How to Reduce Financial Anxiety by Observing Business Patterns

Every business experiences fluctuations in revenue. With good bookkeeping, you start to see the patterns and can begin to leverage them to your advantage. This is a key skill for small business owners. Learning to harness the power of observing business patterns can lead to greater financial security.

Recently I was talking with someone who mentioned that she felt guilty taking a salary from her business, because she hadn’t actually made any money last month. The cyclical nature of her business meant that she made a lot of money during one part of the year, and not very much during the rest. The way I see it, there are several ways to approach a situation like this:

Notice the Pattern

This woman had already taken the first step, which is to notice what revenue patterns are coming up in your business. If you aren’t aware of your own business patterns yet, now’s the time to go back through your records (or get them up to date!) so that you can figure them out. Whether your business is product- or service-based, it is likely subject to fluctuations. It’s likely that these fluctuations are seasonal, or else focused on specific events.

Once you’ve learned where your revenue is coming from, it’s time to make some decisions. To ensure your financial security, it’s best to either focus your business more heavily on your best revenue sources. Sometimes that is either not possible or not preferable – perhaps you want to expand your business beyond a certain season or event. In this case, it’s time to think about how you can adjust your business and move out of that revenue pattern.

Make Adjustments

If you’ve decided you want to alter your business to be less cyclical, it’s time to find ways to avoid sharp drops in revenue during some parts of the year. Oftentimes, this can mean changing your offerings up to be less seasonal/event-focused.

It might also mean broadening the function of your business to more products or services, or more events over a wider range of time. Adjusting your business in these was is also called “diversifying” your business. Here’s an informative read on some ideas for doing this.

Capitalize on Your Patterns

If you are comfortable with the cyclical revenue patterns in your business and are not interested in diversifying, your other option for increasing your financial security is capitalizing on existing patterns. Take a look at what positively impacts your revenue. What are the products are services that do best, and when, where, and why is that happening?

Once you have that information, the next question is, how can you amplify those conditions to bring in more revenue? Can you create variations on a popular product or service? Are there events similar to the one where you always sell out that you can get your business involved in? How can you spend the “downtimes” in your business prepping for the upswings?

Solopreneur Paycheck

No matter which path you pick, creating a Solopreneur Paycheck for yourself will do wonders to ease financial anxiety. A Solopreneur Paycheck smooths out the rollercoaster ride of fluctuating revenue, by giving you a steady income amount each month. This can help take away the guilt of withdrawing money from your business even when you’re in the “off season”. Read more about creating one for yourself here.

If you liked this article, that might be a sign that some expert help with a year-end bookkeeping review could be just the ticket for you! Click below or right here to schedule a free Financial Self Care Consultation to see if a bookkeeping review can help you allay your anxieties and lay the groundwork for financial success.

By |2022-11-08T12:08:36-08:00November 8th, 2022|Categories: Bookkeeping Business, Small Business, solopreneurs|Tags: , , , , , , , , |0 Comments
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How to Create Your Own Paycheck Using a Money System

 

I know you like being your own boss, but do you ever have paycheck envy? Do you ever wish you could get a paid vacation? Do you get tired of the feast or famine in your personal income? Especially with creative or freelance work, this can be a real issue for some of us. Fortunately, when you create money systems around your business income, you can create a solopreneur paycheck, by paying yourself first.

The System

Setting up a paycheck for yourself is simple. Every time you collect income, set aside a portion in a separate account just for your pay. Then pay yourself out of that account, but leave a portion in the account. The balance in this account will build over time so that you eventually have a cushion built up to even out dips in income, or even pay yourself while you take a holiday.

Determining Amounts

How much should you pay yourself each round? A good place to start is keeping track of your personal expenses and ensuring you cover those every month. After that, it’s a simple question of what to do with any extra income you may have made that month. You may choose to leave it all in the account to build up your balance, or take out an extra allowance if you’ve earned a reward. Setting up reward systems for yourself can be another motivator to keep your money systems consistent, organized, and ensure they meet your needs.

More in-depth information on creating a solopreneur paycheck can be found in my money mapping series. Part II discusses setting up a solopreneur paycheck in the context of your larger money system.

If you liked reading this, you might enjoy my free eBook, the Cash Flow Reboot Guide. This resource gives you a bunch of actionable steps to take to ensure that your business can thrive through times of financial uncertainty. Click below to grab your free copy!

By |2022-04-11T12:05:06-07:00April 11th, 2022|Categories: Profit First, Small Business, solopreneurs|Tags: , , , , , , , , , , |0 Comments
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The In-Depth Guide to Mapping Your Money, and How It Can Fortify Your Business, Part III

In the last two parts of this in-depth guide to money mapping, we’ve talked about why it’s helpful and how to get started. We’ve also touched on creating a system of accounts to set up a regular paycheck for yourself and an assurance of profit. Creating your own money map based on these ideas takes a lot of evaluation of your finances. You need to assess your operating and tax expenses and analyze your living expenses and savings goals. Once you’ve assessed these amounts, they translate into the percentages you put into each account.

What’s Your Percentage?

I help clients figure out what their percentages could be. We assess the needs of their business, and we figure out how much they actually need to live on. We discuss their life goals, and how those relate to money. There are good benchmarks for each percentage, which are suggested by Profit First. For your reference, the suggested percentages are: 5% profit, 50% owner’s pay, 15% taxes, 30% for operating expenses. This breakdown applies to most solopreneurs (anyone under $250,000 in annual revenue).If this doesn’t feel doable for you right now, don’t sweat it. It takes a lot of work, evaluation, and good financial habits to create a sustainable money system.

Applying the Model

Let’s look at an example of all of this mapped out. In this example business, the owner is using the ideal benchmarks and keeping a cushion in their Owner’s Pay account. What they do take out is then subdivided, with 20% of their pay taken off the top for three savings goals (I like to call this “paying yourself first.”). The remainder of this money goes to living expenses. While this model might be unrealistic from where you stand, keep in mind that this is something my clients work towards. I’ve included it here so you can start to picture what your own money system looks like.

If you enjoyed this guide, I recommend also checking out Part I, and Part II. And, try going to the Tools page, where you can play with an allocations calculator. Plug in your revenue and your preferred percentages to see what your amounts are! Then you can start filling in your money map.

Money mapping is an important tool, and one that I enjoy walking clients through. If you’re interested in working with me, check out my services page to check out my packages, and schedule a call.

☮

Angela

 

Image by:

Estée Janssens

By |2020-01-17T22:12:46-08:00January 20th, 2020|Categories: Personal Savings, Personal Spending, Small Business, solopreneurs|Tags: , , , , , , , , , |0 Comments
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Pick One of These 5 Ideas To Automate Your Wealth

Pick Pick One of These 5 Ideas To Automate Your Wealth: At Peace with Money

Last week we talked about loving our future selves, and dove into the world of IRAs. Today, I’d like to share a way you can love yourself and share the wealth with both future and present you – automation! I’ve written about automation before, and why it is so beneficial to our financial lives. The idea is simple: by automating your finances, you reduce your decision making, thereby reducing your chances to change your mind  or forget about saving money or paying a bill in full. Automating your finances make saving money easier and less of a mental effort. This principle is what Steve Jobs and Mark Zuckerberg employ in their wardrobe choices. They’d wear the same thing every day so that they could conserve their brainpower for other more important decisions!

Here are my five ideas you can use to dip your toes into the world of financial automation. Start off slow – just pick one and try it out. If you like your results, you can come back for more!

Automate a Savings Goal

Set up an amount to automatically be sent to a particular savings account for a goal you’re pursuing. Don’t worry about the amount, any amount is great! Simply trying this is the most important step. 

Automate a Bill Payment

Automating a bill payment insures you will not pay late fees. In the long run, this could save you a lot of money. 

Set an Alert

Many banks offer to send alerts when your account hits a minimum balance. Set this up so you don’t overdraw your account. This way, you can avoid those pesky overdraft fees. 

Connect Your Accounts

Connect your accounts to a money management system or app so you can  really see where your money is actually going. I use Mint and I love it! Personal Capital is another I’ve heard of, and many people also swear by YNAB, or You Need a Budget. 

Set Up Direct Deposit

Have your paycheck automatically deposited into your checking account! This is so much more simple than Pick One of These 5 Ideas to Automate Your Wealth: At Peace With Moneyhaving to take all that time and effort to take your paycheck to the bank. Even if you have your own business and have varying income, you can create a solopreneur paycheck using the Profit First system. If you’re interested in reading more about this, I recommend my posts Create Your Own Paycheck  and How to Pay Yourself First.

If you enjoy these tips and want more resources on automation, I’ll happily recommend The Automatic Millionaire by David Bach. This book emphasizes how savings habits and automation can help you build up savings for retirement. He also has a variety of free resources available for download on his website, so go ahead and take a look at those too! And of course, if any of this has piqued your interest, I’m happy to talk to you about setting up money systems for your business. Take a look at my service packages and schedule a curiosity call!

☮

Angela

Image Source: Rodion Kutsaev

By |2019-02-27T02:51:57-08:00February 27th, 2019|Categories: Banking, Cash Flow, Personal Savings|Tags: , , , , , , , , , , , , , , , , , |0 Comments
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Know What Your Numbers Are Telling You

Know What Your Numbers Are Telling You: At Peace With Money

This article is the third in a month-long series on taking care of your finances as self-care. Specifically, I’m focusing on what you can do with your money to take care of yourself and improve your business in 2019. You can read the whole series by clicking here. 

 In the last installment of this series, I talked about how important it is to separate your business and personal finances. Doing so gives you access to a lot of important information about your finances. However, it’s also important to know what to do with that information once you have it. This requires some analysis. Let’s dive in:

Know What Your Numbers Are Telling You

Look back through your financial records for the year. Figure out what products, services, or other sources brought in the most revenue. Identify which months you made your largest and smallest amounts of revenue, so you can understand the rhythm of your income.

Do the same for your expenses. Did you have surprise expenses come up that caused you problems? How can you plan for these surprises in case they happen again? For many people, taxes are a surprise expense. You can plan more effectively once you look at last year’s tax expenses, and prepare for upcoming years. 

Solopreneur Paycheck

Look at your total revenue. Did you pay yourself? Did your business pay you money? If so, move money from your business to your personal account. In the Profit First system, Owner’s Pay and Profit accounts are used to divvy up income and ensure that the owner is getting paid. This is called paying yourself first, an important practice for any business owner. Actually separating your income from the other categories, like savings for operating expenses and taxes, is key to a thriving business. 

Bringing It All Together

By analyzing your finances and gleaning all this information, you are ultimately able to tie loose ends and What Your Numbers Say About Your Business: At Peace With Moneycreate a financially streamlined business. Strategizing to prepare for surprise expenses and taxes, offer more of your most profitable products or services at the optimal time of year, and remembering to pay yourself all contribute to financial success. If you’re interested in doing this analysis work with some professional help, I’m happy to speak with you. Take a look at my service packages and schedule a curiosity call. If this has piqued your interest about Profit First, download the first 5 chapters for free here on my website! I do hope this post helps you find some financial insights into your own business!

☮

Angela

Image Source:  Martin Sanchez

By |2019-01-18T05:56:17-08:00January 18th, 2019|Categories: Bookkeeping Business, Profit First, Small Business, solopreneurs, Taxes|Tags: , , , , , , , , , , , |0 Comments
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Three Steps to Financial Clarity

3 Steps to Financial Clarity: At Peace With Money

As the holidays set in and the mad rush of preparation begins to slow, you might find yourself with a little time to reflect on your year. Why not take the opportunity to reflect on your finances? Your money, much like all the other pieces of your life, deserves your attention, thought, and critical eye. This exercise is meant to lead you to financial clarity. By completing it, you’ll gain a better understanding of what you want from your money, and how to get there.

Step 1: Define Your Destination

What’s your destination with your money? What are you planning to do with it? Is there something you’re saving up for? You might have vague plans, a well-defined roadmap, or nothing at all. This is the step where you can dream and imagine that destination. If you already have one in mind, check in and make sure it’s where you want to go. Make sure you investigate any current money goals you might have to make sure they really align with your desires. If you don’t have any goals, think of some you might like to adopt!

Step 2: Drop Your Pin

Pinpoint your current location. In other words, figure out where you are now financially.  It’s time to get clear and honest about what you have, what you owe and where your money is going each month. Use this step as an opportunity to total up your expenses and debts and track your recent income. Leave no bill unturned! If you want further instructions on this step, I recommend checking out my article on creating a spending plan, specifically the section on analyzing your expenses. 

Step 3: Plan Your Journey

3 Steps to Financial Clarity: At Peace With MoneyNow that you know where you are and where you’re going, it’s time to figure out how you’ll get there. This is the step where strategy comes in. Based on all the information you’ve already looked at during Step 2, you should be able to determine what will help you get to your destination. Whether that’s saving more money, paying yourself first, cutting out certain expenses, increasing your income, or a whole host of other ideas, identify your moves and decide when you’re going to make them. 

This process may take you a little while to complete, but it will ultimately bring you to a place of much greater clarity when it comes to your finances. This exercise can be applied to personal finances but it can also be applied to your business finances. I hope this season of reflection serves you well.

If you need any assistance looking through your finances, I’m happy to help you reach a place of clarity. Schedule a call with me!

☮

Angela

By |2018-12-19T00:43:10-08:00December 19th, 2018|Categories: Financial Clarity, Money Mindset, Personal Savings, Personal Spending|Tags: , , , , , , , , , , , , , , , |0 Comments
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The Possibilities of Rejection Therapy

The Possibilities of Rejection Therapy: At Peace With Money

Everyone dislikes rejection. So the thought of “rejection therapy” may seem less than enticing at first. But when I came across this idea, I immediately thought of how useful this could be for solopreneurs. How so? By helping us learn to make the big asks!

Learning to Love “No”

In a recent podcast episode, Hillary Hendershott featured Alex Grodnik, an investment banker turned entrepreneur  who discussed “Rejection Therapy”.  His therapy practice is simple: every day he asks for something and tries to get a “no” answer. This regular practice desensitizes him to rejection, and makes it easier for him to ask for what he wants. I think this is a great exercise for any of us: we all need a little help in asking for what we want!

Make the Ask

Rejection therapy is really about encouraging you to make the ask, and remember that the worst case scenario is hearing “no”. Once you’re desensitized to that outcome, it doesn’t feel nearly as scary as it used to! What are some things related to your business that you’ve been wanting to ask for? Maybe this issue comes up for you when you’re negotiating your rates, or looking for new clients, or cutting a deal with someone. Think about the big asks you’ve been needing to make. What if you just made them?

My best ask ever was getting to visit bead makers in Murano, Italy, when I was running my jewelry business. I was planning a trip to Italy, when I realized I would be very near the studio that the beads I used to make my jewelry came from. I had practiced bead making for a little while at that point, and my heart leapt at the thought of getting to visit and observe master bead makers. Before the trip, I reached out to them and they enthusiastically encouraged me to come to their studio. I even got to use their equipment and make beads along with them! If I hadn’t asked, I wouldn’t have had that experience. Making the ask made all the difference.

Can you think of a time when you made a big ask that worked out well? Think of the positive impact it made on your life. Asking is important! I encourage you to try out rejection therapy and work on asking for what you want and need. It will only help your business, and help you achieve your dreams! If you find you need some guidance or coaching, check out my packages under my Services page.

☮

Angela

Image Sources:  Katerina Radvanska, Jeremy Galliani

By |2018-11-08T20:18:40-08:00August 14th, 2018|Categories: Small Business, solopreneurs|Tags: , , , , , , , |0 Comments
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