[00:00:00] Fi Johnston
Learning to manage your money is actually the key to making more. When you can understand where your money is going to go after it's been paid to you, it gives you this new information and this new clarity about the fact that your prices probably need to increase. If your business is not making enough money to pay you a decent wage, what are we doing it for?
Intro
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. Let's go.[00:01:00]
Acknowledgement of Country
This podcast episode was recorded on the lands of the Warri people of the KU 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 seeded.
This always was and always will be. Aboriginal and Torres Strait Islander land.
I am Fi. I am the host of the Money Secrets podcast. I'm a chartered accountant, a small business expert who's been helping founders with their money for 25 years. So you are in safe hands. There is one thing I know about and it is money and small business.
So let's talk about how managing your money is the key to making more of it. So the first thing that I wanna bring forward is that lots of small business owners tell me that they'd love to know how to manage their money, but they need to [00:02:00] wait until they're making more of it first. And I get it. A lot of us think that our businesses are either not sophisticated enough or not developed enough, or not organized enough for us to be able to invest time or money into building our skills to manage that money.
Actually, when we learn how to divide up the money that comes into our business and spend it in a way that actually works for us, it actually unlocks the ability to earn more money. The reason why this happens is because so many of us don't trust ourselves when it comes to money. We are scared that if we have too much money coming into our business, we won't know what to do with it.
We're scared that if we have too much money coming into our business, we're gonna owe the tax office or the A TO or the revenue office or whatever it's called in your country, that we're gonna owe money to the tax man, to the tax overlord. Because [00:03:00] we are so unconvinced about our ability to manage our money because we're scared that we won't be able to handle the responsibility.
The level of commitment required to bring in large amounts of money, we just don't bring in the money. So let's talk about this further. Managing your money is about understanding how much of the money that comes into your business is for different parts of your business. For those of you who have read Profit First, you will know exactly what I'm talking about.
For those of you who haven't read Profit First, I am a huge fan. Profit First is a book that was written in 2012 by an American called Mike Malowitz. Mike, I'm sorry if I'm butchering the pronunciation of your surname, but I'm pretty sure I got it at least close to right. So Mike wrote this book called Profit First.
What's really cool is that Mike is an entrepreneur who's run many successful businesses. He sought the advice of [00:04:00] lots of accountants and bookkeepers and financial people, and he always felt that his businesses were really successful on paper and successful through the eyes of his accountant and his bookkeeper, but somehow there just never seemed to be any money.
Does that sound like something that happens to you too? I actually see this so much. People who have really successful businesses on paper actually don't have enough money in their bank account to manage their day to day or the week to week of their business. And this causes a huge amount of stress. So Mike really thought about how can I actually change this approach?
To managing my money so that my business looks successful on paper and in my bank account. I won't go into the whole process of Profit first, but I do highly recommend that you get the book. And I also really recommend that you consider coming to Join Good Money Club because we learn about Profit First every month and every week.
We [00:05:00] actually do our Profit First, transfers together. A community. So let me just give you the overview of profit first. One of the things that Mike talks about in the book is that accountants, that's me by the way. Accountants talk about profit in this way. They say income or revenue, less expenses equals profit.
In other words, whatever's left after you've paid all of your expenses is your profit. Now that's a really passive way to be thinking about the profitability of your business. Like there'll be profit if there's any left after I've paid all of my bills, and that's how most business owners think about and manage their money right now.
What he did was flip the script to say, well, what if I thought about how much profit I wanna make first, and then my calculation is income less profit equals expenses. In other words, I will [00:06:00] protect my profit before I spend money on expenses. So in practice, what this looks like is having different bank accounts for different aspects of your business.
You would end up, if you decide to go down the Profit first road, you would end up having a bank account for income that your clients pay into. And then you would have four other bank accounts. Most of you would have another four. And those bank accounts would be people costs. Or owners pay operating expenses, tax and profit.
What we do is we decide in advance what percentage of your income you want to be your profit, and you can only spend the rest. So for example, if you wanted to make a profit of 10% of your income, that means you can only spend 90%. On your expenses and your tax and everything else. If you wanted to make a profit of 50%, and this would be relevant if you were a sole trader or a digital business, you can only spend [00:07:00] 50% of your income on your expenses, your people, and your tax.
So see how it really flips the script. It's all about deciding what percentage of your income is going to go to the different elements of your business. Now, I cannot overstate the amount of calm and clarity that using Profit First will bring to you as a small business. If you set it up right from the start, so when you work out what percentage of your income is going to go into your different bank accounts, and you actually listen or you take note of whether or not there's money left in those bank accounts.
That will help you so much to guide your decisions. So what I really love about Profit First as a money management tool is that it really gives you the clarity immediately just by logging into your bank account. So when you log into your internet, banking can see immediately whether you [00:08:00] have any budget for operating expenses.
You can see immediately what. Money you have there for your tax whenever the tax man sends a bill. And you can also see what you have in the tank for people costs. So if you are clear about what your weekly people costs are, net of tax. You'll be able to see instantly how many weeks of pay you already have in the bank.
So this clarity and this calm that comes from knowing that the different elements of your business are taken care of, helps so much in small business.
Good Money Club Ad
Are you a woman in business who wants to make more money and impact through your small business? Good money club could be for you. In Good Money Club, we have no more than 45 members and in the community we are working on making and managing more money.
The doors to the club are open right now and they close on Sunday, the 5th of [00:09:00] October, 2025. We won't be opening the doors again until next year, so if you are keen to join, the time is now.
I wanna come back to the point now that I made at the start of this episode, which is that I believe that so many small business owners do not trust themselves when it comes to managing money.
So many small business owners tell me that they are so scared that they're going to owe money to the A TO or to the tax board, and that stops them from making money when we don't trust our ability to manage the money that's coming into our bank account. We are more afraid of money coming in than we realize.
So this is what I really love about learning to manage your money, is it actually gives you so much calm and confidence and clarity about how to deal with the money that comes into your account. It allows you to trust yourself when it comes to earning money and when you trust yourself and you trust your ability to [00:10:00] spend your money and invest your money in ways that work for you and your business, it removes the fear of bringing more money into your business.
The other thing that I really love about Profit First or Similar Money Management Tools and strategies is that it tells you instantly whether or not you are charging enough. So many of us think that the entire invoice or the entire revenue that's coming into our business is for us, and when you are pricing your products and services, thinking about this idea that that revenue is all yours, when you are not factoring in that the tax needs to get some of that, you have expenses and you should be putting money aside for profit as well when you start to realize how how much is actually going to come out of your revenue.
It actually gives you a lot of information about how to price your product and service. So for example, if you are a solo freelancer or a solo service provider, I [00:11:00] recommend roughly 45% of your income is paid to you in the hand. So if you are charging a hundred dollars an hour for your service. You'll be getting $45 in the hand.
Is that enough? Because when you say a hundred dollars an hour, it actually sounds pretty cool, but when you say $45 an hour, it really changes your relationship with that a hundred dollars price tag. So this is why I love Profit First and why I love percentages in general. Because when you can understand where your money is going to go after it's been paid to you, it gives you this new information and this new clarity about the fact that your prices probably need to increase.
If you are currently charging a hundred dollars an hour and you think that getting $45 an hour in the hand is not how much you wanna be earning, then I encourage you to look at your pricing. If you wanted to increase that to $90 an hour, you'd need to increase your [00:12:00] price to $200 an hour. And I get it.
That takes a lot of bravery and courage to increase your price. But if your business is not making enough money to pay you a decent wage, what are we doing it for? So this has been a short episode about the power of having a money management tool like Profit First. And it's also talks to the power of understanding the percentages of where your income is going to go in your business, when you understand what your income is going to be used for, which in my mind is paying you, paying for your expenses, paying for your team if you have a team.
Paying for the A TO and putting some money aside for profit. Once we understand how that is actually going to be managed, you can actually go after more income because you have the skills to manage it, and you can get crystal clear clarity about whether or not you [00:13:00] are charging enough. And looking at your internet banking is gonna give you so much more information than what you can see on your profit and loss statement in Zero.
So maybe I've convinced you to consider Reading Profit First or putting it into practice. If this is something that you want some support around, please reach out. Profit First is a core part of Good Money Club, and the Doors to Good Money Club are actually open right now. We are doing our last intake for 2025.
So if you want to learn how to manage your money, how to price yourself and how to trust yourself when it comes to making and managing money, we'd love you to come and join a single money club. So reach out. Come and find me on Peach Business on Instagram, and send me a dm. Let me know what you're thinking about and how I can support you to trust yourself when it comes to investing and managing your money.
I'll see you next week. [00:14:00]
Outro
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 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.
