The Financial Awareness Checklist Every Founder Should Do Quarterly

Most agency founders aren't avoiding their finances because they don't care. They're avoiding them because nobody ever told them what to actually look for.

In this episode, Melissa walks through the five numbers every creative agency owner should be reviewing every quarter — and why 45 minutes, four times a year, is the difference between catching problems early and finding out when it's expensive.

What's covered in this episode:

• Why "things seem fine" is not the same as things being fine
• Gross margin by client and project — where quiet erosion actually lives
• AR aging and why cash flow problems in agencies are almost always a collection issue first
• Burn rate and runway — and what your number should be telling you
• Revenue concentration and the 30-35% threshold worth paying attention to
• Utilization rate, the industry benchmark for creative agencies, and what it reveals about hiring and pricing

The five numbers:

1. Gross margin by client or project
2. Accounts receivable aging
3. Burn rate and runway
4. Revenue concentration
5. Utilization rate

No Se Habla Taxes is the podcast for creative agency owners who want to understand the financial side of their business — without drowning in spreadsheets. Hosted by CPA and fractional controller Melissa Armstrong, each episode unpacks real operational finance questions through candid stories and practical insight. Subscribe to the newsletter at steadyhandaccounting.com for episode recaps and financial insights delivered straight to your inbox. 

Not sure if your business is healthy or just busy? No Se Habla Confusion is a $500 financial assessment for creative agencies on QBO doing $300K–$3M. I dig into your numbers, find the gaps, and tell you exactly where you stand. Email info@steadyhandaccounting.com — subject line: No Se Habla Confusion. 

Let's connect!

LI: https://www.linkedin.com/in/armstrongmelissacpa/

Website: https://steadyhandaccounting.com/

Transcript

0:10

Hey, welcome back to No Se Habla Taxes. I'm Melissa Armstrong, your favorite CPA and fractional controller, and the person in your life who's going to say the thing nobody else is saying about your business finances Review and half of you mentally checked out. You pictured spreadsheets and a boring Saturday afternoon and a very large cup of coffee that is not doing its job. Stay with me because what I'm describing today is not an accounting exercise. It is a business habit, and it's the single thing that separates founders who feel in control of their numbers from founders who find out bad news at the worst possible time. Okay, so let's do this. I want to tell you about a founder I worked with. She ran a branding and design agency, small but mighty. Eight years in business, good reputation, a wait list at one point. She knew her clients, she knew her work, and she genuinely believed she had a handle on her finances because she had a bookkeeper and QuickBooks, and everything was, quote, "being tracked." What she didn't have was a habit of actually looking at any of it. She would log into QuickBooks maybe twice a year, during tax time especially, and whenever something felt off, which meant she was never really looking at the full picture, just reacting to the moments when the picture was already blurry. So when I sat down with her and we pulled the quarterly numbers, a few things showed up that she had no idea about. Her gross margin had been slowly eroding for almost a year. Retainer clients she'd underpriced in 2021 were still on those same rates. New project costs had crept up because she'd added a contractor, but she hadn't really revisited what she was charging to cover that. Margins looked fine on the surface until you ran the numbers by client, and then it was absolutely not fine. One client, her oldest and most loyal client, represented about 55% of her revenue. She knew they were a big client. She just didn't realize they were that big. And her accounts receivable aging... she had two clients sitting past 60 days. Combined, that was almost $20,000 that she had already done the work for, but it hadn't come in yet. She thought cash was tight because it had been a slow month. It wasn't a slow month. It was a collections problem, and she had overlooked it because she wasn't keeping up with her numbers. None of this was a catastrophe yet, but it was getting there, and the entire thing could have been caught and corrected earlier if she had spent about 45 minutes once a quarter actually reviewing her numbers with intention. That's the part that gets me every single time. Not that bad things happen in business, they do, but that so many of them are preventable, and the only thing standing between the problem and the fix is paying attention. One thing about financial reviews is that they don't feel urgent until they are. You're not gonna get a calendar reminder that says, "Hey, your margins have been slipping for three months. You should look at this." Your bookkeeper is not gonna call you and say, "Hey, I notice your AR aging is getting a little concerning." That's not their job. That's your job as the business owner. And sure, I hear the objections. I have heard all of them. "Oh, I don't have the time. I don't know what I'm looking for. My accountant handles that. Things seem fine." Things seeming fine is not the same as things being fine, and I say that with full compassion because I know that for a lot of founders, the reason that you're not looking is not that you're lazy. It's, you're avoiding it, and avoiding it usually means that you have some anxiety. Anxiety, that is there because you don't feel like you're equipped. So let me equip you right now. Here's what a quarterly financial review actually looks like for a creative agency owner. There are five areas I want every agency founder to review every quarter. Five. That's the whole list, and I think you can do it. Number one, look at your gross margin by client or project. Overall revenue feels nice, but it's a vanity number. What matters is what you're keeping after you deliver the work. For agency and creative firm owners, I want you to look at this by client and ideally project type. Are your retainer clients as profitable as you think? What about the project work versus ongoing work? If you have a contractor or a part-time employee delivering on specific accounts, are those accounts actually covering the cost? And this is where the quiet margin erosion lives, not in one big problem, but in a handful of relationships that stopped making financial sense somewhere along the way, but nobody noticed. Number two, accounts receivable aging. Oof, this is a big one. This impacts your cash. Pull your AR aging report. It takes 30 seconds in QuickBooks. I want you to look at anything that is overdue by 30 days, and I want you to feel something when you see it. Past 30 days means that you've done the work and you have not been paid. Five, 60 days means that you have likely had to follow up, and it hasn't moved. Past 90 days means that you have a problem, and you need a plan. Cash flow issues in agencies are almost always a collection issue before they are a revenue issue. You are not slow. You are just owed money Number three, burn rate and runway. We talked about this in episode two, and I'm bringing it back because it belongs on every quarterly check. What does it cost you to operate for one month? Not revenue, your cost. I'm looking at payroll, software, contractor fees, rent if you have it, insurance, all of it. Divide your current cash balance by that number, and that is your runway in months. If that number is under three, you should know that. If it's under two, you should be actively addressing it. If it's over six, congratulations. You have breathing room, and you should know that too. Number four, revenue concentration. We just talked about it last, two weeks ago. What percentage of your revenue is coming from your top one or two clients? Is any single client more than 30 to 35% of your revenue? Then you know that you have a concentration risk that you need to pay attention to. Not panic about, just pay attention. And this doesn't mean that you fire your best client. It just means that you make sure that your business can survive without them, and it gives you time to diversify if the answer is no. Number five, your utilization rate. For agencies and creative firms, this one is everything. Utilization is the percentage of your team's billable hours that are actually being billed to clients. Industry benchmarks for creative age- agencies run around 60 to 65% for a healthy operation. If yours is lower, you're carrying capacity that isn't generating revenue. If it's significantly higher, your team is heading for burnout, and your quality is going to start showing it. You cannot have an honest conversation about hiring, pricing, or capacity without knowing this number. I want you to block 45 minutes at the end of every quarter, January, April, July, October. Put it on the calendar right now if you're listening to this while you can act on it. 45 minutes, five numbers. That's the whole thing. You're not auditing yourself. You're not preparing for a board meeting. You are doing a health check of the business that you have built so that you can catch small problems while they are still small. The founders who feel confident about their numbers are not smarter than you. They are not more financially gifted. They are just looking more often. That's it. That is the whole secret. You can't fix what you don't measure, what you don't track. Awareness is not the same as expertise. You do not need to understand every line in a financial statement to run a financially healthy business. You need to know your five numbers. You need to look at them every quarter, and you need to be honest with yourself about what they're telling you. If you look and something feels off, that's when you call your accountant, your bookkeeper, or hopefully somebody like me. But you have to look first. That's it. That's the episode. Five numbers, once a quarter, 45 minutes. Gross margin by client, AR aging, burn rate and runway, revenue concentration, utilization rate. Write them down right now and go schedule the time. Look at your business. If you want help knowing what you're looking at when you do, that's exactly what we work through in the No Se Habla Confusion assessment. 90 minutes, one flat fee, and you'll walk away knowing your numbers and what to do about them. There's instructions in the show notes on how to make it happen. Thanks for being here. Share this episode with a founder friend who says they're bad at numbers, and, I'll see you in two weeks. And remember, no se habla taxes