Have you recently looked at your bank account and felt a wave of mixed emotions?
Are you honestly satisfied with the numbers you see?
Are you rewarding yourself with a market-related salary each month?
If not, it might be time to revisit why you went into business for yourself in the first place
In my previous blog, Time Tug of War - Transform Your Business Time Management! I explored the importance of time management and the flexibility it brings In this blog series, the shift is towards the anchor of Business Mastery - Money Mastery
My first question to you - Are you paying yourself a market-related salary?
If the answer is NO, then what is the point of being a business owner? Look back at when you worked for someone else and received a steady salary Now that you are steering the ship that is your business, it is crucial to ensure that you are not at the bottom of your payroll if you even make it onto the list Your business should serve as a reliable source of income for you, not just for your clients or employees
Assessing Profitability
How truly profitable is your business? It is not just about the CashFLOW coming in, it's about the money retained after expenses If more cash is leaving than entering your business, then it is time for a serious strategy session
Managing Client Payments
Dealing with clients who delay or default on payments is a common downfall of many businesses Providing services without timely payment can lead to a cycle of debt that hinders your business growth As hard as it may be, the truth is that you are worse off by keeping these clients than you would be by choosing not to do business with them at all If they do not pay, they are not your clients!
Steps to Tackle Financial Challenges
So, how do we tackle these challenges? It starts with getting your cash flow in order
Here are the steps to take -
Determine Your Salary - Calculate the salary you need and deserve
Evaluate Your Expenses - List all your monthly personal expenses, utilities, groceries, insurance, transportation, and other necessary costs. By practising this, you will have a baseline for the minimum salary you need
Set Your Salary - Based on your personal expenses and market research, determine a reasonable and sustainable salary for yourself This amount should be sufficient to cover your personal needs and reflect your value to the business
Align Your Finances - Put a plan in place to align your business finances to meet your salary goals
Review Business Expenses - Do a thorough review of your business expenses Identify any non-essential or high-cost items that can be reduced or eliminated
Increase Revenue Streams - Look for ways to boost your business income This might include upselling to existing clients or expanding your market reach
Set Financial Targets - Establish clear financial targets for your business that align with your salary goals. This includes setting revenue goals, profit margins, and expense limits
Predictable Profitability - Ensure that positive CashFLOW is the norm, not an occasional stroke of luck
Create a Budget - Develop a detailed budget that outlines your expected income and expenses This budget should include your salary and provide a clear picture of your financial health
Monitor CashFLOW Regularly - Keep a close eye on your CoashFLOW by regularly reviewing your financial statements
Build a Cash Reserve - Aim to build a cash reserve that can cover at least three to six months of operating expenses This will provide a resource for unexpected expenses or periods of low income
Implement Profit First Accounting - Follow the 'Profit First' approach by allocating a percentage of your income to profit before covering other expenses This ensures that profit becomes a habit, not an afterthought
Understanding Your CashFLOW
Understanding your CashFLOW is crucial. Do you know exactly how much you will need to come in to cover what is going out? Many business owners suffer from 'Arithmophobia'—a fear of numbers However, ignoring the figures will not lead to financial stability.
Seek Guidance and Take Action
If this conversation has stirred up emotions or if you are looking for further guidance, I am here to help You can attend one of my webinars or seminars, or take advantage of a personal consultation Sometimes, a 10-minute chat can provide the support you need to make a change.
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