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Money is the lifeblood of any business. And whether your business has a strong pulse or ends up on life support depends not only on how much you make, but how you manage what you make. It’s about money management. Even if sales are good and there’s money coming in, there can be problems. Why? Because it’s not just about bringing money in, it’s about what you do with it once you’ve got it.

Money management is one of the biggest challenges business owners face. When business owners are struggling, money is often a big part of the reason for their struggle. Issues like cash flow, out-of-control debt and expenses, working hard but not making the money that matches their effort, being derailed by taxes or unexpected expenses, and not receiving regular owner’s pay are common.

There are a number of factors that contribute to those financial struggles, but each one of them comes back to two central themes – lack of intentional planning and mindset. Fortunately, no matter how new or well-established your business is, there is always hope of turning things around if you change those two variables.

Let’s look at the issues with mindset and lack of intentional planning in mind.

Out-of-Control Debt, Expenses, and Cash Flow

Most business owners make decisions about debt and expenses without really thinking it through. They look at what’s available in the checking account and, when the account is flush, they spend, spend, spend. When the account is low, panic sets in and they go into a poverty mentality where they frantically try to rein it all in. What results is a roller-coaster ride that cycles through big highs and low lows that threaten sustainability and affect cash flow.

This kind of financial roller-coaster ride isn’t healthy for a business. It also isn’t healthy for the stress level of the owner either! If you’re experiencing highs and lows – and living with feat-or-famine cycles month to month – now is a good time to ask yourself why. Your mindset and the choices you make as the business owner affect your financial stability.

Are you that business owner who makes decisions based on how much is in the account? Have you taken the time to look at how much is coming in AND where that money is going? Do you have an idea of which expenses are actually an investment in the future of your business – rather than just a drain on the account every month?

The truth is, some expenses (even loans or lines of credit) are necessary and some aren’t. Some serve you and your business, and some don’t. You have to decide which are which. If you’re spending money on something that isn’t serving your business, you’re blowing money that could be going somewhere else – like owner’s pay or building up reserves for future purchases or growth.

If you break out of the feast or famine mindset and weed out the expenses that aren’t truly investments in your business, you can overcome the challenges of expenses, debt, and cash flow. It really doesn’t have to be a roller-coaster ride month to month.

Lack of Owner’s Pay 

Working hard but not having the money reflect the time, energy, and effort you put in can cause big problems in both your business and personal life – not to mention a lot of stress. So many business owners struggle with money management and are only paying themselves when there’s “extra” money left over after everyone and everything else has been paid. They’re putting in long hours and tons of effort, but have little to show for it. Unfortunately, some see that as the price you pay for being the boss. It’s time to nip that little bit of mindset nonsense in the bud. Trust me, there is no trophy for having a long-suffering mindset and depriving yourself of owner’s pay!

There’s a problem if you’re not paying yourself what you’re worth on a regular basis. If your business fails to pay you, your business is failing. If you are working hard and running a business, you deserve to get paid for your time and effort! Make that your mantra. Make that your top priority when it comes to managing your business finances, and put a money management plan in place to ensure that happens.

How do you ensure you get paid? Let’s go back to the discussion of out-of-control expenses and debt. You’d be surprised at how much more you could pay yourself if you’re making intentional decisions in those areas. Be proactive. Consider your pay to be the top priority – just like the mortgage that provides a roof over your head in your personal budgeting. Most people will cut back in other areas to be sure that mortgage gets paid. You need to have that same attitude about paying yourself.

So, flip your mindset and take an honest look at revenues and expenses. Consider how much you want or need to make in pay. Then go back and adjust your expenses based on that number. I’m not saying all of the decisions will be easy or clear-cut, but your personal financial success is just as important as the success of your business… and it won’t just happen. You have to (and you can!) be intentional and plan to make it happen.

Having Money in Reserve for Taxes and Unexpected Expenses

Are you one of those people who is shocked every year at how much they owe in taxes and has to scramble to get the tax bill paid? Do ‘unexpected’ expenses throw your business finances into a tailspin? Planning and mindset also play a big role in how you handle taxes and ‘unexpected’ expenses.

Here’s the hard truth. We’ve all heard the saying that there are two things in life that are certain: death and taxes. The other thing that’s certain is that stuff happens. Calling unexpected expenses unexpected may make us feel better when we didn’t plan ahead, but better money management can help us be prepared for what the future might hold. We can’t foresee every possible scenario of what could come up, but we can be setting money aside for anything that does – because we know something will. If you don’t see yourself as a planner or a saver, shifting that mindset will increase the potential for you and your business to succeed.

When you look at money management from a mindset and planning perspective, it’s easy to see how some simple shifts could drastically change things for the better. Money management may be one of the biggest struggles business owners face, but it doesn’t have to be. It’s as simple as setting priorities, having a system in place for managing the revenue you have coming in, and planning for the future.

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Schedule a complimentary session with Cathy to discuss your business finances now!