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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Is Your Business Serving Your Life, Or the Other Way Around?

As a business owner, it can be tough to make sure you don’t get caught up in the hustle all the time. I’ve worked with many business owners whose businesses were definitely the main center of their time and attention, but who weren’t really getting their needs met that way. This is really unfortunate to see, yet so common. Today, I’m going to walk through an exercise you can use to evaluate whether your business is serving your life, or the other way around, and then suggest some next steps. Let’s dive in:

Reflect

To evaluate whether your business is serving your life, or the other way around, there are many different questions you can ask yourself. I recommend setting aside at least 20 minutes to reflect on a few of these questions. Pick whichever call to you:

  • How are my needs being met by my business?
  • What is my primary emotion while performing business tasks, and why?
  • What needs are being fulfilled by my business? Which are not?
  • Do I gain anything by running my business? Do I miss out on anything?
  • Is there balance in my life between all the different roles I play (ie. business owner, friend, partner, etc.)? Which role do I spend the most time in?
  • What are my goals in life? Is my business helping me get closer to reaching them?

Re-evaluate

Once you’ve sat with those questions, you will have a clearer idea on where your business might be running your life. Balance between your business and other parts of your life might be out of whack, or maybe you simply aren’t getting paid enough. Now that you’ve acknowledged the issue at hand, it’s time to re-evaluate. Ask yourself, “How can I re-orient my business so it serves my life?” Start thinking about and researching new strategies you can use to close the gaps between your needs and what your business is providing.

A couple pointers for inspiration: if you feel like you’re not getting paid enough, check out my article on considering your hourly wage and my article on creating an owner’s paycheck. Another good place to look for solutions is my series on money-mapping.

Take Action

After you’ve researched and thought through strategies, it’s time to take action! Your business doesn’t need to run your life. Acting decisively to end this cycle will only help you. Whether it’s opening a separate account or deciding on a day every week where you look at your numbers, any action you take is a step in the right direction. If you work well with an accountability partner, you might enjoy my profitability coaching services. Feel free to schedule a call with me to see if we’d be a good fit.

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Angela

By |2021-04-09T09:55:13-07:00August 18th, 2020|Categories: Money Mindset, 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 II

Last week, I talked about money-mapping, why it’s helpful, and how you can get started. Today, we’re going to dive into more money-mapping using the Profit First methodology. Profit First posits its own money system, pictured in the above map. Its goal is to ensure that you as the business owner get paid.

Solopreneur Paycheck

In order to ensure that you actually get paid by your business, you need to portion off a certain percentage of your income, and then designate that for your personal finances. This portioning off is exactly what the Owner’s Pay account is for in the Profit First system. The Profit First system advocates for creating separate accounts for all your different pots of money associated with your business. If you can’t do that or don’t want to, I advise using a spreadsheet. You can use this to keep track of how much money is designated for Profit, Owner’s Pay, Taxes, and Operating Expenses.

So, back to that Owner’s Pay Account. Once you put a percentage of income in it, you then transfer some portion of that to your personal account, which serves as your solopreneur paycheck. When I work with clients, we work to figure out what portion should go into this account. That amount depends on how much the business makes in revenue, and what portion of their personal expenses they want to cover using income from their business. If income in their business varies month to month, we decide on an amount that they transfer to their personal account, leaving the leftovers to act as their cushion during slow months. This way, the business owner receives a steady stream of income, even if their business varies from month to month. This is the solopreneur paycheck.

The Function of Profit

Cordoning off funds for operating expenses and taxes may seem practical enough, but the Profit account is what makes the Profit First system unique. The profit account accumulates and then is distributed quarterly. Business owners are encouraged to use their Profit Distributions to reward themselves for their hard work. This keeps the owner excited about and invested in the business. It also discourages any tendency to reinvest everything back into the business, or over-save.  Rewards can range from a day out to charitable giving, to really anything you want!

In part three of this series, I’ll discuss what applying this model to your business can look like, and integrate all the info we’ve gone over so far. If you’re enjoying this and would like more, check out part one! You can also head to my services page and schedule a call with me. Money mapping is one of my favorite subjects. Come talk about it with me!

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Angela

By |2020-01-17T01:48:43-08:00January 17th, 2020|Categories: Personal Spending, Profit First, solopreneurs|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!

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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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