[00:00:00] Fiona Johnston
We've made a lot of progress as a society in many of the areas that we needed to in the last few hundred years. But one thing that has not changed enough is money. If we want to be able to tip the scales towards the favor of marginalized people, we need to understand the secrets to making money in small business.
The more we talk about money and the secrets that usually stay at the golf club, the more likely we are to be able to make money. My mission is to get more money into the hands of good people, specifically good business people like you. This is Money Secrets, the place to learn about the money secrets of successful small business owners.
Because I believe small business can change the world. And in order to do that, we need to be making a lots of money. Let's go.
[00:00:51]
This podcast episode was recorded on the lands of the Wurundjeri people of the Kulin nation. And I'd like to acknowledge them as the traditional owners and custodians of this land and water that I live. work and play on. I'd like to pay respects to Elders both past and present and note that sovereignty has never been ceded.
This always was and always will be Aboriginal and Torres Strait Islander land.
[00:01:40]
Hello. This episode of Money Secrets is dedicated to one of my clients. Her name is Renata Dewalt and she is the founder of A1 Consulting. She is a sustainable packaging expert, and you should totally check her out, especially if you are trying to meet the new sustainable packaging guidelines. Now, Renata rightly called me out on something that I said in a previous episode, and I want to circle back to it. So what Renata called me out on was the fact that in one of my little mini tip episodes, I said something like that we have all of these different money thoughts running around our minds and some of them are really damaging. One of them is this saying that a lot of us have in our minds, which is you have to spend money to make money.
[00:02:37]
What I said in the previous episode is that that is a narrative that can be. extremely damaging to small business owners. But let's break it down a little further because of course, like everything, there's a bit of nuance there to unpack. Firstly, sometimes you do need to spend money to make money. So some instances of that will be when you have already fine tuned most of the elements of your business. And you are wanting to optimise something. So it might be that you need to hire a person to do X, so that you can focus on Y. Growing your team or outsourcing tasks that somebody else is better at than you, can be a great investment for growing your profitability, growing your revenue. But the sentence, you have to spend money to make money, I find, is usually being said by someone who is trying to convince you to spend money with them. My friend Mia Fileman would call this person a guru. Sometimes that person most definitely is a guru. There's definitely a kind of marketing message that really tries to lean on these money psychology sentences, these money blocks, these money beliefs, that so many of us have been socialised to believe, and one of them is that you have to spend money Now, let's talk about some instances where this sentence really leads small business owners in the wrong direction.
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Let's say you are a small business owner who has been in business for 6 to 12 months. Things are going pretty well. You've got some clients. Um, maybe you're a service based business owner. You could be a graphic designer or, copywriter or a photographer. And you've been in business long enough to have got through some of those really kind of awkward, messy bits at the start.
And now what you're trying to do is work out how to actually grow your business and your brand. Now, somebody who is going to teach you, say, to run, uh, meta ads, for example, and this is not calling out meta ads experts. Let's come back to that later in the episode, but let's say you decide to spend money to make money.
By spending your money on meta ads, Google ads, Instagram ads, Facebook ads, TikTok ads, something like that. Now, there is definitely a place for using advertising to grow your brand, but it is rarely in the first 6 to 12 months of your business. Now, when you are 6 to 12 months in your business, you actually need to be working on optimising your website.
So making sure that when people come to your website, that they do the thing you want them to do. That might be that you want them to book a discovery call. It might be that you want them to buy something, you know, straight into their cart if you're an e commerce business. So we want to be making sure that our website is actually doing what we want it to do.
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And the other thing that we need to be doing as a small business owner in those early stages. is working out who is the ideal client for my business. What sort of business or individual am I wanting to work with? And how do I position myself to get their attention? Now, if you are spending your very valuable money on ads to get people to your website, but you haven't yet worked out who your ideal client is, exactly what you want to do for them, And you haven't worked out yet whether your website is actually causing them to book the discovery call or buy the thing, then spending money on ads is actually going to be a big waste of your money. And I see a lot of business owners turning to ads when things aren't going well.
[00:06:11]
Now, let's flip it to when spending money on advertising is a great way of spending money to make money. So, if you've been in business for longer than 6 to 12 months, Perhaps you've been in business for two, three, four years or more, or you started your business as an already experienced business owner or a very experienced marketer, and you've already optimised your website, so you know that when you get visitors to your website, they take the desired action that you want, they book the discovery call, they send you an email, they buy from your e commerce store, or take whatever other action it is that you want them to take, You've already optimised that and you are converting from visitor to customer at a really nice rate.
[00:07:00]
It's very broad, but we'd want to see that at least at 2 percent of your visitors actually converting to customers. So you've already optimized that. You've already worked out exactly who your ideal client is, exactly what it is that you want to do for them, exactly what your price point is going to be.
[00:07:21]
So now when you turn the ads on, you are so much more likely to get the right people looking for the right product or service coming to your website and buying. That is one of those instances where. Spending money will help you to make money if it's done right. So see how there's a nuance there, and you can't just put a blanket statement on something that says you need to invest money to make money. I want to also call out something that is too nuanced for that sentence to take into account. In the first couple of years of our business, the thing that we have the most of is time. And I actually think that it's a really crucial and amazing opportunity. For business owners to be able to use that time that they have before they have a big client list and emails, endless emails that need to be answered, and all of the other things that come along with owning a business, because we have that excess of time, we can actually invest all of our time into skill building, training, and actually doing the thing, picking up the phone and calling a prospective client, or Sending an email to, you know, the person you met last week, or working out how to market yourself on Instagram. You've got time to invest in all of those things. And whilst, yes, you could also, or instead actually, invest money in those things, there's no guarantee that those things are going to work because you haven't tested them yet. When you move to later in your business, So maybe once you've been in business for five years or maybe even longer, you will find that your time is actually more expensive than your money.
[00:09:00]
This is a concept that can be a little bit hard to get your head around, especially if you are new to business. But the bigger your business gets, the more expensive your time becomes. So that's when your time becomes more expensive than your money. That is also a really great time to invest money to make money.
[00:09:12]
So hopefully me pulling out these examples has helped you see that while sometimes spending money can help us to make money when we spend it on the right thing, but to say that you have to spend money to make money is factually incorrect, and it's often being said by somebody who is trying to get you to buy something from them.
The next time you see this in somebody's marketing, just take a pause and consider whether, you know, how much certainty do I have that this particular investment is going to make me money? If I do think it's going to make me money, then what sort of return am I looking for? If I invest, invest a hundred dollars, am I looking to have $500 return?
If I invest $2,000, am I looking for a $20,000 return? You know, what is the return that I'm hoping to get from this investment? And is this a good use of either my time or my money?
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I hope that was a helpful episode. See ya.
[00:10:24]
Thank you so much for listening right up to the end. I hope you enjoyed this episode of Money Secrets, where we talk about the money secrets of successful small business owners.
If you enjoyed the episode, I'd love it if you'd subscribe to the podcast. But leave us a review or share this episode with one of your friends. I hope you learned something. I hope you got a new perspective and I really hope you enjoyed the listening experience.
