Making Friends with Your Financials
In case you read the title, shuddered and were about to move on – wait! Instead, write down what brings you joy or, “what makes your heart sing”, and then think about how money would benefit that. A variety of sources identify the two core motivators that drive our decisions as love and fear. Ensuring that you are making your financial decisions based in love rather than fear requires clarity about what brings you joy. In addition, assuming your bills are paid and you have savings in the bank, you want to then ensure that you allocate financial resources to those things and/or experiences that bring you joy.
By clarifying in writing the key part your future revenue can play in what brings you joy, you have created a stronger desire to learn to make friends with your financials. Often it is only the fear of the unknown that holds people back.
Have you created a clear budget? How can you plan for your future if you have little to no idea of how much you need to run your business AND make a profit? Give your business “love” by clarifying what your needs are. How much do you want to pay yourself each month? What are your monthly business expenses? Know your value. Remember that what you are paid does not reflect you’re worth but rather the value received by your client. Calculate an annual revenue goal and use that to create a monthly revenue goal. This allows you to plan for success and ensure that you are building a business that will provide you with the resources to live your life according to your unique needs and desires – not those of others.
Create a Business Dashboard/Business Progress Tracker, which is the high-level view of where you are at the point in time that you review the dashboard. It will help you manage and monitor your “metrics” – a fancy word for the measures of your success. To quote Peter Drucker, known as the man who invented modern business management: “If you can’t measure it, you can’t improve it.”
Hire a bookkeeper who loves financials to not only assure you have financial accuracy in your business, but to update your Business Dashboard for you to review and track weekly.
Don’t “hide” from your financials. Keeping your finances organized is like de-cluttering your office. If you are on track to achieve your goals, you’ll quickly know that the numbers are either meeting, exceeding or falling behind your plans. And if you are meeting or exceeding your goals, great. But if not, you need to figure out why and start doing more of the activities that create revenue for your business.
If you attended Genius Exchange (read the recap here!) you heard Mike Michalowicz’s energizing keynote about creative marketing, but to get as energized about your financials, read his book, “Profit First”. The title says it all – you should be focused on building a profitable business! What better encouragement to become best friends with your financials could there be than watching your profits steadily grow?