How to Financially Survive Holiday Inventory Prep

Inventory and Cashflow During the Holidays: At Peace With Money

The holiday season is fast approaching, with Halloween on the way this week. With this season comes the time forstocking up your inventory. You want to make sure you have plenty of product available for when shopping season begins! The challenge of this time of year is that you want to build up your inventory while still having cashflow. That is, manage your financial responsibilities while increasing your spending on supplies. This can be a difficult balancing act for solopreneurs, so I’ve made a quick list of tips to get you through your holiday prep safe and financially sound!

Holiday Inventory Prep Tips

  • If you’re taking orders, consider securing a deposit from your customer so you can pay for the supplies before production.

 

  • Buy wholesale! Make sure you’re not paying sales tax for materials your plan to resell. This will likely require that you obtain a resellers permit for your state, so be sure to check. Negotiate the best terms with your suppliers. Can you get a discount for buying in bulk?  Will they give you net 30 or even net 60 payment terms, meaning you can receive the items now but not have to pay for them until later? If you find yourself feeling nervous about asking these things of your suppliers, please check out my article on rejection therapy for a little inspiration, then pick up the phone and stick up for your business!
  • Increase the dollar amount of each sale. For example, when I ran my jewelry business, I was able to do this by selling sets of jewelry. I would sell a pendant combined with a pair of earrings, making it easier for customers to make the decision to spend more money at my business. Even though I gave a small discount, I still increased my sales, and my profit!

Manage Cashflow and Inventory: At Peace With Money

  • Do you know your best-selling item? Make sure you have plenty on hand for the holidays! This will increase profits come shopping time.
  • When it’s all over, use a portion of your profit account to celebrate. You’ve worked hard during the holiday season. Make sure you reward yourself. To learn more about a profit account, I recommend downloading the first 5 chapters of the Profit First book on my website.

If you have more questions about balancing inventory and cashflow, don’t hesitate to schedule a discovery call with me! 

If you want to read more about the issues of inventory vs. cash flow, I recommend checking out my articles “Why Selling More Doesn’t Mean Making More” and “The Stages of Financially Growing a Business.”

Angela

 

Image Sources: Drew Beamer , Annie Spratt

The Stages of Financially Growing a Business

Stages of Business Financial Growth: At Peace With Money

Starting a business is a financially intricate process. I’ve written at some length about avoiding financial pitfalls and myths, and important first steps, but something I don’t see many people talk about are the stages of growth a business goes through as it financially matures. Today I’m mapping these out for you, so you know what to expect on your solopreneur journey.

First, some general advice. When first starting a business, you have two priorities: a) get the word out about your business, and b) keep your expenses low. Doing these two things from the get-go will set you up for business success. If you need some more guidance around wrangling your business expenses, check out this article of mine. 

Fledgling

As you build your business, focus on streamlining your processes. Figure out how you can refine them to be time efficient. Keep track of time spent and ensure you are making a living wage and being cost-effective with your expenses. If you’re purchasing a lot of materials to create a product, look into bulk purchasing your supplies.

In this stage, it’s also important to cultivate the relationship with your current customers. Allotting time or room in the budget around strengthening customer relations and making sure your first customers have exemplary experiences with your business is very important. A good reputation sets you up for success, and good word-of-mouth exposure can eliminate advertising costs later on.

Growth

As your business begins to grow, again refine your processes to cut costs and increase efficiency. As you receive more orders or draw in more clients to serve, your processes may have to adjust to accommodate these larger numbers. You will likely find yourself spending more time doing production or client work. Consider the possibility of delegating or outsourcing some of your tasks, or find other solutions. Work on further defining your role in your business – what are the pieces that you want to keep doing yourself? What can you hand off? Continue to keep an eye on your bottom line.

Maintaining and Sustaining

Once your business establishes some staying power and becomes financially stable, it’s time to move to the next stage. Make sure your business is sustainable for you by keeping it fun and engaging. Continue to challenge yourself. Incorporate new ideas and investigate what role your business can play in the lives of your customers, clients, and community.

Stages of Growing a Business: At Peace With MoneySearch for feedback. Listen to your customers to continue innovating and refining your product or service. If you have a team of other people, focus on them to keep things fresh and engaging. Brainstorm together and streamline your business partnerships.

And of course, again make sure you are earning a living wage. Continue to examine your finances and find ways to improve the financial sustainability of your business. Part of the reason you created it was to meet your needs, after all!

Lastly, at all stages utilize Profit First. This is an essential part of every step, especially the fledgling stage. Setting up money systems that allow you to have a steady paycheck and stay focused on your own financial needs will help you create a business that won’t feel draining to operate.

I hope this little walk-through helped inspire you to work on your business idea! If you need more guidance, take a look at my offerings.

Angela

Image Sources: oldskool photography,  rawpixel

How to Get The Most Value From Your Bookkeeper

How to Get the Most Value Out of Your Bookkeeper: At Peace With Money

As a business owner, every time that you outsource a task for your business, you want to make sure you are getting the highest value out of that task. Particularly if you are hiring a professional for services, such as a CPA or bookkeeper, they should not only provide the service you need to keep your financial records up to date. They should also be able to provide you with insight or advice into your business finances. They regularly see all the financial facts of your business right in front of them. If they aren’t interpreting and discussing with you the trends they see in your business,  or they aren’t talking about or making suggestions to support the health of your business , they are actually doing you a disservice. Financial professionals can easily access that information. Making sure you hire someone who is willing to talk to you about those things and provide information that will provide you with much greater value from this professional service. If you are able to apply these financial insights, your business will benefit greatly in the long run.

This point also illuminates the value of hiring a professional in the first place. Hiring someone who knows what they’re doing to both keep your books in order and analyze financial trends is important. Paying a professional a higher wage for a better quality work, rather than hiring someone who doesn’t do the job well, will greatly benefit you and your business. Someone who can provide you with valuable information about expenses, cash flow, profit margins, and other financial inner workings of your business can prove invaluable in the long term. Think of hiring a talented professional as an investment in your business’s financial wellbeing.

How to Get the Most Value Out of Your Bookkeeper: At Peace With Money

When you are looking to hire a CPA or bookkeeper, inquire whether their services include providing these insights and consultations. If you are already working with a particular professional, ask them if they are willing to start discussing their financial findings with you. If not, maybe it’s time to find someone else – because that valuable financial knowledge of your business is absolutely worth it. If you’d like to speak with me about my financial services, schedule a discover call!

Angela

Image Sources: Sergey Shmidt , Sharon McCutcheon

Why Selling More Doesn’t Mean Making More

I assume that when you started your business, you wanted to put money in your pocket. Whether your goal for that money is to use it to fully support yourself or your family, or to fund a particular life goal, your business is meant to supply you with money.  As such, making money by selling product is often the business owner’s most common focus. Enter, the hustle timeline.

The Hustle Timeline

When we first start a business we have to get out there and hustle to sell something; to get things moving. Eventually we start rolling. But at some point we want to make more money, and we believe that growing our business is the way to make more profit.

So, we hustle some more. We do more gigs, we move more product, we sign on more clients. There is more money coming in, but there still doesn’t seem to be enough. Then we set our sights on a particular goal, the gig, the number, the client that’s big enough to put us over the edge so we can put more in our pocket. But it never really happens. Here we find ourselves trapped in the timeline; always hustling, and never quite reaching our goals.

The Answer

There are only two ways to put more money in your pocket: increase margins or decrease expenses. If we are using the same labor, materials or processes as we increase sales we are increasing our output, but not gaining anything. Perhaps we may have even added to our spending to buy that new printer or new app to handle the increase in sales volume. If we haven’t examined our spending, we aren’t gaining anything. Taking a good look at our margins and our business expenses is an important step to upping the profits of our business. 

Why Selling More Doesn't Mean Making More: At Peace With Money

To examine your expenses and profit margins, ask yourself these questions. Is your product or service priced appropriately, or are you undervaluing it? Comparing your prices industry standards can help you suss out an answer. So can calculating in materials, labor, and other costs. If you’re unsure how to price your product or service, do some research to get other opinions and methods!

Are you delivering your product or service in an efficient manner, or are there places you could cut time and expenses? Look at your processes, and be discerning. Have you reviewed your business expenses lately to see if it’s really all necessary?

Ask yourself these questions and review the inner workings of your business. This is where your profit is hiding. Let’s get it into your pocket.

Angela

Image Sources:  Roman Kraft ,  Nik MacMillan

Business Expenses Are Not Free

Business Expenses Aren't Free: At Peace With Money

There is a common misconception among business owners: thinking that “I will write that off as a business expense” means it’s free. Let’s bust this myth! Our business (and bottom lines) will be all the better for it. 

Why Do We Think This?

The root of this misconception probably stems from our experiences as employees of larger companies. As an employee, business expenses are often “free” in that you get reimbursed for them or your company is covering the expense. However, now that you own your business, the expense is included in your bottom line. Business expenses no longer disappear into the ether of corporate bureaucracy – owning a small business means every expense shows up. 

A New Way to Think About Business Expenses

It’s true that as a business owner, you do get a tax write-off for business expenses. But it is also true that an expense is still an expense; the money still leaves your accounts. It’s important that, as business owners, we rewire our brains to recognize this. Business expenses are not equal to receiving things for free. Free stuff is still the best option!

Business Expense Advice: At Peace With MoneyRecognizing this may mean we need to reexamine our approach with expenses in general. When making a purchase, it’s important to ask yourself, “Is this expense actually adding value to my business? Do I really need this?”. Often we are pressured into spending money on our businesses that we don’t really need to, especially when starting out. Evaluating our priorities and finding financial clarity in our businesses can be a helpful step in the right direction. 

As my final tip, I’d like to present a favorite Profit First strategy of mine. Ask yourself, “Can I wait just one more day to make this purchase?” This simple question can again help you in evaluating your financial priorities, and buy you more time to get your business finances in order. 

 


Angela

Images: rawpixel.com , Brooke Lark

Three Money Myths to Avoid When Starting a Small Business

Avoid These Three Money Myths: At Peace with Money

If you’ve ever expressed interest in starting your own business, you’ve probably come across a lot of money myths designed to discourage you. I’ve busted three of the most common ones below. Here are some ways to avoid the pitfalls they warn of:

“You have spend money to make money.”

One of the most common money myths would have you believe you need a lot of capital to get a business venture off the ground. The great thing about starting a small business is that it can be just that – small. You don’t need a lot of money to start testing out your business idea now, and you can always scale up later.

It also depends on what type of business you’re looking to start. Service-based business may not call for any upfront investments in materials or supplies. Craft business may be able to source up-cycled materials at lower costs. The possibilities for starting business without a lot of money are numerous. For more reading on this subject, I suggest The Toilet Paper Entrepreneur.

“You have to look successful to be successful.”

This money myth is sort of the “keeping-up-with-the-Joneses”  mindset of the business world, and many fall victim to it. Just the other day, I was listening to Hilary Hendershott’s Profit Boss podcast, and she was discussing an earlier part of her career in the mortgage business. She felt that in order to be a successful professional, she needed to project a certain image. She ended up spending all her money to keep up her appearances, and eventually had to turn it around and re-evaluate her financial priorities.

Ultimately, she learned an important lesson – success can come without material trappings. You don’t need to get caught up in spending your startup cash on the best technology or a new car, and you certainly don’t need to fret because your office doesn’t look like Google HQ yet. (Anyway, does anyone actually use those nap pods?) Evaluate what success means to you, and make sure every dollar you spend in your business serves a purpose that agrees with your goals and values.

“Your income becomes less dependable.”

This is a myth-bust within a myth bust! In a Wisebread article on this same topic, I read, “As a business owner, I seemed to have little or no control over my income. I worked hard all the time trying to bring in income and win new business. Sometimes there was a lot of income, but sometimes there was none, despite my best efforts. My income ultimately depended on fickle customer decisions and economic forces beyond my control. Income for small business owners can be quite volatile.”

Clearly, this particular business owner was using the GAAP (Generally Accepted Accounting Principles) Formula, rather than the Profit First formula. Profit First asserts that Sales – Profit = Expenses. This equation lets business owners create a system to stabilize their income and plan for incoming expenses. The author above probably would have benefited from the free download of the first 5 chapters of the Profit First book! I know I definitely could have benefited from Profit First when I was just starting out as a small business owner. 

If you’re looking for more reading on this topic, definitely download those chapters and read through my other blog posts! If you think you can benefit from some one on one help with your business finances, schedule a curiosity call with me. I wish you the best business beginnings – don’t let these money myths stand in your way!


Angela

Image sources: Thought Catalog, JoelValve

How to Boost Your Revenue Now!

Boost Your Revenue Now! At Peace With Money

Alright, I’ll just come out and say it: invoice your customers! I know it sounds obvious, but you would be surprised how many business owners put off that task of invoicing their customers. Doing just that can help you boost your revenue immediately.

You know your business needs cash flow to survive. You cannot pay yourself or your bills or buy the things you need to keep your business moving forward if you don’t have the cash flow. Invoicing your customers is your way to secure that cash.

Invoicing

If you’re running your business with recurring billing, or better yet, recurring automatic payments, then you already understand the power and importance of invoicing. With that type of system you can better plan for your revenue stream and upcoming expenses. In contrast, if you are doing any type of project-based or one-off billing, you need a system in place to get your invoices out to your customers as soon as possible. It’s likely that your customer will sit on that invoice for a couple of weeks before they bother to get it paid. All the more reason to invoice them as quickly as you can!

The Follow-Up

After you send the invoice, follow up with the customer to make sure you get paid. Again having a system in place comes in handy here. If you don’t get payment within a few days, resend the invoice, send a reminder or call them and ask for payment. Calling gets results. As a bookkeeper, I know which vendors are going to call me to ask for payments and which aren’t, so I pay those that don’t ask last.

Boost Your Revenue Now! At Peace With MoneyYou need to be the one following up to get paid. If you truly don’t like this part of your business, ask yourself why. After all, you started a business to make an income, you are offering a product you believe in, and your customer benefits from your product. You deserve to be compensated!

The main takeaway here – to boost your revenue immediately, get a system in place for invoicing and following up with your customers. If you need help putting together an invoice system, maybe it’s time to work with a profit strategist. You know where to find me!


Angela

Image Sources: 1, 2

My Profit First Story

My Profit First Story - Angela Keller, At Peace With Money

How did I get started with Profit First? Well, prior to starting my bookkeeping business, I was a mompreneuer jewelry designer for 11 years. I had a lot of good customers, and supplied a number of retail stores with jewelry including several museums across the country. I frequently had people work for me to help put together jewelry for my orders and for individual shows. By all counts, I was successful.

There was just one problem – I never seemed to make any money. Instead, I was always spending money on more supplies, or chasing the next big order or next big venue that was going to help me make some “real money.” In reality, I’m pretty sure my employees made more than I did! When my husband and I started talking about how to pay for college for our oldest daughter, I knew I was going to have to do something else in order to bring the cash we needed.

Enter Profit First

In the process of establishing my business as a bookkeeper, I came across the book Profit First. This book was a game-changer for me; it taught me how to manage my cash in order to actually get paid as a business owner. The concepts of this book strongly resonated with the struggles I faced while running my small jewelry business.

My Profit First Story and Why I Help Solopreneurs: At Peace With Money

I know many solopreneurs and small business owners could benefit from these systems, and as a bookkeeper, I am in a great position to help make that happen. I use the Profit First system in my own business and have implemented it with some of my clients. In my own life, it’s given me the peace of mind to know I’m able to pay the college bills for our second daughter, have money available for estimated tax payments, and my SEP IRA. With my clients, particularly those with varying income, I have used the Profit First system to help them overcome challenges like repaying lines of credit, accumulating a buffer in their tax account, and creating a plan to smooth out the ups and downs of the owner’s income. 

Whether you decide to implement this system on your own, or find you need the help of an accountability partner, you need to read Profit First and start using the system. The sooner you do, the sooner you can become permanently profitable! You can download the first five chapters at the bottom of my home page, and read more about the Profit First services I offer. I know the system can help you find the profit in your business.


Angela

The Cash Flow Problem Facing Healthy Businesses

business desk with flowersIt’s great to have a healthy cash flow, but a cash flow without a plan? Not so great. Lacking a plan when it comes to managing cash flow can definitely cause problems.

Let’s say Barbara owns a business. She makes a nice cash flow every month. She pays herself a high salary and maintains a fun, comfortable lifestyle. Barbara also has a large monthly payment for last year’s taxes, past-due vendor bills, and every week she scrambles to make payroll. Barbara makes her decisions based on the fact that the money just keeps flowing. This is bank-balance accounting. It’s a stressful game that is played almost weekly, with a few sleepless nights here and there.  

What if Barbara had a plan for all of that cash coming in? What if she actually allocated some portion of it to work in her business, some portion to pay taxes, and a portion to pay for her lifestyle? With a bit of planning anHow to Manage Cash Flow At Peace With Moneyd a few adjustments to her habit of treating her cashflow like a personal piggybank, her business would be much less stressful.

Profit First is that cash flow management system. This is the methodology I specialize in helping small businesses implement. You can schedule a call with me for a discovery chat about Profit First, or read up on the system here.

Angela

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By |2018-03-05T19:51:16+00:00March 5th, 2018|Categories: Cash Flow|Tags: , , , |0 Comments