Ecommerce Budgeting & Forecasting: Who, What, Why, When, and How

So Preston, thanks for joining us. Tell us a little bit about yourself.

0:16 Preston Alder

Yeah, happy to be here today. Like you mentioned, I'm an owner-operator of Solé Toscana. And me and Stephen met back in, what was it, 2018 now?

0:29 Stephen Brown

I can't believe it. He helped us start our marketing at LedgerGurus. Before that it was me, so he took it up in a big, big way.

0:36 Preston Alder

Yeah, I can't believe it's been that long. But yeah, it was shortly after I graduated from college. It was a part-time gig as I was pursuing something else.

So I played golf in college and then pursued it after college on some mini tours, basically like the minor leagues of golf. And I wanted to kind of [unclear] it out in Cheyenne, Wyoming. Yeah, everywhere. It was a grind. Great experience.

I had dabbled in the online business world in college a little bit with some internships and part-time jobs, and so I wanted to keep that skill going while I was golfing. And yeah, I met Stephen and Brittany in 2018.

1:22 Stephen Brown

Brittany is my partner in LedgerGurus, also my wife.

1:24 Preston Alder

Great duo. Love the Stephen and Brittany duo.

Anyways, yeah. So learned a ton at LedgerGurus. I wasn't planning on doing this, but as far as a plug for LedgerGurus, great company to work for. Especially the space that they gave me to learn and figure things out on my own is something I thrive in, while also giving me resources. So anyways, I learned a lot there.

When I was wrapping up golf, I bought a little online business that required the skills I had learned at LedgerGurus. That was a great experience. And I told Stephen and Brittany, hey, I'm going to probably buy another business.

2:05 Stephen Brown

And we were like, whoa, whoa, whoa. We had had this idea. Brittany started LedgerGurus and she said, boy, it'd be great to have a brand that we could learn from more intimately than our customers. And when we heard that Preston was thinking about going down that path, we were like, hey, why don't we go in together? We could probably get a bigger company than you could on your own, and we can support you, but you run it. We'll support you.

So Preston is the operator with his team. I act as the CFO, and Brittany drops in and helps us on special projects from time to time.

2:39 Preston Alder

Yeah, it's been a perfect partnership for, I think, the needs that we.

2:44 Stephen Brown

We bought the business in 2022, probably at the worst time to buy ecommerce businesses. We kind of knew what we were getting into, but nonetheless we had some very hard learnings.

2:57 What we actually do, and why it matters

Stephen Brown

So one of the things I want to talk to Preston about, and share with those that are listening, is our experiences around budgeting and forecasting. I, playing the CFO role, imposed this upon Preston. So I'm not sure what he's going to say. He might be like, why, this has been a miserable experience.

But I want to go through five questions. What is it that we do? Why, as in what are the benefits, why should we do it? How do we go about doing it? Who should be involved? And when we do it, what is the timing of this?

3:35 Stephen Brown

So let me start with the what, since I was the one that imposed this upon you.

We do three things, and we didn't actually do this out the gate, it's kind of been an evolution. But we do an annual budget process. And really that is where we'll come up with what we think we're going to do and plug it into a model that tells us, hey, this is what we think the outcome is going to be. We got profit religion in 2023 after burning a lot of cash in 2022. And so we use the budget as a projection of what we think is going to happen.

4:10 Stephen Brown

I then take that and I roll it over into an annual cash flow, where we incorporate timing of cash, which is much different than a profit and loss prediction. And most importantly, we integrate an inventory purchase plan. And so we see where the peaks and valleys are around cash. We kind of know that, but it gives you kind of at a monthly basis.

And then tactically we do a 13 week cash flow, and that gives us very precise insights on what we think we're going to do.

4:37 Stephen Brown

So that's the what that we've done. And we've been doing that about two years, isn't it? We didn't do it right out the gate. I think we started budgeting pretty quickly, but I don't think we did our cash flow right out the gate. We probably should have, and would have been a lot smarter.

4:49 Preston Alder

Yeah. If I remember it, maybe it's been even less than that, year and a half maybe, that we really have utilized it.

4:59 Stephen Brown

So we've been about, I think we've done it for at least two cycles.

So I want to ask you the why. Because I know why we do this, but for you, who's operating the business, is there benefit to this? Why do you feel like we should do this?

5:11 Preston Alder

Yeah. First of all, it's given me a clear picture of how the business works from a cash perspective. Cash is king, right? You hear that in school. And now that we've gotten into this, it's been a real life application of understanding how true that is. So I kind of understand now how the cash flows through the business and the challenges that we have.

And now, as I'm making decisions every single day on marketing efforts or different operations, those numbers are driving the decisions, because I understand them now. They drive decisions that I make every day, right, at a marketing level and operating level. And I know the impact of decisions that I make.

5:55 Preston Alder

I'm given these constraints now, right, as an operator, of how to spend money. And I know when I'm getting out of those constraints, and there better be some really good strategic reasons if I'm spending more in certain areas than normally I should.

So anyways, it's giving me a clear picture of how the business works, number one. And number two, it's driving kind of decisions that I make daily.

6:21 Stephen Brown

When I think of a budget or a projection, I have a friend who says you do projections, not budgets. I'm like, potato, potato.

I think of a budget or a projection as basically, I'm taking what I expect the business to do and my strategy, and what the projected outcome will be. It's never going to go according to plan, but I can guarantee you it's easy to adjust if you have a plan.

And what we found in that first year is we just went, we bought the business and we just went and we spent and we executed and we spent, and we were like, put more money in the business, put more money in the business. And almost, not quite a year in, we were like, crap, this isn't working, we're running out of cash. And then we read Profit First. We'll have to do an episode on that. And we really said, no, we want to drive profit, and this is how we do it.

7:13 Preston Alder

Yeah. And then this is kind of getting off subject a little bit, but I'm using Triple Whale to forecast our financials on a daily, weekly, monthly basis, giving us a general idea of how I'm doing from week to week, month to month. And that all comes back to the budget. Like I know when I'm getting off, or if I'm somewhat on track, and like you're saying, I can make adjustments, right, even on a weekly, monthly basis.

And then we're checking our cash flow projections and actuals. It's what, once a week we check that, right? And I kind of know where we're at because of Triple Whale, but that gives me real data of where we're at with cash flow. And I'm using both of those to make decisions.

7:57 Three phases and the cash flow layer

Stephen Brown

I see like three phases with this. We've kind of developed three phases, and a lot of companies, they don't even get past phase one. In fact, some of them don't even get to phase one.

Phase one is good accounting, because it's hard to budget and project without understanding where you've been. It's almost like a virtuous circle. So we use our accounting to determine where we are, and that informs our budgets and forecasts. And then the budgets and forecasts inform how you use your analytics, which in this case is Triple Whale. And then we validate that with accounting. So it kind of goes round and round, so we're constantly adjusting.

And I feel like this three phase approach, to accounting, forecasting, real time measurement and execution, it's been a really good cycle for us.

8:47 Preston Alder

And I feel like over time we've gotten tighter on our forecasts and actuals, right? At first I think we were wildly off like every month, and then slowly it's kind of come together. And now I think we're getting within like five to 10%. And then you can make really good decisions.

9:06 Stephen Brown

Yeah. And I think that the cash flow part of it, so that's the budgeting, we're executing a plan. The cash flow for me serves two purposes. I mean, the main one is, what is the cash cycle going to be? But like last year we were looking at an inventory purchase strategy, and we layered in a couple of different scenarios to say, what's the cash impact going to be? Do we have the credit facilities to do that?

And then the 13 week cash flow is that tactical, okay, we're going to need to tap into credit at this point. So we use kind of the 12 month cash flow to say how much do we think we're going to need and when we're going to need it, and we use the 13 week to actually make that execution on lending. Because we've got this business going, it's growing fast. And if you're growing fast, unless you're wickedly profitable, you're usually going to have to find a way to pay for inventory outside of profits.

9:59 Preston Alder

Yeah. And I think that's where, at least for me, we've realized the biggest challenge with an inventory business is we are paying for this inventory that we're not even selling for months, right? We're making payments on that way in front. And then when you add on our growth, like you mentioned, you're making a big bet on the future and buying up this inventory.

And so yeah, we have to know, okay, how much cash are we going to need based on our budgeting, which is now getting pretty accurate. We're going to be this far short, and we have to figure out our best options to fund it, which yeah, Stephen's been awesome at. And I think for inventory businesses it's crucial, right?

10:44 Stephen Brown

At the end of the day, I don't know how we would live without all three of these things. Particularly, I mean, the ones that we use the most are the budget and the 13 week, but the annual cash flow kind of helps us as we're starting the year. We'll get into the when. But yeah, I don't know how we would run this thing without those three components.

10:57 Preston Alder

And I just had this thought. I think last year when we did our annual forecast and we saw, we're good, we have quite a bit of growth forecasted, I think that's when you went out and started looking for funding options, which was crucial for this year and moving into next year. Like now we have those options available.

11:13 Stephen Brown

And I see a lot of brands that don't do these things and they find a way through. But for us, I think we've been able to grow significantly. What was our growth in 2024?

11:28 Preston Alder

40% ish.

11:33 Stephen Brown

And we increased our profitability significantly at the same time. Which if you can do both of those, it's like walking and chewing gum at the same time. It's awesome. But it's allowed us to drive growth intelligently, as well as stay focused on profitability.

11:51 Preston Alder

It would have been much more stressful if we didn't have those funding options with the growth, for sure.

11:56 Stephen Brown

And we wouldn't know how much we need if we hadn't gone through this exercise.

So let's talk about the how. But before we do that, I want to talk a little bit about our sponsor, which is LedgerGurus. If you're interested in budgeting and forecasting and need help, LedgerGurus are experts in ecommerce and can help you with your budget and cash flow forecasts. Head over to ledgergurus.com and see how their team can help you level up your business today. That's L-E-D-G-E-R-G-U-R-U-S dot com.

12:24 Stephen Brown

All right, let's talk about the how.

12:26 Preston Alder

LedgerGurus support Solé Toscana. I think I take it for granted sometimes, but the accurate financials that we have to plug into our budgeting and forecasting, and I think about the COGS sometimes and how accurate, I can just trust all those numbers when we're making decisions. I don't have to second guess what the numbers are. So yeah, it's been amazing to have LedgerGurus as part of the Solé Toscana team.

12:52 Stephen Brown

Yeah. Thanks, Preston.

12:58 How the budget gets built

Stephen Brown

Let's talk about how we go about this process. We're not going to get into bits and bytes and bring up a spreadsheet, because I have a fairly complex model that I do with every customer that I work on.

Typically what we're doing is we are building, well, let's start with the budget. The budget is, I like to use the budget, or the 12 month projection, as the basis for everything else.

Some things are easy and some things are hard, and we're going to get kind of the how and the who in this one. So the things that are easier is all of our fixed expenses. We kind of know what we're spending for software and for payroll. We're fairly lean, we're a virtual business. But even if we had property, that's pretty straightforward, because you know what your rent's going to be.

13:45 Stephen Brown

So I do a lot of the fixed expenses. I will also go in and do the cost of goods sold, because we have good accounting that makes it fairly easy. I tend to use more of a percentage of income approach, which has worked for us because we're fairly consistent on our cost of goods sold. I'll use a percentage of income on the fulfillment, because we found that it is more or less a percentage of income. There is some variance, but for budgeting and forecasting that has been accurate.

I'm trying to think, what else do I do that you don't, Preston?

14:24 Preston Alder

And you're just basically going in and looking at P&Ls for trailing months and pulling those historical and looking at those ratios to drive those things.

14:30 Stephen Brown

The hard part, and this is where finance can't do the budgeting and forecasting alone, is the marketing and the sales. And that's where I really lean on you, Preston, who's doing that stuff to build that.

So tell us a little bit about how you go about building out a marketing and sales plan or forecast.

14:51 Forecasting marketing and sales, and working with agencies

Preston Alder

Yeah. So I think every business is going to be a little bit unique, but what I've found is, okay, look at two different revenue numbers. I'm looking at, one, our returning customer revenue, and then number two, our new customer revenue.

Our returning customer revenue can be forecasted really accurately based on our acquisition of new customers in the past 12 months, looking at cohorts, kind of the growth. We know the growth of our cohorts over time. So using that historical data, I can forecast our returning customer revenue pretty accurately.

15:30 Preston Alder

Then you get into new customer revenue. That one's a little bit more difficult, right? I'm looking at how efficient has our ad spend been, not just for all customers, but specifically our new customer return on ad spend, right? I have a good idea of where we've been with our new customer ROAS and kind of the trend. And I'm looking at year over year data, all of those things. And so I'm saying, okay, based on our new customer ROAS, how much we're planning to spend in our budget each month, this should be our new customer revenue for each month.

16:02 Preston Alder

At a high level, those are the two things I'm looking at. Then you're taking your marketing efforts, right? And this is kind of easier on a quarterly basis, monthly basis. But you're looking at, okay, what am I planning to do with marketing this next month? How does that compare to what we did last year in the same month? And I can kind of make adjustments, right, on how I think that will impact both returning customer revenue and new customer revenue.

So yeah, I think we've really dialed that in, probably, what, Stephen, in the last like six months, we've gotten pretty accurate in that approach.

16:41 Stephen Brown

Yeah. Whenever you're doing budgeting and forecasting, the best way to start is just to start. And then you're going to make some stupid mistakes. We did not appreciate the holiday calendar this last year until we hit it. And we're like, our November, December projections are all messed up, because Black Friday, Cyber Monday, we didn't account for that bled over across the month.

So I think there are a couple of things that you do better over time. Better understanding the cycle, the time of the year, what's going to work, what's not going to work. I think better understanding campaigns and how those are going to impact sales.

There are those out there that are like, you should build out a daily plan. I don't think we're at that level yet. I mean, how granular are you at this point?

17:33 Preston Alder

Yeah, so at a marketing level, each month I have like a daily plan every month ahead. But I did like a quarterly, I was doing like quarterly marketing plans. Like, okay, we're going to do this Mother's Day campaign in May, these are going to be the dates. So I had our main campaigns built out.

I actually did an annual plan last year and plugged in our main campaigns, and then each quarter kind of dialed in exact dates, so then it was getting more weekly. And then each month, that's where I get probably more on like a daily basis, is like a month ahead. And I've gotten tighter on that over time. I've been able to build those out in a better way over time.

18:17 Stephen Brown

Now let me ask you. A lot of brands are using outsourced marketing. We went down that path initially and it just wasn't working for us. We're a smaller brand at this point, but we're growing very quickly.

How would you change your approach if you were leveraging more agencies in terms of helping with creative and maybe the ad campaigns? What would you do differently if you weren't doing as much of the work? Talk through that.

18:42 Preston Alder

Yeah, totally. So for sure, I think when you're involving more people, your planning just has to be better and more dialed in, because there's communication back and forth, right?

So like a few months ago we went out and got a freelancer for our creative on our ads. We needed more creative juice, wasn't necessarily my skill, I had kind of been doing it. But now because of that, I have to have a better plan in place a month ahead, two months ahead, because I am coming up with the creative concepts that I give her. Then it takes a week or so to get those back, right? And then I have to plug them into our ads account and into our structure there.

So yeah, I just think the more people you have involved, if you're working with agencies, especially multiple agencies, your plan just has to be more dialed in in advance to work with them.

19:37 Stephen Brown

Right. Do you feel like it's a mistake? I mean, we're small, we kind of did it out of necessity, but we're growing fast, so Preston wants to spend more because he can. Do you think it's a mistake or a good thing to throw marketing over the wall as a consumer products brand selling online?

19:55 Preston Alder

I think early on, when we were trying to rely on agencies who didn't completely understand our brand and business, and I didn't at that point, I think it was a huge mistake. But having me dive in, learn how to do ads and media buying, it helped me understand the business better, and our brand. That was a huge, I think, super important for where we are today.

And now I know, like we were spending a lot at first to outsource everything, right, with our ads and marketing, or a lot of it. But now I have some skills that I've learned, and I know where we can plug in much smaller expenses to give me the juice that I need to work with the vision that I now have, and understanding I have. So we get a lot more out of our agency spend now than we did before. And I know what type of agencies and people to look for, right? But I wouldn't have known that if I didn't dive in and learn it myself and realize where my weaknesses were, right?

20:59 Stephen Brown

We're not there yet, but if you fast forward, how do you feel like your approach would change if you were a 10 million dollar plus brand?

21:08 Preston Alder

Yeah, I think fundamentally the budgeting approach would be the same. Just more people involved, different people doing different things. I'd have to probably do it further in advance, more communication between different people.

But I would hope, it depends how involved I am with the operations at that point, but I would hope I'm involved enough that I could still do a lot of the build out on the forecasting. But yeah, I may need to rely a little bit more on other people. Or just, there's going to be more data at that point that I have to sift through and figure out.

21:40 Annual cash flow, the 13 week, and who's involved

Stephen Brown

So let's talk about the second and third part of the what, which is the annual cash flow forecast and then the 13 week.

On the annual cash flow forecast, a lot of it is finance, accounting work, understanding the timing of cash flow. The big thing that we do, you come up with a couple of scenarios for inventory purchase schedules. That gets derived, if I'm not mistaken, that gets derived from the marketing sales plan?

22:10 Preston Alder

Yep, yeah, I'm working back from our revenue plan to get to inventory numbers and forecasts, yep.

22:16 Stephen Brown

So we come up with a couple scenarios, how we could do this many orders and this time frame, and then we plug that into the machine to see what's going to happen. Do we have the credit facilities? What are the pros and cons of more orders or less orders? I think that gives us the constraints for, can we do more orders or less orders or bigger orders? What's the dynamic? And that's usually a function of cash and logistics. We're also looking at our manufacturers and what the nuances of them are.

22:50 Stephen Brown

And then we usually stick to an approach, an order strategy, and then we roll into our 13 week cash flow, which is giving us that tactical insight. And I'm doing like a hundred percent of that, but we're discussing it together. So I'm doing the calculations on the 13 week, we go over it, we make some tweaks. Or what are we going to do here? What about this? Okay, it looks like we're needing to draw. Kind of staying aware. How did we do against plan? Okay, do we need to adjust? Yeah, I think we need to adjust here.

23:29 Stephen Brown

Yeah. So we've already kind of talked about the next two things. So the who, and then we'll get to the when. But the who is really clear. I mean, if you're a savvy person, you could probably do this all yourself, right?

23:40 Preston Alder

Yeah. I mean, but the model you've built, that took time, right, to build out that model. And it was a lot of work.

23:46 Stephen Brown

Yeah, so you could do it if you have a strong financial or accounting background, you could do it all yourself. But you don't usually see the skill sets to do it all in one person or in one group.

So usually I'm doing kind of the modeling and the stuff that's easy to forecast. You're doing, you being marketing. If we're a bigger company, it might be multiple people. If you had an inventory planning team or some sort of a supply chain team, they might be involved with the inventory thing. But we're all coming together.

24:20 Stephen Brown

Right now it's easy because it's just me and you. If we had more people involved, it might be a couple more people around a table where we're looking at each component, but they're all interrelated. And I don't think in reality, if you're outsourcing your marketing, you may need to work with an outsourced CMO on the marketing plan, building that out. If you had a supply chain person, that maybe each piece kind of feeds together.

24:48 Preston Alder

Yeah, it's easy with just two people. We kind of have a good grasp on everything that's happening. And for me, yeah, we can see how it's going to get more complicated.

And here's what I'll say in addition. Marketing is so important to the business right now, and the growth and the profit, the marketing efficiency impacts so much of the business. I think if I didn't have you and the LedgerGurus team that gives us the numbers, I know it's super important, I know forecasting and budgeting and all that and cash flow is super crucial to the business, but I don't think I would have built that. I would have been spending so much time on marketing and prioritized that, and probably done very simplistic forecasting and budgeting.

25:35 Preston Alder

But now looking back, because we've done that and we've gotten good at it, it has impacted me so much in marketing and operations. I don't think we would be close to where we're at today without the budgeting and forecasting, that I probably wouldn't have done without you guys.

26:01 Stephen Brown

Right. Well, what I've seen working with other companies is most people, and if you're listening to this, there's a good chance you have some sort of a cash flow forecast. You very quickly realize you need that. So I see that everybody has their cash flow spreadsheets and their inventory forecast spreadsheets, because.

26:17 Preston Alder

Would you say that, like on average, when you see a seven, eight figure brand, how accurate is it? And is it really driving good decisions?

26:23 Stephen Brown

I've seen some pretty good cash flow forecasts. What I don't usually see is budget projections. So people have to do the cash flow because you have to, you're like, I'm running out of cash. Okay, I got a cash flow, I got to go get some facilities. They'll do stupid things like Shopify loans or Amazon loans, because that's what they know about, and that's a whole different conversation.

But for me, what's missing is the strategic. How do we not just grow, and how do we cover cash needs, but how do we grow profitably? And I think that's hard to do without a 12 month forecast. And that provides like rails on how we're going to execute our strategy. It doesn't go according to plan. So I don't see that enough.

27:07 Stephen Brown

And then you see these companies using cash flow because they have to, but because they're not plugging it into a budget and working against that, the profitability struggles with the growth.

And part of the reason they don't have that is, to bring it back to accounting, if you don't have good accounting, it's so much harder to do. You don't even know if you're profitable sometimes. We have a lot of customers come to us just asking, I don't know if I'm profitable, because on a cash basis it's really messy, and accrual accounting is hard, especially for ecommerce. And so you kind of have to start there to be able to do the budgeting. You don't necessarily have to have that to do the cash flow forecasting, you can kind of tease that out.

And so that's why I see that a lot of times. But I think they're missing it when they don't do all of the components, because the budget is, we want to achieve an outcome of growth and of profit.

28:06 Preston Alder

I think of the budget as, it's a P&L forecast, right? And because then I'm using past data to plug into Triple Whale, that gives me almost a daily, weekly projection of our P&L, which is probably like, I don't know how many companies have that. But that wouldn't be anywhere near possible without the budget and P&L.

28:31 Stephen Brown

Yeah. Good profit and loss in ecommerce, we rarely see them. With a new customer, even among seven and eight figure brands, they'll come in and it's a mess, because there's so much complexity. But without that historical information it's hard to come up with a budget. And the budget is what we use to determine profit, how we're going to achieve a profitable outcome or a growth outcome.

And I think pre COVID bust, so there was the COVID peak, it was really easy to just be like, grow, grow, grow, grow. Maybe I'm not profitable, but I'm growing, I'm taking some money out. And I think what you and I came to is like, no, we don't want to just grow. We want to put some money into our pockets. We want to have a business that's valuable as we're growing. And when you decide to go down that path, it changes your relationship with accounting and finance, because you realize this isn't just nice to have, to throw out to the accountant at the end of the year for taxes. This is how we achieve an outcome.

29:32 Preston Alder

Yeah. Yeah. I feel like, before we became profit focused, the stress on the business, just running it daily and thinking about it, was super high. And as we became profit focused and gained a real understanding of what was happening, the business was no longer, I mean, it's still running a business, there's stress, there's stuff that pushes you, there are curve balls, but it's manageable. And it feels like we have control. I feel like there's control of the business, and you can be more strategic. There's so much, and it's just, yeah, it's less stressful.

30:13 Stephen Brown

Well, there's a quote that I've, see, I've been a big budgeter for a long time. I've imposed it on every business that I've led. And there's a quote that I always use. It's from Dwight Eisenhower, and it says, in preparing for battle I have always found that plans are useless, but planning is indispensable. Or another way to say it, plans are nothing, planning is everything.

And the reason why I think this makes sense is nothing goes according to plan. But if you've gone through a planning process, you know how to adjust. You're not just reacting. You're like, okay, what if we do this differently? We have a framework for decision-making that we've used.

30:56 Stephen Brown

And then I think it's also helpful, as we wrapped up 2024 we've done a preliminary analysis on how it went, and we're like, hey, where did we get off? And what was it about our assumptions or approach that were off, and how do we apply those learnings into the next year?

And like I said, I see a lot of seven and eight figure brands that I've worked with that will have components of this, but they don't embrace it. It's expensive, let's be honest. Doing this takes time or money, right? If you're going to use somebody like myself, it's going to take money for me to build you a model and to maintain that model. But is the investment worth it? My experience has always been yes.

31:39 Preston Alder

Yeah. And you made a good point in there, looking back at 2024 and where we were off a little bit and making adjustments. I feel like in general, having the budget and the forecast and the cash flow, and reviewing those frequently, we see where we're off very quickly, and we see where the struggles in the business are, like where we need to make improvements, right? That I feel like otherwise you wouldn't catch until it's too late, or it's really messy, right?

32:11 Stephen Brown

Or opportunities will come up. We analyzed a couple of opportunities last year. We've got a framework for how to layer in that decision-making process. I can remember multiple situations where we were looking at, do we go down this path, and do we do it now? And what is the cost, and what do we think the benefit is, and what do we think reality is? And we used this financial framework as a way to make better decisions, versus I think a lot of people will just be like, feels right, go do it. And sometimes that works. I think that's where that entrepreneurial magic is. But at some point it gets too complicated to just go off of your gut. There's kind of an informed analysis that you have to do.

32:52 When to do it, and final thoughts

Stephen Brown

So let's talk about the when. So we are working on our 2025 forecasts and budgets. So we usually do get that going at the end of the previous year, and we tend to wrap it up.

I think for a consumer products business that is very tied to the typical cycle of end of year being a peak, January, unless you're like a winter product, January tends to be slow. So it's a good time to finish up your plans. But we usually want some level of guidance in January. January we tend to keep it simple on the execution front, and so we'll spend the first few weeks of January finalizing our strategies.

And then I'd say monthly we are revisiting our sales and marketing forecasts, making adjustments for the next month, sometimes two to three months at a time. We have an inventory order we need to finalize, right?

33:53 Stephen Brown

Or if we see if we're starting to get off track. I see usually plans will start to vary by the middle of the year, and you need to do like a mid-year adjustment one way or the other. It's like, we're doing better than we thought, we're doing worse than we thought. And so sometimes it's good to do a mid-year adjustment to account for whatever direction of variance there is.

And then I think on a weekly basis, we're talking about cash every week. We're just taking a look, here's where we are, here's what the 13 week forecast shows, here's where the issues are. Okay, this is what we're going to do. And if the issues are related to something like we're not executing according to strategy, we'll go back and be like, hey, what's not working? How do we adjust the plan?

34:32 Preston Alder

Yeah. And that weekly cash flow check, sometimes it's like five minutes, right? It's like, okay, here's where we're at, everything is looking good, we're on track.

34:41 Stephen Brown

Especially if we're ahead of plan on sales, because more sales usually equals more cash. But too many sales could equal, oh, we need to get ahead on our inventory purchase plan, because we're getting ahead of ourselves. So either way, if you're doing better than planned or doing worse than planned, there are going to be impacts either way that you need to adjust to quicker than usual.

35:11 Stephen Brown

So there we have it. Hopefully this has been helpful. Final thoughts, Preston, on budgeting and forecasting.

35:17 Preston Alder

Yeah. For Solé Toscana I think it's been, first of all, becoming profit focused was when we realized we needed to focus on budgeting and forecasting. But yeah, I think for Solé Toscana it's been crucial to the business, and not only having good growth but, like you mentioned, profitable growth. And just the stress levels that have decreased, and the benefits we've seen have been huge on so many levels. So yeah, it's something I will never go without in my business ventures.

35:49 Stephen Brown

And for me, I think if you want to achieve an outcome, you need to have some sort of a plan. Winging it works only so far, let's just put it that way. Winging your way to success, I've seen some people that have had a lot of luck, and if you're in a good market you can get away with a lot. But when things get tough, being deliberate about your approach becomes more important than ever. And then I think as you do that, it allows for better execution in a good market.

36:17 Preston Alder

Yeah. I think I saw friends over the last, I don't know, decade or so in ecommerce, who some of them were part of that luck, right? They got in at the right time, right product, things went well. And things have gotten harder in ecommerce the last few years. And I think it's those who built the right skills and had the right foundation in place, right, that got through that. Others who didn't. And if you do it the right way, then you can get through the hard times and capitalize on the good times, right? So yeah, I think I've definitely seen that, and you guys probably at a bigger level with more clients.

36:58 Stephen Brown

All right, well, let's call that a wrap on this episode. If you need some help, reach out to LedgerGurus. And if you want to engage with us on the socials, feel free to do so. We'll catch you on the next episode.

37:11 Preston Alder

I don't think we even said what Solé Toscana sells. If you need some good skin care, this is actually our new product, the hand cream, made on our Italian farm in Italy. But yeah, the products are certified organic by an EU organization. Great products. It's a great gift, and honestly, males love the product. The brand is made for women, but both women and men love the products.

37:35 Stephen Brown

Yeah, really good stuff. We'll have to do a plug the next time we do it up. We'll have to talk about actually what we sell.

37:41 Preston Alder

So get some nice organic Italian skincare. That's soletoscana.com.

37:45 Stephen Brown

All right, catch you next time.

37:48 Preston Alder

Thanks, Stephen.