indications on what you might need to improve or change within your business in order for you to make more money and be more profitable. And at the end, you know, we talk about profit. That's, like, the technical term.

Mhmm. But it's really what you pay yourself. You know? It's what you get to keep and put in your pocket at the end of the day. And that's one of the main reasons we all went into business for ourselves. Right?

Exactly. And I think that's part of, like, why why we're not talking about it that much because of course, like the love of Travefy. But part of, like, the reason that you got into business was to make money. And if you're not making money, then why are you in business?

Well, I would say, you know, a lot of people, it probably starts out being a hobby. Yep. That's not of course, that's not everyone. But it's like, oh, this is fun. And I get to travel and I get to do all this. But then once you get in, and I'm gonna be completely honest, it was kind of a part time thing for me when I started Me too. Not not realizing what it really took to be, like, a travel business owner.

Yes.

And it was a shock to the system when I decided I wanted to go full time. You know, once your children are back in school full time or whatever the reason for doing it, or you quit your nine to five and you make it full time. But that's when you really yes. Exactly. A lot of people do that. And but that's not to say that doing travel part time still can't be profitable because it can. And it should be no matter, you know, how many hours you put into the business and how you want to structure your model. But, yeah, if you don't know what you're looking at or how like, what questions you need to answer in order to grow and and propel your business, how to get the information to do that, and then what decisions you make with that information.

It's kinda like we go back to what we know. Right. And it's posting on social media and talking about destinations and all of these things when, you know, that brings clients in, of course, but you to be more streamlined and to really, really, like, make your profit grow, you need to find that mesh of the two.

Right. Right. And that's, I actually took a little bit of, like, numbers training at the end of last year, which kind of, like, opened my eyes. It was so helpful because, again, not a lot of people talk about these things. Like, how many people should you be talking about? What product do you wanna be selling? Well, how much is your average commission from that product product? And and kind of like creating these, like, overall goals. So if you make I'm putting numbers out there. 5,000 per river cruise, how much do you need to sell if you want your annual profit to be $80,000 a year or whatever it is? So what are kind of the numbers that we really should be honing in on? Like, when we're talking about numbers, I feel like it's like a, oh, like a fairy tale almost. But if we're going, like, real tangible, what numbers are we looking at now?

Yeah. And they're so it's gonna be different based on the travel advisor's model. Mhmm. So, you know, a solopreneur just running the business by themselves and not without any assistance or any other outside help will look different than somebody who has ICs Mhmm. Or somebody who's not with a host. You know, there's different things that they would factor in. But for the most part Right. I mean, it really is a numbers game.

Yeah. Even though we love what we're doing, it's really a numbers game. And when you figure out where you wanna be, because you mentioned setting goals

Mhmm.

If you don't know what that goal is, then what do you how do you know what you're working towards and that you're on track to get there?

Right.

So, I mean, one of those number is, like, what is your financial goal? And whether it's a revenue or a profit or even both. And I look at both because there's a difference between revenue and profit. I mean, you have expenses in the middle. Yes. And you can be bringing in all the money in the world and, you know, high commissions and still have a low profit. So those are some main ones, but also your list size, like your list growth rate. Mhmm. And how do you know what that needs to be? And you kinda touched on that a little bit in order for you to make the profit you wanna make.

But just because you have a certain size list doesn't mean you're gonna get the same amount of profit from that list every month or every year. You know, it's also your close rate. So how good are you at closing on new requests? And I kinda look at mine between brand new people, so they're not currently clients. So, you know, my prospects and what my close rate is, converting them to a lead versus an existing client.

Yep.

And usually, the existing clients, you know, they already know about you. They're already comfortable with you. So they're pretty sure when they contact you that they're gonna you're gonna be their adviser to work with, but it's the new people. So knowing what your average close rate is, I mean and, really, that's just keeping track of new inquiries that come in and how many of them you you book. Mhmm. And what that percentage is. And then, like, you messaged, mentioned the average commission rate per booking is huge. Yeah.

You know, if you don't know what that is and you can break it down, even by destination or by type of trip, you know, whether you're working on honeymoons or you have, baby boomers or you're doing river cruise versus FITs to Europe, like, they're all different. And when you lump them in altogether, it's really difficult to tell where, like, the true profit is in your business. I mean, you have some intuitive thoughts about that.

Right.

But when you do enough or you have a varied range that you offer to your clients, you probably wanna look at them and section them out. So I think those are the those are really the big ones. And a new one that I've added, is cash flow. Like, what's your dynamic cash flow? And it's kind of a term that I created myself, but we can bring all this money in. But if we don't have the cash to pay our bills at the end of the month, you know, you have to monitor what's in your bank account because that's a huge part of being a business owner.

You

don't wanna get into this cash crunch. And I think this really came about or was, amplified with the pandemic.

Mhmm. Yeah. Yeah. Because kind of going in that that direction, because I have another another point. But do you recommend because I've heard a couple different times that you should have multiple bank accounts. Like, one should be in a a bank account, like a savings account. One should be, like, where the money's coming in. One should be where all the bills get paid out of.

Do you have any recommendations for certain bank accounts that you should be having?

Yes. So, definitely an operating account, and that's typically so, basically, it's where your day to day transactions come in. Your commissions would come in. You pay your bills out of that account. But based on what's left at the end of every month or every quarter, whatever the process is that you decide to set it up, I move money into a separate account for taxes because you don't want to spend money without having something set aside for your taxes at the end of the year because now, you know, you could potentially be hit with this huge tax bill, and you're like, oh, no. Where's that cash gonna come from? And Mhmm. I've already So the things that you kinda earmark for something, and then I also have kinda like what I call a slush account. So I use that if I have any debt or any future things that I wanna be able to do and I wanna save towards those.

Okay. Remove that money aside because true just gonna be, like, very transparent here. When I see money in the bank account, I'm like, oh, I can go do this, this, this, and don't remember that I've already said I wanted to do something else. Mhmm. So you can over commit. And then that creates another, you know, issue within your business. So being really organized in all these. And for the people who don't wanna create separate bank accounts, you can keep track of this on a spreadsheet.

As long as you're really good at updating your spreadsheet and balancing, you know, balancing it monthly to what's in your bank account, you can have it to where you just put in columns, like the different areas that you've already earmarked your funds for.

Right. Right. Yeah. No. That's that's a really great point because as, like, having gone fully all in in the May, yeah. Yeah. You see money and you're like, woohoo, there's money you know. Exactly.

The the other thing that I thought about was sales as a number because our sales tracking is so different than kind of like other entrepreneurs because just because we have sold, that doesn't mean that's the exact revenue coming about just because of the commission splits with the suppliers and then if we're hosted as well. Because I remember and also going full transparency here. I thought I needed to sell a certain number of corporate retreats. Like, if I sold one corporate retreat for me every every month, so pretty much 12 retreats a year, I would be great. I would have enough revenue, profit, all that just to cover. And then when you do figure out all of the things that come out, your just normal home expenses and your investment type of expenses. It's kind of like The strategic travel entrepreneur is brought to you by mailbox power. Harness the power to attract and nurture your clients through something many entrepreneurs have forgotten about, the mailbox.

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Exactly. And I think that's, you know, I've heard other entrepreneurs that are not in the travel industry kind of simplify it that way. They just look at the revenue. Yeah. But when you have all these extra expenses or if you're working in a model where, like, with groups, it's a net versus you, you know, earning a commission that's paid to you, you have to calculate. Like, you have to, you know, backtrack or kind of, like, gross up your net, though we call it grossing up in the the finance world, to see what you need to charge the people to make sure you have enough money, but also factoring in, especially with groups, any extra expenses, you know, that you that might come along the way or things you want to do for the group that would be an investment on your part. Mhmm. You know, that's not part of the group itself.

But I always like looking at, you know, what's the end goal? What do you wanna end up with in your pocket at the end of the month, the quarter, the year? However, you wanna divide that out. Most people start with the year. Mhmm. And then you kinda backtrack knowing that it's gonna, you know, go up and down from month to month or quarter to quarter based on our wave season, whenever that's gonna be.

Right. You know? We're used to the wave now.

Right. No. We're used to the traditional wave season. And I don't know. We could have a really large wave, and then it could die down. We don't know what it's gonna do. But, you know, start with a yearly amount and then figure out what your business expenses are.

Mhmm.

And then add those two together. So you have your expenses plus what you wanna keep. So that's your commission goal or what I call the travel business owner's revenue goal. It's not your sales goal. Because now you have to figure out Right. What you're booking and the commission that will be coming in, fees, whatever out other, you know, different types of revenue streams you have to meet that revenue goal.

Mhmm. Yeah. No. I I love that you mentioned that. It's kind of like just totally simplify it. Start with what you want your commission goal to be. And once you have that goal in mind, kind of start putting the numbers together for what your yearly profit or your owner's equity kind of is going to be for yourself. And start crunching the numbers that way because you need to know how much commission on average you're making, but also what do you want to be making, taking home to create the plan? Correct.

And it's all I mean, really, it's reverse engineering everything. And it's a very you can think of it logically. Now in reality, does it work out logically? Most of the time, it's not at all. But at least you know what your targets are. And then then if you're looking at it on a month to month basis or quarter to quarter, you can see where you might need to adjust before you get to the end of the year. Because I know many travel advisors, you know, we're trying to do everything. We're marketing. We're, you know, we're client relations.

We're document prep. We're we're, like, everything in the business. And the last thing on the list typically is bookkeeping and financials. I'm or it's the one low on the list because most people don't want to do it to begin with. Right. So what do we typically do with our list? Right? Yeah. We work on the things that we like to do first, and then just kind of work our way down. So many, you know, may not put their bookkeeping or look at their numbers until it's tax time.

Mhmm. And this was I used to do this very early on before I had a lot of volume. But then when you think about it, typically, tax time is also wave season. Yeah.

Oh my gosh. Yeah.

This extra stress on. Right? You're like, oh, I haven't updated my books for twelve months or six months or whatever. But now I have all these new travel requests coming in. And, of course, you wanna take care of the travel request Mhmm. And push off the bookkeeping. So I think it's just one of those, you know, if you if you set a process and a habit or a routine of now you have your goal that you calculated, like we talked about based on what you wanna pay yourself and reverse engineer that. Mhmm. And then kinda look at it each month and do, like, a cumulative and see where you're you're gauging against that goal Mhmm.

Month by month, then you always have extra room to kind of if you need to focus on somewhere else or you don't have enough of this or that, you know, you can refocus your attention.

Right. Right. Because going off of that, how often should we be looking at these numbers? Is this like, okay. I set my revenue goal. I wanna be making putting in, like, $90,000 a year. That's

nice. So for me, you know, I always recommend monthly at a minimum. Even if even if you're a new like, a newer agent and you don't have a lot of volume or you're part time and it's kinda fluctuating, still, it creates a habit. And to me, like, when you don't have that habit, that's when things kinda start falling off Mhmm. And you focus in other areas. But just to create the habit of at least updating the key items monthly. And then if you do have a high volume, you can gauge against your goal monthly. If it's not quite that much, if it's only a couple of items, then maybe quarterly.

But I wouldn't do it any less than quarterly because at that point, it's really hard for you to course correct or change some things up going forward if you if you're pushing it out further than that.

Okay. And what is and I I had told you, I'm like, this is for selfish reasons too. How can we start tracking, like, other than even, like, one of the bookkeeping services? Cause I've always heard too, like, if you're gonna hire somebody in your business, the first hire needs to be an accountant. But how can we keep track of all these numbers? Is there a software or are we putting in a notebook?

Well, I wouldn't do a notebook unless is it unless it was, like, electronic and did math calculate. You know, let's use the tools that we have that make us be more productive. So the tool that I use is QuickBooks. Okay. And it's not super intuitive for the more complicated things. But as an extra or, like, as just a basic bookkeeping software, it's very easy to enter in your revenue, your expenses, pull in your credit card transactions, do your bank account reconciliation. I don't know if many people actually do that, but it's just making sure that everything came through correctly on your bank account and it matches up at the end of the month with your statement to what you have in your bookkeeping software.

Mhmm.

That way you know that nothing was missed because mistakes happen. Yeah. Things get missed and that kind of thing. So it's just the checks and balances, but there's other software besides QuickBooks. I think Xero is one, and I'm trying to think of another one. And there's, you know, there's some that are desktop versus or online, or you can use a spreadsheet. I mean, if you don't have a lot of transactions, you can always use a spreadsheet. And in that case, I would probably just create, one tab for income, and you could track that by month and another tab for your expenses and a column to, like, categorize them so you know what type of expense that is.

Mhmm. And then maybe a summary at the beginning, to net the two together.

Okay. Yeah. Because

just see what's in and out.

Okay. Because that's that's what I was wondering too. Like, if you wanted to start tracking the metrics of kind of like the exact commission or, like, track your sales, track your commission, but then also track kind of like conversions.

Mhmm.

Would that be would it be easier kind of just to create just a handy dandy spreadsheet and have, like, different tabs for each one then?

Yeah. So anytime I create spreadsheets

Mhmm.

I like to look at, like, what do I need to see Mhmm. To be able to make decisions or track, like, see trends. Okay. And then I figure out what data and how much detail that data needs to be in in order for me to report it, you know, to get what I need out of it. Because the last thing we wanna do is put a bunch of data in a spreadsheet and create all these things, and then it means nothing. We just wasted our time. So it's you know, you have to look at it and see, like, well, what am I gonna get out of this? What am I gonna use it for? And what's the best way to put it together? Mhmm. To give basically to give you what you need.

Awesome. Awesome. Well, thank you so much for coming on to the podcast today. Is there do you have, like, any special programming coming up that, people can check some of your stuff out?

Yeah. Actually, on my website that I created actually this year Yay. For the I know. For the financial side of trying to help travel advisors in this area, I do have a free calculator. And, it takes a little getting used to because we don't normally think this way. Mhmm. But it's a way that you can calculate how much it costs to run your travel business per hour. And then you know, like, when you're working on with new clients and bookings, like, what your what your commission target is Yeah.

Based on the amount of time you're spending with that client or that type of booking. And it's free. People can opt in for it. So they can go to with stephaniecanon.com. Okay. And there's a link there. And then, coming up in a couple weeks, I actually have a four workshop series. It's a paid workshop.

Okay.

But it breaks down a little bit more about what we talked about here. So So we're gonna break down revenue, revenue drivers, like, things you can be tracking to and how to calculate these. And then we're looking at expenses in another one, profit, and how to do what we talked about reverse engineer. Mhmm. So you can end up with the profit that you did or that you want to have at the end of the year. And then cash flow. This is a huge one. The cash flow forecasting and how to manage all of that.

So that's coming up, within a few weeks.

Oh, that's so good. Oh, I'm gonna have to keep my eyes peeled on that personally. Cool. And I'll be sure to add that link into the bio also. So, again, thank you so much. I hope everybody listening has taken away something important. And if if bare minimum, know that there's this awesome workshop coming on so that you can start getting your numbers in order.

Yes. Thank you so much, Rita. This has been so much fun. I love sharing this information, and I really want to help travel advisers make more money post pandemic.

Oh, yeah. And I wanna be making more money too. I'm sure we all do.

Exactly.

Have a great week, everybody. Thanks for joining me on the strategic travel entrepreneur. Please subscribe and leave a show rating on your favorite podcast platform. Oh, and don't forget to take a look at the show notes for important information and links. See you next week.