WELCOME TO ISSUE NO #055

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📆 Today’s Rundown

Hey 👋, hope you had a great week! I bet you missed me, but I was so busy cooking something that you’re going to love. Stay tuned for more info! 👀

In the last issue, we discussed why tracking Net Burn matters, and now we are moving with the next topic from Cash Flow & Expenses content.

Let’s talk about ⬇️

Net Income

Let's face it…

Financial jargon sucks.

Especially terms like "net income"—which sound simple but often leave SaaS founders scratching their heads.

Today, we’re going to finally decode net income in plain, human-friendly English (and have a laugh or two while we're at it).

Buckle up, let's dive in 👇

TL;DR

🎯 Net Income (The Bottom Line—Literally!)

🎩 Why Is Net Income the Magic Number for SaaS Founders?

🔍 3 Sneaky Limitations of Net Income

🏆 Bonus: Gross Income, EBITDA, EBIT (Oh My!)

🛠️ Practical Tips to Keep Your Net Income Healthy

🎯 Net Income (The Bottom Line—Literally!)

Your net income is the profit your SaaS makes after ALL expenses…from AWS bills to your taxes…are paid.

Think of net income as your paycheck after taxes. (You know, the number you actually care about!)

Simple calculation (zero math anxiety guaranteed):

• Total Revenue: $500,000

• Cost of Revenues: $100,000

• Marketing & Sales: $100,000

• Salaries & Admin Costs: $150,000

• Interest & Taxes: $50,000

Net Income = Revenue – ALL Expenses
👉 $500,000 – $400,000 = $100,000

(Still with me? Good. Let’s keep going.)

🎩 Why Is Net Income the Magic Number for SaaS Founders?

Here’s the juicy part:

Your net income is the ultimate scoreboard for profitability. It shows investors…and yourself…whether your SaaS is a well-oiled cash machine or leaking money faster than a sinking ship.

3 big reasons to keep your eye on net income:

✅ Trendspotting Profitability

You might be losing money now (totally normal for a high-growth SaaS). But improving net income trends show you’re steering toward eventual profitability—and investors love that trajectory.

✅ Monitoring Financial Health

Consistent negative net income means you’re bleeding cash. It’s your cue to patch up leaks and tighten expenses ASAP.

✅ Planning for Growth

Positive net income can be reinvested back into your SaaS (think hiring dev rockstars or doubling down on profitable marketing campaigns).

But there’s more to this profit story—let’s get nerdy (just a bit)...

Need clarity on your financial strategy or cash flow optimization?

I'm Aleksandar, fractional CFO at Fiscallion, where we help founders like you achieve financial clarity, streamline reporting, and build investor-ready forecasts.

Ready to level up your finances?

🔍 3 Sneaky Limitations of Net Income

No financial metric is perfect. Here are some quirks to watch out for:

Non-Cash Expenses (like depreciation)

These lower your net income but don't actually drain your bank account. Accounting magic at its finest! 🪄

Accounting Assumptions

Creative accountants can inflate or deflate your net income with sneaky assumptions. Stay vigilant!

Accrual Accounting Trickery

Net income ≠ cash in the bank.

Always cross-check with your cash flow statement. For example, Netflix reported a $2.9B net income—but actual cash flow was slightly lower. Always look under the hood.

🏆 Bonus: Gross Income, EBITDA, EBIT (Oh My!)

Let’s quickly untangle some common confusion:

• Gross Income: Revenue minus cost of providing your service (server costs, developers, etc.).

• EBITDA: Earnings before interest, taxes, depreciation, amortization. Great for valuation comparisons, less so for SaaS.

• EBIT: Earnings before interest and taxes. Great for checking if admin costs are out of control.

Each metric has its place…but net income remains your SaaS's ultimate truth-teller.

🛠️ Practical Tips to Keep Your Net Income Healthy

Here’s your action plan:

1️⃣ Weekly Checkups: Check your cash flow weekly…not quarterly. You run a SaaS, not an oil company from 1920.

2️⃣ Clear Expense Tracking: Know exactly what counts as cost-of-goods vs overhead. Precision now saves headaches later.

3️⃣ Automate Your Finance Processes: Stop drowning in spreadsheets. Use software to automate profit margin calculations—fewer errors, fewer headaches!

🎉 You Made It—Congrats!

You’re officially net-income-savvy—congratulations! (Celebrate with cake 🍰.)

Got more questions? Need to dive deeper into your SaaS’s financial health? Or just want to chat about how ridiculous finance jargon is?

Just hit reply—I’m here to help.

Cheers to your profits

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