Tag: finance

Checking Your 5 Key Areas of Business

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When we get into the “groove” in business, it’s easy to just let things roll. There are areas of business we are good at, that are in our zone of genius, and areas that aren’t. Even after you contract out or hire others to handle the “not so much fun” stuff, you should do an overarching wellness check across five key areas of business at least a few times a year. Take a few moments this week to consider any place that needs your attention. It’s a great time to tackle any changes in these areas before we head into 4th Quarter in October.

 

  1. Marketing.

 

Always keep what is working, but marketing, particularly digital marketing, changes constantly. Algorithms are always changing. When is the last time you looked at your marketing strategy?

 

  1. Sales and Business Development.

 

When is the last time you looked at your sales strategy? Do you have anything new coming out the rest of the year? How is your networking?

 

  1. Branding and PR.

 

Do you need a refresh, or just to ensure that your offers are consistent with branding? How about your PR? How are you staying visible in your business?

 

  1. Finance.

 

Is it time to revisit your breakthrough number? Do you have an income plan for the rest of the year? What do you want to make month over month, and how are you going to reach that goal?

 

  1. Systems and Productivity.

 

Do you have systems and support in place to help you manage your workload and stay productive? Do you need time management strategies?

 

This list has a lot in it, right? My last consideration for you is what can you delegate from this list?  Get expert support for your marketing, branding, finance, systems, and sales if these are not your zone of genius. Invest in a consultant, a contractor, finally decide to get after growing that team. Each of these areas is key to the health of your business.

What I Learned About My Business When I Revisited My Mission Statement

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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!

 

Three Unexpected Benefits of Calculating Your Breakthrough Number

Posted on by moneycoach

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!  

 

Three Steps for Making Business Cash Flow Management Easier

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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.

Simple Strategies to Build a Business Emergency Fund

Posted on by moneycoach

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!

Managing the Finances When You Are a Multi-Passionate Entrepreneur

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I am a multi-passionate entrepreneur. Across the businesses I am a teacher, coach, and cheerleader, but my businesses are very different and have very different audiences. I teach and coach entrepreneurs with their money and strategy, I tutor and coach non-traditional law students through school and the bar, and I teach ballet, tap , and jazz one day a week. And I am passionate about each one of my ventures. I know there are some of you out there who are just like me. I wanted to take a minute and support you by providing a few tips and tricks for balancing the finances across entrepreneurial pursuits. We will start with the “rules.”

 

Rule number 1: Every venture is different; you must separate your finances. Period. I have accounts for each business. I have check books for each business. I go so far as to have Stripe for one and PayPal for another to process payments. The money is earned in different businesses. By using PayPal, I can also “park” the money until I need to transfer it. No co-mingling. I keep everything absolutely separate. So should you.

 

Rule number 2: Expenses are different and should be tracked for each venture separately. This is as easy as putting all the receipts in a different folder, one for each business. Make sure that you pay the right expenses from the right account. Another benefit of PayPal is I can send money directly from the business account to pay expenses. You can set up the same for your businesses. Keep them separate.

 

Rule number 3: Taxes are separate in each business. You must pay the self-employment taxes on each venture. If you are a sole proprietor in the US, you will have one EIN if you are operating with your own social security number. You can make a single tax deposit online to cover the taxes for all three, but you must keep withholding separate in your tracking. You must file a “Schedule C” every year for each business that you own as a sole proprietor on your taxes.  If you are an LLC, Limited, Corp or any other structure you must absolutely deposit your own taxes but let your accountant do the K-1 filings at the end of the year.

 

It doesn’t have to be complicated for the multi-passionate entrepreneur. I sit down and handle each business separately and in turn. I have a written spending plan for each, and the B-number that goes with them. I spend less than 1 hour a month on the financial planning and management of the companies.

 

How to do it:

 

  1. Have Your B-Number. Know your B-Number for each business separately and have a written spending plan for each. I’ll say it again, know your breakthrough numbers and have a plan for the money in each business. If you need to calculate your breakthrough number get the free workbook at entremoneycoach.com. This step will save a ton of stress and crazy. You know what you need to make, what you need to pay, and where your money is going.

 

  1. Use color coding. I have different colored folders for each business. I mark receipts as I have them and place them in the correct folder by color. To avoid payment errors, I have checks in different colors with a little icon in the corner. Color coding keeps everything easy and organized. You can find different colored folders at any office supply store.

 

  1. Delegate what you aren’t good at, or don’t like to do. Stay organized with a virtual assistant, bookkeeper, accountant, etc. The actual bookkeeping for my businesses is very straightforward, and I don’t do it, and it takes less than 3 hours a month for all the businesses. I only manage the income and planning.

 

  1. Always have a plan for your money. Don’t let your money run off and spend itself. Know what each business’s income is for. Your money every month needs to have a purpose. You may decide to take a salary from one business, with the intent to use the money to grow a different one. Have a plan, withhold your taxes, and use your money strategically.

 

I celebrate multi-passionate entrepreneurs like me and understand that being organized can sometimes be a challenge. But take these few steps above to make managing the finances across multiple businesses easier. Happy entrepreneruing!

Are Your Business Finances Organized For Growth?

Posted on by moneycoach

Small businesses are started with an intent and design for growth. To impact more people. To serve a larger audience over time. That’s why entrepreneurs start businesses, right? More growth typically means more money. Another reason we start a business.  Keeping your finances organized for growth can be tricky. Particularly if your business grows quickly. Growing businesses mean growing expenses. Perhaps the addition of a new team member or increased wholesale or raw material costs. So, how do you keep track of it all? Here are five tips for organizing your finances for growth.

 

  1. Make sure you have all of your bills and expenses in one place. You should never have to go looking for a bill to pay it. Write down who you pay, what it’s for, account numbers, contact information, and online login info in a notebook, on a spreadsheet, or just on a list in a Word document. Keep this list updated anytime you make a change to the business expenses.

 

  1. Be intentional with your payments and take all your bills off autopay. If you aren’t already, this is the time to manage cash flow very carefully. You need to be in control of your cash. Holding the water bill for a day or two while you are waiting for your invoice to be paid keeps cash in your pocket just in case. Cash flow issues cause sleepless nights in around 60% of entrepreneurs. Control yours.

 

  1. Track all money coming in, in writing, and leave it in the holding account until you pay bills, payroll, or write yourself a paycheck. Don’t use any money coming in before it’s time. When you are growing you may have intermittent bills or newer expenses that are due in a time period that is new for you. Don’t try to rely on memory to tell you where that $65.00 cash payment went. It doesn’t have to be a complicated system. You can use a sheet of paper. JUST WRITE IT ALL DOWN.

 

  1. Have categories for your “extra money.” Miscellaneous is the category of money that runs off and spends itself, and we don’t want this. I am a firm believer in “profit parking lots” that have names, and a purpose attached. You need to have a separate bank account from your operating account for holding these profits. Use a fee free checking account, and don’t forget to look online for a bank. My clients have had great success using an online bank for their holding account.

 

  1. Don’t forget to put money in your emergency fund to protect the business you have as you are growing. Three months of your breakthrough, or B-Number, is a wise amount to put aside in case of emergency. Giving yourself a full quarter’s worth of money to cover expenses as you pivot or launch something is a smart move. To figure your B-Number use the free worksheets on www.entremoneycoach.com and the free videos on the Entre Money Coach Facebook page.

 

You don’t have to make money organization and management complicated. You just have to maintain control, track it all, and protect yourself with categories and purposes for profits. Use these five tips to prepare your business for growth. Happy Entrepreneuring!

Entrepreneurs- Make 2020 the Year You Write Yourself Paychecks

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The 2016 American Express OPEN Small Business Monitor reported that  only 51%  of entrepreneurs pay themselves a salary. By 2019,  the statistic flipped,and 51% of entrepreneurs did NOT pay themselves a salary. In fact, 26% of business owners skipped pay for 2-6 months, and another 25% went OVER six months without a paycheck. What in the world?

Truth be told, many entrepreneurs pay themselves as an afterthought. I spoke with a restaurant owner just yesterday who admitted, “I could probably take a check, but I’m afraid if we slow down the business would struggle.” That’s a fairly common sentiment. Cash flow concerns have caused lost sleep and anxiety in  63% of entrepreneurs in a recent survey.

It is my personal experience that foregoing a paycheck caused even more anxiety because our personal income became unstable. I hear the wishful thinking that entrepreneurs can pay themselves, “someday.” Well, let’s start the habit now. You may not be able to pay yourself your dream salary, yet, but you need to get into the habit of budgeting for yourself.

1. Make sure you know your business “4 walls.” I like to envision your business as having 4 sides, like a house or a box, and your priority must be the expenses on the inside of that box. Expenses that cover your access to buyers, critical operating expenses and minimum inventory spend and a paycheck for yourself should be your priorities over anything else you may owe. The anxiety of worrying whether you have made “enough” this month will be alleviated by having this number. You can get the free worksheets on my website www.entremoneycoach.com.

2. Pick a number. Pick a number to pay yourself. Many entrepreneurs get stuck here. There are a few different ways to calculate your salary. One is to total up the personal expenses you need to cover your personal “four walls;” food, utilities, rent or mortgage, and transportation. When your electric and water is paid, you will be able to show up and serve with less stress.

Another method is to decide your ideal check, and take a percentage of it, say 40%. For example, if your ideal check is $1,000.00/ week, your 40% is $400/ week. Then add your taxes on top of that. So, you may take base pay of $500 week with a 20% tax rate. Every two weeks you write a $1000.00 check, deposit it and pay $200 to your self-employment taxes. Every dollar over that amount remains in operating account. As the business grows you can incrementally increase your salary.

3. Put your paydays on a calendar. And commit to paying yourself, even if it’s only $10.00. Do it. Celebrate your business, and yourself, with a tangible reward for two weeks of hard work. This pay must be in a paycheck. You are not going to live out of the till anymore. The money you earn between paydays stays in the operating account. Many entrepreneurs go through “petty cash” or take money directly from the business to pay personal expenses. This co-mingling is a nightmare for taxes and your personal finances.

The picture of the struggling entrepreneur working hard, starving even, until they make it big is the Cinderella story we love to read. But most small businesses grow slowly and incrementally. Those “overnight successes” we read about were likely in business for years before the “big break.” So, let’s pay ourselves, something, every other week in 2020. If you need a reminder, sign up for the Entre Pay Day newsletter at Entre Money Coach