Bad business money habits keep so many awesome businesses stuck, with no extra cash to grow.
Here are six ways you might be keeping your business in broke town!
being money clueless isn't cute
It’s not cute or sweet to be completely blind about your business finances. It’s madness and for me, it’s maddening.
It’s fine to feel confused about where to look for the numbers or what numbers to look at, and totally fine not to be able to figure out what all the numbers mean.
It’s not ok to choose not to know.
Unless you have already been exposed to business why would you know how to find and digest that information. It’s part of the process of learning to run a business and mostly it’s going to be new information, and that can be a bit confusing and scary.
Not knowing is fine until you know you don’t know, then it’s not fine. It’s like having a spreadable disease, it’s cool you’re out there living your best life until you know you have a contagious disease, then it’s not cool. Sort yourself out.
Learn about business and money. Understand what the numbers mean. If you’re not willing to do that then get out of business.
dipping your sticky fingers into the business bank account
Stop dipping your sticky mitts into the businesses bank account, that’s not your money yet. It only becomes your money when you have taken out the tax man’s money, and your supplier’s money, and your staff’s money.
If you’re using your businesses money like your own personal ATM then you’re robbing your own business.
Set up your business bank account, if you’re just starting out then you can usually (you will need to check the rules in your country) use a personal bank account that you set aside for business transactions.
That keeps everything nice and clean, and you can see exactly how much went into the account and how much came out each month. The same goes for your PayPal account too, keep it clean, keep your personal paws out of your business account. Set up an account for business, and one for your personal spending.
If you’re about to quote a very popular business book right now, one that suggests you “pay yourself first” you haven’t read the entire book.
doing it all yourself
Unless you started your business as a bookkeeper or accountant, you shouldn’t be noodling around with receipts and tax returns. You should be focusing on what your business sells. If you’re tight on spare coins at the start of your business, it’s fine to bootstrap it with bookkeeping but you need a plan to hand that stuff to the experts.
It will take you at least double the time of a professional to do the work, and then likely it will take your accountant a whole lot of time to undo all the stuff you did that shouldn’t have… because you didn’t know what you were doing!
If you’re doing your own bookkeeping right now, and you’re not a bookkeeper I would bet a non-vital organ you’re not up to date. I would bet you have a stack of receipts shoved in a dark place that needs sorting. If you’re using bookkeeping software I bet you’re months behind.
That’s because it’s not your focus, nor should it be.
The D-I-Y bookkeeping approach, that you think is saving you money isn’t. It’s costly for an accountant to fix your mistakes, all because you were poking about where you shouldn’t have been. And, for many business owners, the cost of hiring a bookkeeper is less than what they could have made by focusing on selling their own goodies.
Get a bookkeeper. Get an accountant.
know your cash flow
If you mentally tuned out, or you’re about to scroll on by because I said cash flow…. don’t!
Cash flow is not nearly as confusing as your accountant might like you think. It’s not nearly as confusing as your highschool business studies teacher led you to believe.
Cash flow is nothing more than the money that flows in and out of your business.
You can start the most simple of cash flows by doing two very simple things, recording the money that comes in each day and the money that goes out each day.
At the end of the month total up the numbers to see if your sales exceed your expenses. The more you do this the easier it becomes to predict what will happen next month and the month after that. It’s pretty simple, especially if you have that business bank account I talked about earlier.
If you have positive cash flow you have more money coming in than going out, you have more sales than you do expenses. That’s a good thing. If you have negative cash flow you have more money going out than you do coming in, more expenses than sales. That’s a bad thing.
The only way to know if your business is making money or losing money is to know your numbers!
No idea where to start? I made this so ridiculously easy, I pulled together the motherload of all important information and arranged it neatly in one easy to use spreadsheet. Click that pretty pink link below and download it for FREE now!
don't be a martyr, pay yourself!
I have been asked before about the differences between men and women when it comes to running a business. Here is a big one, a huge one; women often don’t pay themselves. I don’t see men do that.
Women often don’t pay themselves because they don’t plan for it.
It’s that simple. They don’t calculate how much they need, they don’t consider how much they’re worth, they don’t price products or services correctly and they either have no clear money goal or no plan to reach that money goal.
When women in business do have an excess of funds they find more business-y things to spend it on.
Your business needs a plan to have money for everything it requires in terms of costs, expenses, taxes AND a weekly or monthly pay or wage for you. A set amount of money no matter how small you start needs to leave your business bank account and be deposited into your personal account.
You need to be paying yourself regularly.
If you can’t do that yet, then that is your first business goal. Forget about how many Insta followers you have, forget about the next fancy business retreat you want to go on and focus on getting paid. Once you’re paying yourself a small fixed amount regularly, focus on making it more until you reach your income goals.
buying business unicorns
What’s a business unicorn? It’s the course, coach, workshop, or platform you wasted your hard-earned cookies on because it was THE solution to your business problems.
But here is the kicker, if you’re not tracking what’s happening in your business and paying attention to the important numbers like your traffic, conversion, lifetime customer value, average cart value, profit per sale etc…
Then you don’t know what your problem is ...
So investing in that fancy Instagram course, signing up to that new marketing platform or going on that mindset retreat is a little pointless.
If you want a real business unicorn to invest in then identify your problem first, then find a solution to work on that specific problem. Otherwise, you’re potentially fixing the wrong problem or a problem you don’t have. If you’re going to work with a business coach, they should be able to step you through a discovery process.
If you’re going to invest money, make sure you invest time and headspace too. Throwing cash at a problem rarely solves the problem. It just makes you feel like you did something, even though that something isn’t going to create change.
How many unfinished courses have you bought? How many have you never started?
Your solution needs to be integrated into your business, and you need to look for the indicators that the solution created a result.
If you want some great resource to break your broke business habits, download the Plan and Track below to get started with the hugely popular and customisable spreadsheet that will help you become a Profit Lover.