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When you aim at nothing, you will hit it every time” – Zig Ziglar

This is the quote that reminds me to set my business goals, and that includes financial goals.

Some entrepreneurs are a bit timid in setting income goals because they just want to sell as much as possible. Others set super stretch goals that they will never reach with the belief that “if you aim for the moon and miss, you will land among the stars.

I understand both approaches. I want to offer you an approach that falls somewhere in the middle.

 

If you don’t typically set goals right now

 

How much money do you want to make, and in what timeframe? That can feel like such a loaded question.

Does reading that have you thinking, “What if I set it wrong? Too low or too high? Am I going to be disappointed? What if I miss it?” right away.

I hear you. The fact is goals don’t have to be arbitrary or decided by throwing a dart at a bunch of numbers. Here are a few questions to help you narrow down a good goal.

 

1. What am I offering, how much does it cost?

 

How many can I sell? This question will help you look at your capacity to make more money. This may be limited by your time, by your production model, or by your own working guidelines.

If you don’t know the maximum that you can comfortably make with each offer in a month, you can’t begin to set a goal, because you can’t figure out what to sell and how many.

 

2. What is my best sales month ever?

 

What made it so good? Was it a new ad? Did you host a challenge? What was it?

These questions can help you to examine what you did in your best sales month, and whether you can duplicate it or do more now. What are you available to do to hit your goal this month?

 

3. What is the purpose for the money?

 

Having a purpose can definitely help you gain clarity on your goals. If you to make $3,000.00 so you can launch a new thing,  then that’s a pretty clear purpose for the money.

Get laser focused on what you want the money for and what it is going to do for you and your business when it is earned.

 

If you set arbitrary goals that you always miss

 

First, follow the questions above! And check on your capacity, availability, and purpose for the money and the goal.

Then ask yourself if it would be better to keep the lofty goal as a “best” goal, but add in a “good” and a “better” goal that is more attainable.

For example, if you set your goal at $10k for the month, but your best month has been $2k and you don’t have the availability to do more than $6k, you can set a “good” goal at $3k (attainable) and a “better” goal of $6k, the “best” (or stretch) goal of $10k.

There is a real psychological boost to you as an entrepreneur as you reach your financial goals. For each of the three goals, make sure you have a clear purpose for the money.

It takes just a few minutes to set your financial goals. It can be for the week, month, quarter, that is up to you. But make sure you have something to aim at and then define the availability and steps you need to take to hit your mark.

By the way, The Profit Accelerator is open again! Grab one of the 12 spots inside the signature program that has helped entrepreneurs focus on making more money and keeping more profit in a six-week sprint. Visit https://entremoneycoach.com/accelerator to learn more.

Wishing you the best with your business goals!

 

My short answer: separately. I get this question a lot. Because your personal and business finances are different. But you should have a management system for each. And the systems do not have to be complicated. They need to be separate, but not complicated. Here are a few simple steps for managing the personal finances when you have a business.

 

Step 1:   How much do you need? Know your numbers.

 

Personal: First tally up your “four walls” because these expenses get paid first, always. Food, utilities, housing, and transportation. This is the minimum number you need to eat, cook, sleep in a real bed, and get to work so you continue to make money.  Know this number. Next, add together your minimum debt payments.  You will have two numbers, the “four walls” number and the “total I need to pay everything” number.

 

Repeat for your business.  

 

Business: Four walls of business, your Breakthrough Number. The Four Walls are rent/utilities and internet/ phone (access to buyers), Critical Operating Expenses, Minimum inventory and product spend, and payroll (and payroll expenses).  These four walls will secure your business and allow you to keep the doors open and making money. Next,  figure in any debt payments and other business areas (marketing, projects, team). You will have your Breakthrough Number (minimum amount) and total “All In” number.

 

Step 2: When do I need it? Know when things are due.

 

Personal: To make things smoother in your personal finances, schedule your paydays. Say NO to co-mingling! Do not pay your car insurance form your business account (unless you are a delivery service). Take the time to pay yourself on regular days and then you can begin to count on that regular income. I advise my clients to pay themselves every other week. This way, they can arrange their personal expenses the way they likely would if they were employed somewhere.

 

Business: On the business front you can do two things; Pay business bills as they come due, not early and know which bills can be halved. In business cash is king and protecting the cashflow is critical. Since you are now only paying yourself on regular paydays, the next thing is to preserve cash by paying expenses when they are due. Some of my clients pay bills weekly. Some twice a month. They key is to get into a rhythm and know when you need and how much you need available for expenses.

 

Step 3: Begin to plan your spending.

 

Personal: Once you have regular paychecks scheduled, you can create a personal spending plan (or budget) for what need to be paid and when. You can plan your personal spending for everything. My only rule for my clients is write it down. Your plan. It may change, but you will have the baseline to refer to.

Business: For your business if you don’t know what you are going to spend in a given month or know how much you need to plan for projects and growth, you will stunt your business. Again, my only rule is that your plan must be written. If you are new to this, it may take a moment to set up. How much did you pay for ads last month? How much are you going to pay this month? That’s really all you need to do to have a general spending plan that you can refer to when you work your business the next month.

 

Following these few steps will get you on a good path to managing both the personal and business finances every month. If you’d like more tips and strategies for taking and keeping control of your money stuff, join my Facebook Group, “Stacking the DECK for financial success.”

Many times, I speak with entrepreneurs who have “turned all that stuff over” to an accountant. Meaning, they don’t look at or control their business money. I get it. The money stuff isn’t as sexy as a new logo or website. The truth is, your bookkeeper, accountant, or payroll company is NOT responsible for your bottom line. They are responsible to keep you compliant and out of trouble. Here is my take: You control the income, let your accountant do the accounting.

These small business professionals SHOULD take care of the reporting and advise you on the best way to manage your responsibilities as it pertains to taxes, withholding, unemployment insurance, etc. But they are NOT invested in making sure your profit margins are “right.” That’s YOUR job.  The thing is, YOU have to control your income.  Don’t delegate that part of your business.

You know what comes in, and decides what goes out, to whom, and when. That’s it. Let your payroll company cut the checks and deposit your taxes. Let your accountant file your taxes and help you stay compliant and legal.

 

First, don’t ignore the money and just let it flow in and out without intention.

 

Make managing your money an intentional act. Take the bills off autopay to protect your cash flow and put dates on the calendar for your paychecks and for tracking your money. It’s so easy nowadays to just let it run on it’s own, but when you aren’t looking at the money management, you aren’t looking at the health of your business.

 

Second, prioritize your expenses and pay them in the right order to keep the doors open.

 

It seems like everything points back to your Breakthrough Number, doesn’t it? This is because it is the simplest way to holistically look at all of your expenses and to calculate the minimum amount of money you need to bring in every month.  If you don’t have your Breakthrough Number yet, it’s free to do and typically takes under 30 minutes! Grab your workbook here.

 

Third, Track every dime that comes in and give every bit of money a job to do.

 

This is the part many people don’t embrace. You have to write everything down. It is way too hard to try and remember where your money went, what got paid, and how much is being used for different things in your business. It is also very simple to do. Just write down your total income for the week (in a log, on the computer, in an app, wherever) and everything you paid or funded for that week. The number “in” needs to equal the number “out.” Meaning, just note where it all went. You may have some left in the operating account. Cool. But note how much came from that week’s sales.

 

Finally, have your accountant do your reports and taxes and compliance stuff.

 

Small businesses need accountants. I would never try to navigate the tax stuff on my own. This is why you hire professionals. You still need your accountant and bookkeeper and payroll person. Particularly if it takes you away from your business and outside your zone of genius.

You do not want to make a mistake here. Use their reports to help you make financial and tax decisions. Just know that they aren’t going to tell you how to make more profit every month or to find opportunities for growth.

Your brain likes to keep you safe. It likes to talk you out of doing things that are new and perceived as “dangerous.” Like opening a new business, meeting a new income milestone, or launching new products and services. If your brain doesn’t have a point of reference for the “new” thing you are doing it defaults to believing you are in “danger” and it takes immediate steps to talk you out of it. Putting doubts, fears, and sometimes self-sabotaging behaviors into your head. To make you stop. To keep you, “safe.” It’s all laid out in The Big Leap by Gay Hendricks.

 

It’s happened to you before. It has happened to all of us. You get a great new idea and immediately you think, “this will never work.” Or you have repeatable patterns of self-sabotage every time you are ready to launch something new into the world. It’s frustrating and confusing. Why does the brain work so hard to derail anything new? Even if the new thing is good for us, like making more money?

 

It’s actually quite simple. Our brains haven’t adapted to the fact that we aren’t physically in harms way when there’s something happening the brain doesn’t recognize. The ego wants to keep us in the status quo where it can predict everything, and nothing is going to harm us.  This is the part of the brain that watches for cheetahs chasing us.  And it hasn’t adapted to life today in 2020. But you can get past an upper limit problem. We need to get past the brains safety switch so we can level up past our previous “set point?”

 

First, acknowledge that this is new, and you know the brain is feeling fear.

 

Recognizing an upper limit problem is the first step. Paying attention to how you feel and what’s going on around you as you begin to do or attain something new and different is the first step.  Fear may show up in different ways, but the consistent thread is that your brain is trying to talk you out of moving forward and is making excuses for you not to continue. We’ve all done it, had those inner conversations that talk us out if ideas.

 

Second, reassure your brain that you are safe.

 

Give it a little attention and thank it for trying to protect you.  I thank my brain all the time, and remind it that I am safe, and that we are doing this thing. By paying attention and not ignoring it, the negative voices in my head do quiet down a little.  It is okay to feel scared when we try something new.  Anything new in our business may feel scary, and in many cases we are unsure of the outcome, no matter the projections and plans. Acknowledge it. Remind yourself you are safe.

Another trick is to trace and minimize the fear by asking, “what if (this negative thing) does happen?” and  answer the question. For example, “what if we don’t sell any?” then honestly examine the consequence. By answering the questions you give yourself a point of reference. By giving yourself a point of reference, the brain can calm down.

 

Third, do your thing. Just do it. 

Your brain will create a new set point as it experiences your new level.  As you try and succeed (or learn) different things, the brain adapts and knows “how” to do it, and it isn’t seen as automatically dangerous. 

I have my own upper limit problems. We all do. I tend to self-sabotage when “new” things are happening, and the business is readying to break through a level. In fact, as I write this, I am on bed rest from an odd back injury. I didn’t fall and don’t remember hurting myself, but I have a bulging disk in my lower back. Is this my body and brain telling me to slow down? I think so. So, I am going a little slower. But I am not quitting, which is what my brain really wants me to do.

 

Fourth, recognize the growth place and celebrate it.

When you grow and reach the next level, celebrate it. You’ve done it now, your brain has a frame of reference, you are not going to struggle to that level again. Congratulations on staying the course and growing into your next thing.

 

Finally, rinse and repeat.

Every time you come up against something new, scary, your “growth edge” you will likely have to calm your brain and give it reassurance. It is a part of growing and making permanent changes in your life. And once you are aware of them and take the steps to grow around them, your growth potential is limitless. Happy Entrepreneuring!

 

One of the first things many entrepreneurs do is to create their mission statement, vision statement, and values. These three statements anchor the brand, the business plan, the map for the business itself.  If you have never taken the time to define these things for your business, it’s definitely an exercise in clarity.

A surprising assignment.

I learned the importance of this exercise with UNEQ Consulting. We were late with this process though and we worked with an amazing business consultant to guide us.  Since that experience I have made a point to create these three statements for every venture. But I didn’t revisit them before now. Revisiting them was an assignment from my coach. 

I honestly never thought to review the “big three” statements once I got them written. I guess I always thought that was such a “corporate” thing to do. Not a small business thing. In reality, small businesses change and evolve and pivot and serve different audiences much more frequently than large corporations.

I had created this first mission statement back in October 2019 as Entre Money Coach was fully separating from my law practice and personal financial coaching business into its own entity:

“My mission is to empower and support entrepreneurs making powerful, positive changes to their money management approach, to protect and grow their businesses into the vision they were given, with understanding, enthusiasm, and without judgment.”

Niching Down

So much happened between October and March! I worked with many more people on their businesses. Through those clients I refined the process of calculating my signature Breakthrough Number approach to money management, so it was more streamlined. I definitely niched differently. I thought that start-ups would benefit from getting their financial sh*t together from the beginning, but I realized very quickly that these entrepreneurs were so excited about just, “being in business” that the money stuff hardly entered their mind. 

Rather the clients calling me were entrepreneurs who have been in business for a bit, and who are making money and not keeping much of it. This segment required much more strategy to create income and increase profits. It was less about “open your operating account” and more about, “we need to change this package because you are losing money on this.” The consistent results for my clients was that they made more money and kept more profit. Financial organization and positive changes to money mechanics were byproducts of my approach. Not the reason I was being called.

Time for a Change

So mid-March I revisited my mission, and realized a lot had changed. So, I refined it, taking into account all of the stuff I already talked about above. Here is the March 2020 version of my mission statement:

“The mission of Entre Money Coach is to help small businesses make more income and keep more profit with a money management approach that starts with their Breakthrough Number and prioritizes protecting the business and paying the entrepreneur so they can grow into their business vision. We do this with understanding, enthusiasm, and without judgment.”

Much more specific as to who and how. I plan to revisit it again in October. It’s already on my calendar to take time to review. If you haven’t looked at your statement in a while, or never created one at all, I encourage you to take the time to do it this week. Happy Entrepreneuring!

 

Most of my clients have lasting results with the money changes we make. But what makes some clients more successful than others? I don’t judge success by dollar amounts of debt paid or profit made. Some of my most successful clients had overall smaller dollar changes.  I judge success by my clients reaching their financial goals, staying protected at their income milestone, paying themselves and having great job satisfaction. If my clients can remove the stress and uncertainty that can come up around money, I call it a win.  But my most successful clients all have three qualities about them that made them “extra” successful.

1 – They have a money goal and a purpose for the money.

My most successful clients have a money goal. Saving to buy a building, leave the 9 to 5 job, open a day spa in 3 years are all examples of my client’s goals and purpose for a set amount of money. These goals aren’t fuzzy. They know how much they need, and they have a timeline to make it. If they don’t start that way, they get it when we work together. If your money goal is “as much as possible” or “as much as I need to cover overhead” you likely don’t have the same laser focus to create and make money as my most successful clients do. The truth is, if you aim at nothing, you’ll hit it every time. You need to define and write down your goals with a plan to reach them. Not that plans can’t grow, change, and evolve, but if you don’t start with one at all you aren’t going to be able to really measure your progress.

2 – They take immediate action to control their money.

They opened the holding account, they took the utilities off autopay, they started tracking income every day. Some of my clients have done those tasks the same day we have our session! Keeping their laser focus on the goal they take quick action and have wins immediately. I have seen less success with entrepreneurs who are slower to make necessary changes. The motivation to get it done quickly goes away, and often only about half of the recommendations make it into the business. They may pay their expenses intentionally, but they don’t make the time to create a monthly spending plan (budget). My most successful clients commit to making changes with their money quickly, one step at a time, and they follow through right away.

3 – They celebrate every financial win and use them to stay motivated.

Let’s face it, saving 5 years for a building can get a little boring. Every $200.00 deposit seems tiny in the face of the price for a building. But my most successful clients celebrate every single win, whether it is a deposit into a building fund, or a payday when they proudly sign both the front and the back of their paychecks. Staying motivated can be difficult sometimes, and we all have to deal with the sometime lack of motivation. Celebrating the little things brings joy into the progress, not the end state. If you aren’t celebrating and doing a little dance after every sale or payday, I challenge you to start today. Find a small money win and recognize it with gratitude.

When the Breakthrough Number (B-Number) process was developing, I used it for the easy visualization of protecting the inside of your business four walls. It was first created to support a client who knew of the Dave Ramsey “7 Baby Steps” approach to personal finance. Each of the walls I identified for business helped her make decisions on how to spend money and to put processes in place for money management. Over time I continued to use the approach over and over and finally gave the process a name…

The Breakthrough Number

I know what should happen when people figure out their unique number. They should be more in control of their income. They will know their minimum monthly amount of money the business must bring in, reducing stress and uncertainty. Finally, they will see the wisdom of including their own salary in the business spending plan (budget).

What I didn’t foresee happening were these additional, unexpected benefits that came with working through the calculation process.

 

  1. More accurate wholesale costs.

I’ve worked with several business owners who forgot something, some small or easily forgotten expense that affected their profit margin. Running through each of the walls carefully uncovered things like the cost of blank labels and ink for handmade products. That cost was easily overlooked because it was under $25.00/ month, but it needs to be included because it affects the real cost to the business and needs to be recovered.

 

2. Finding hidden money and a chance to become leaner.

The first time this happened I was actually in an airport helping a friend run through the breakthrough number process. We were discussing her critical operating expenses and remembered that she had a service she paid for every month that she was no longer using! This service was about $100.00/ year. More than once I have seen clients eliminate or change services and expenses when they take a hard look at deciding what is critical.

 

3. More confidence in making strategic business decisions.

This benefit was sort of foreseeable in that I knew people could use the process to calculate different scenarios such as hiring new people or adding a service because they would be able to forecast the new expense’s impact on the money. But the way my client uses it to make decisions is quite surprising! She literally just uses her known monthly B-number amount to help her make decisions. Her breakthrough number is about $5k a month and included her personal paycheck. Anytime she wants to do anything different she looks at how much she made over her number that month and how much she has in the bank. She can then say, “Oh, this is okay, I made an extra $2k and I can still pay myself for 3 months.” That was her quick ‘back of the envelope’ calculation for hiring her part-time VA and a business coach. Amazing!

 

If you are still without your unique number you can get it today, right now for free.

Just visit http://entremoneycoach.com to grab your free worksheets. You will have your number in under 30 minutes! Happy Entrepreneuring!  

 

  1. Not separating Business from Personal Accounts. You must have a separate financial identity for your business, even as a solopreneur or freelancer. Keep your money separate and write yourself a paycheck from the business. No living out of the till. Use a fee free checking account for all of your business income, and pay your expenses, including your paycheck, at regular intervals from that account.

 

  1. Immediately Making Large Purchases for the Business. Often these large purchases are made on credit, putting the business immediately into the negative with debt. Do you need that new computer right now? How about that website? All of those services? Keep the business lean by purchasing only the necessities. Know your B-Number to determine the amount of money you need to make based on prioritized expenses and put large purchases on hold until you have the cash.

 

  1. Having too Much Personal Debt. Personal income is often dipped into when businesses are first starting. Until the income really gets going, it’s not unusual to pay for certain expenses from personal funds. Having a large personal debt load means less money available for business expenses if needed for perhaps a marketing funnel or to pay a large expense that comes up. On the other hand, if you are relaying on your business to pay all of your bills, personal debt means more money needed from the business, and less money staying in the business for growth or new launches.

 

  1. Not Saving for Emergencies and “Down Times.” Business is cyclical. It just is. Income will be variable, particularly in new businesses who are starting to get visibility and a steady income stream. It is always a good idea to keep an emergency fund on hand- set aside into a free checking account for those months where you don’t make enough to pay those B-Number expenses. Some advice for starting and funding an emergency fund can be found here.

 

    1. Not Having a Clear Spending Plan for Your Business. Money can easily run off and spend itself when your business doesn’t have a spending plan. Always starting from the B-Number, where is any extra money going? You may get by for a bit, but having a plan ensures you can afford to take certain steps in your business. Taking 45 minutes a month to map out upcoming expenses or expansions and what you plan to spend where. If you need accountability or help with your plan, go ahead and check out our Business Money Planning Group.10

When I was at a conference in San Diego last month, I had an epiphany about most new business owners and their business money stuff. Typically, when I work with a family on personal financial management there is a history of making financial decisions that became habit. When we work together, we have to often change years of money habits so my clients can reach their goals.  Business money management is different. Entrepreneurs are not generally “taught” how to manage their money. Rather than a habit to change, there is some learning that needs to happen.

 

In personal finance we are generally dealing with a set amount of money that consistently comes into a household as a regular paycheck on regular intervals. So, we can start from the income. Knowing how much you have to work with makes planning easier. You know how much it will take to cover all of your expenses.  When we have a deficit, a second job can be a solution, and once again we adjust to the new income.

 

Business isn’t that way. You may have income in the first week of the month and nothing in the second. We may have extreme income differences each month, and we may not know how much we will have to work with when the month starts! This difference is what often leads to cash flow emergencies in business, and stress when you are running negative cash. You must know how much you need to make to cover all of your expenses, but you may not know exactly which week you will make what you need.  Business money management is more dynamic and requires at least a weekly look at how things are going. 

 

Here are three simple steps to managing your business income as it comes in, and to keep cash on hand.

 

  1. Know your B-Number. You must know what you need to make, and you must prioritize the B-Number expenses first. Pay these above all other expenses to keep the business operating and able to keep generating income. If you do not have it, get your free worksheets at www.entremoneycoach.com.

 

  1. Track your income as you make it. You don’t need to obsess over your money each day, I had a client who did that, and she never enjoyed being an entrepreneur. Just write down what you make every day you make money. For simplicity, go ahead and write the totals on a calendar the day it comes in.

 

  1. Pay your expenses when cash flow is positive. You can pay the bills weekly or bi-weekly but know when you have made your B-Number, and when you are funding other things such as marketing, debt, and growth. Other coaches may disagree with me, but I have held the water bill for an extra week to ensure that my cash flow was positive, meaning I had more left over after I paid the bill, and didn’t let it run dry. I tend to be a little nervous about not having cash on hand, so I wait until I have sufficient cash to pay my expenses.

 

Finally, as you are making more and more over your B-Number each month, make sure you are funding an emergency fund. A good rule of thumb is three times your B-Number to keep on hand to protect against cash crunches. Just open a free checking account and start to put some money away.

If you’ve been following me for any time, you know that I am all about protecting your business, now, wherever it is in its evolution. One of the best ways to protect your business is to have an emergency fund. Also known as a management reserve, this fund is a stash of cash equivalent to at least three times your monthly expenses, including your paycheck.  The importance of having extra cash for emergencies cannot be overstated. I have worked with entrepreneurs who spend everything they make each month in profit. They enlarge marketing budgets and add services to their businesses but have no cash to protect their existing milestone.

Three times your breakthrough (B-Number) is my recommendation for a first emergency fund goal (you can easily calculate your numbers with the free worksheets at www.entremoneycoach.com.) The reason I believe three months is a minimum number is that if the sun explodes, you still have a full quarter to right the ship. You will have expenses and a paycheck for the three months it takes to pivot, to launch, to take corrective action in your business. 

At first that number may seem a bit high, and honestly you may be thinking, “I’m barely surviving right now, you want me to save HOW MUCH?” But it is possible to save towards your goal and hit it in a few simple steps.  

  1. Get Set Up for Success. Make sure you have a separate bank account so that your emergency fund money doesn’t get comingled and accidentally spent. Keep it liquid but keep it separate, even in a different bank. Have a fee free checking account, with checks, for access and have a defined list of what constitutes an emergency.
  2. Put a little in each month. Make your emergency a line item in your budget. If you write down your savings goal, and you write in a goal for saving a certain amount, you are more likely to do it. Save a little each month, and you will be amazed how fast it grows.
  3. Make larger deposits as you make more money. Alternatively, or additionally, save a portion of your profits over your B-Number in a good month. Let’s say that you have a very successful month in sales, commit to stashing some portion of that profit in the fund.
  4. Celebrate your progress. You are actively taking steps to protect your business should you need a little money to cover you.

Treat your emergency fund as a priority and it will be funded faster than you expect. And once it is funded, you are done! You will then be in a better position to grow and take on new growth and risks, and more confident knowing you can cover what you need to every month. Happy Entrepreneuring!