How much are you reinvesting back into your business?
After doing a little number crunching, most people find out that they literally have nothing to save or put back into their business. If you can’t tell where your money went, you’re in the right place; The Automation G.O.A.T. has your back. Let’s discuss money management.
What’s money management?
Money management is the process of directing your money where to go, saving it, investing, or spending it on something worthwhile.
I decided to handle this topic because we have been talking a lot about branding, [link] while I know most of you have a challenge in managing your finances.
Last year, I researched and realized that I had given away more than half a million dollars to people; that’s about half of what my company makes right now. This was the money that I could have used to run ads, launch branding and automation offers, or just grow my business.
I’m not saying I regretted doing this because I invested it into personal and business relationships, but the truth is I wasn’t managing my money correctly. That can happen to you, as well.
Sometimes, you can make a lot of money, but if mismanaged, you’ll still be “living paycheck to paycheck”.
I know of people who are excellent in money-making but poor in managing their finances.
Mistakes made when managing money
The number one reason why new businesses fail in the US is because of financial cash flow. If you don’t know how to manage your finances, it’s easy to increase expenses and reduce the profit margins.
The most important thing for any new business is to make a profit that can enable it to move forward. A business is only a business if it’s making money for you. Otherwise, what’s the point of even running one?
The first mistake entrepreneurs make is increasing their expenses and getting little to no profit to reinvest into the business.
e did make some money management mistakes as a brand. At one point, we hired the wrong people to manage some of our business processes and ended up wasting money.
- Avoid the shiny object syndrome
The point is, whenever you have money, learn to put it where you know it can yield twice the results. We did reinvest money into skilled people who could run our ads, better create our offers, and manage our clients.
Most entrepreneurs have the shiny object syndrome. They tend to purchase any new course that comes along, books, or mentorship programs.
The worst thing is, you tend to feel like you’re actually investing in your business. In a sense you are, however it’s not efficient. Not all of them are going to help you scale your business, but you don’t need all that to grow.
How to properly manage your money and achieve business success
Would you want to avoid the mistakes that most entrepreneurs make when it comes to money management?
Well, here are some tips:
- Establish goals
The worst mistake you can make as an entrepreneur is not to set SMART financial goals. I’ve seen far too many people fail at getting ahead in their business simply because they don’t set goals. The product/service is on point, their drive is on point… but they don’t set goals.
You see, goals help to keep you accountable. They give the purpose and the strength needed to work. It’s easy to set financial goals. All you need is your financial information, understand your needs, and set your priorities straight.
You cannot opt to buy a car, for instance, when you don’t have a steady stream of income to fuel and pay for the insurance cost. That is where the issue of assets and liabilities comes into play.
Choose to document your goals, as well. Written goals are easier to achieve.
- Track every penny
How often do you wonder where your money went after some time? One minute you are running the table and another minute it all disappeared into thin air…
What do you think happens?
Do you track your expenses? If you do, you will find out that you did spend money on things that don’t really matter.
Do you know how to create a budget for your money?
Having a budget helps to tell your money where to go instead of wondering where the money went. Start today. Track every coin to reduce wastage.
- Your business money is not your money
Business owners tend to use their business money to purchase personal expenses. .
I know you might tend to disagree with this, but you shouldn’t use the money unless necessary. Since you are central to your business’s running, you need a comfortable life to function effectively. However, don’t let that be the norm.
This is how great entrepreneurs do it:
They begin a business, run it until it breaks even, and collect profits from that business and use it to launch another business. That means they will have created multiple income streams.
- Hire an accountant
The last tip is to hire an accountant. If you can’t do money management alone, why not hire someone to do it for you. I mean, that’s what accountants do, right?
It’s the same thing as going to the doctor or a lawyer; If you are sick, you visit a doctor. If you want to buy a property, you need a property lawyer. And if you have a toothache, you will go to a dentist.
Similarly, if you are poor in managing money, hire an accountant. He will keep all the records for you, fill your tax returns, and develop yearly financial plans for the company.
The moment you know how to manage your money as an entrepreneur, you will scale faster and attain your life goals. But don’t worry if you are not yet there. Like most other things, it’s not a science that only the smart can master but an art that anybody can develop over time.
P.S. Want to learn more about how to crush your goals as an entrepreneur? Hop into my Wavemakers group and join the discussion!