[00:00:00] Fi Johnston
Who is the client that I can do the best work of my life for? That is who I want to target. That is how you are going to increase the amount of money coming into your business. But what we wanna talk about is how do we keep more of that money? I meet so many founders who have really great revenue coming into their business, but they are always stressed about money.
And it's very normal. There's nothing shameful about being stressed about money. There's nothing wrong. There's nothing broken.
Money Secrets Intro
Are you a small business owner who'd love to be making more money while making positive change in the world? You're in the right place, friend. Hi, I'm Fee Johnston, a chartered accountant and money coach obsessed with Small Business. In the Money Secrets podcast, I share strategies that you can use to make more money without working harder. You'll hear successful small business owners share what they've learned about money and business, and I'll help you to think differently and shift your [00:01:00] perspectives about money so you can grow your business and your impact. My mission is to get more money into the hands of good business owners, like you.
Acknowledgement of Country
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 notes that sovereignty has never been ceded. This always was and always will be Aboriginal and Torres Strait Islander land.
Fi
Today we're gonna talk about the fact that making money is not the same as having money. And before we get into that topic, I wanted to let you know that I work with businesses one-on-one. I just don't talk about it often because I rarely have space. But right now, I do have space [00:02:00] for one medium-sized business that is looking to take their revenue from say, maybe around the 500 to a million mark, up to maybe two million or beyond in the next couple of years.
I have a specific program which is called My Signature Program. I've delivered it to many, many businesses. It's a four-month program where we meet twice a month, just the two of us, on Zoom, and we work through all of the elements of your business from your vision and mission to your business model, your business strategy, your financial roadmap, and I'm there with you as you are implementing those changes.
I've got one spot coming up in June, and as I said, these spots don't come up often, so I wanted to let you know about it here on the podcast. If you wanna find out more about it, get in contact with me via the link in the show notes or just hello@peachbm.com. Au. And now for the episode, making [00:03:00] money is not the same as having money.
So making money is about bringing revenue into your business, and there's a few key principles to think about here. Your price is going to dictate how many things you need to sell. So we wanna think about our revenue in terms of, "Okay, what is the price that I'm gonna charge? How many will I sell?" And the ideal client or the client that wor- wants to pay the highest price for what you do is who you want to be targeting.
So in order to make as much money as you can in terms of revenue with the least amount of effort, you wanna think about who is the client that I can do the best work of my life for. That is who I want to target, and that is how you are going to increase the amount of money coming into your business.
You know, I meet so many founders [00:04:00] who have really great revenue coming into their business, but they are always stressed about money. And it's very normal. There's nothing shameful about being stressed about money. There's nothing wrong, there's nothing broken. But what we wanna talk about is how do we keep more of that money?
Let's unpack why sometimes we don't end up having as much money as we thought we would. So things in your business might be going really well. You might be getting lots of inquiries, lots of great projects. Your e-commerce business might be selling out every range, and everything is going extremely well from an outside view.
But on the inside, what might be happening is that you are scrambling. You are working your bum off to get all of this work done, to get all of the orders out, you're probably working weekends. Things are extremely busy, and [00:05:00] it's really difficult for you to feel like you get much downtime. This is often what happens when you're going through a growth period in your business, especially if you are a solo service provider, or you're an e-commerce business that doesn't have a particularly big team, or a well-developed kind of process to get orders out the door.
Now, what happens when we get busy is we start spending money on things that we don't spend money on when we're not busy. Some simple examples might be that you catch an Uber instead of a train. It might be that you get Uber Eats instead of making dinner because it feels like you don't have time to do that.
It might be that you buy more coffee rather than making coffee at home, because again, it feels like you just don't have the time, you don't have the headspace, and so you're spending money on the coffee because you just need to keep going. It might also mean that because you're so [00:06:00] busy, you're spending more money on help and support, or coaching, or subscriptions, or whatever materials are required for you to deliver your work, you might find that because you are so busy, you are making decisions around buying that new laptop, or whatever the thing is, and you're not actually spending enough time thinking about whether that decision or whether that investment is actually the right one for you.
So making money and having money are two different things. So what we're talking about here is money, management. And in my experience, the business owners who are the most successful over the long term, and when I say successful, I mean that they're profitable, their business has longevity, and they're well enough to be able to continue on rather than burning themselves out.
The people who are able to do that are the ones who are able to manage their money really well, even during times [00:07:00] of being really busy.
Money Secrets Ad
I'm gonna guess that you are a small business owner who really cares about making money and impact. Me too. It's why I designed Good Money Club, which is a place for female small business owners to come together and learn about financial literacy, how to make and manage more money, and how to think differently about money so that you get different results. We talk about money every single week, and I promise you it doesn't feel gross. The more you learn about money, the more you immerse yourself into the kind of strategies that work for small business owners. You are gonna see yourself feel calm with money, and that is gonna lead to you making more revenue, paying yourself more, and really thinking about money in a whole different way that feels good.
Check out the link in the show notes to find out more about Good Money Club, and we would love to [00:08:00] have you in there.
And how do we do this? My favorite way to do that is by using Profit First. So you've heard me talk about it before. I'll break it down as quickly as I can. Essentially, it's saying, "What percentage of my income do I need to make as profit?
What percentage do I need to pay myself? And therefore, I can only spend the rest on the ATO and expenses." You set up multiple bank accounts, one of them is for expenses, and that is your budget. So I recommend no more than 25% of your income going to your expenses. That doesn't include staff or your wages, and it probably doesn't include contractors either, although there's some nuance there depending on what your business model is.
But for most businesses in Australia of any size, actually, I recommend that you spend no more [00:09:00] than 25% of your income on your expenses. So that is something that it's actually quite simple to apply, but when you get busy and things feel stressful and you've got clients breathing down your neck, or for whatever reason you're feeling a bit frantic or panicked, it can be easy to miss the signs that you actually are spending more than that 25%.
What happens with profit first is you put 25% of your income straight into a bank account called expenses, and then that's where everything needs to be paid from. But if you're finding that you're putting things on a credit card, or you're transferring more money out of another account into your expenses account in order to be able to pay for all of the things that you're wanting to pay for, you will be spending more than 25% of your income.
When you're not intentional about how much you are getting paid as the business owner, everything else can feel [00:10:00] more important. So it can be things like, "Shit, I forgot to book the flights for the event that's happening in two weeks. If I'd booked them six months ago, they would have been $300 and now they're $1,500."
Those are the kind of things that happen when we get really busy and stressed, is that because we are so frantic and pushing and everything just feels so chaotic and busy, we can end up spending more money because of that franticness. So what do we do about it? Well, the first thing is to implement Profit First into your business, and even if you've tried to do that before and it hasn't worked, try it again.
If you need support on this, come and join Good Money Club because we talk about it every single month. The other thing that you could do is, uh, listen to some of my other episodes where I talk more about how to manage your money using Profit First. So that is one way that you can instantly [00:11:00] start managing your money better.
The next thing that you wanna do is slow down. Think about what are the ways that you could slow yourself down in the moment. So a couple of things that I've been trying recently, and shout out to Dr. Anthea Todd, who is one of the speakers at Ripple. She is amazing. Her podcast is also amazing, and one of the things that she talks about in terms of being well as a human is trying to create spaciousness in your life.
This is something that I'm trying on for size at the moment and really enjoying playing with. How can I build more spaciousness into my calendar? How can I build more spaciousness into my day? I'm even thinking about how can I build more spaciousness into my dog walks with Flynn. [00:12:00] I'm actively thinking about how to make the experience of walking Flynn feel more spacious and relaxing.
And for anybody else who has ever walked a 12 and a half year old dog, you will know that it is a very frustrating experience because it's really just about sniffing every single freaking thing, um on the walk. So I've tried this new approach of thinking about this walk as a spacious and slow experience for me and my dog, and it's working really well, by the way.
I can tell that he's enjoying the walks more because I'm spending less time getting frustrated with him that he's still sniffing that freaking blade of grass that he's been sniffing for a few minutes already. I'm also thinking about how I can create spaciousness in my day. Some of the changes I've made has been changing the way that my calendar is set up so that my appointments are [00:13:00] more in blocks, so that I have more time in my week for thinking time and for recording this podcast, rather than having my appointments sort of scattered across the week.
I'm also thinking about how I can be more spacious in the way that I speak. And I think this is such a cool tip from Dr. Anthea Todd around, we can actually create spaciousness in our breath and in our voice without it being this huge interruption to our life. So some of us have a lot going on. I know some of you out there are managing multiple businesses and you're also managing your household and parenting children.
You might also be taking care of elderly relatives, your mom, your dad, your auntie. You know, there's all sorts of caring responsibilities outside our businesses, and I don't wanna make this concept of spaciousness seem flippant, but [00:14:00] thinking about how you can create spaciousness in your day, your week, your schedule, your voice, your breath could be a really great way of thinking about slowing down.
Another thing that you can do if you feel that you are making money but not keeping your money is to really look at, are you over delivering? So are your prices actually reflecting the amount of work that you're doing or are your prices actually reflecting the amount of quality or input going into your products?
Are you s- sort of sliding into scope creep? Because scope creep, which is where we end up doing a lot more work for a client than what they're paying us for. And by the way, we barely ever tell our clients that because we just sort of suck it up and keep going. But if you're finding that you're over delivering and you're working more for each client than you thought you would, of course you're gonna be feeling [00:15:00] frantic.
Of course, you're gonna be feeling overworked. And when we start to get into that place of being frantic, overworked, everything feels stressful, can't seem to sort of get anything done quickly, we start spending more money, and it's a pretty natural stress response to wanna spend money like it's one of our advices to spend.
And the things that one person spends money on compared to another will be totally different, but it could be things in our business that we're spending on, like we're, you know, calling in more help, more contractors, more, you know, we're hiring people, we're, you know, upgrading the laptop to the better one, or we're upgrading the office to the bigger office and that costs more.
There's lots of ways that we spend more money in our business because we are stressed, and the solution is to slow down and really think about how, is the way that I'm working, is the way that I'm [00:16:00] pricing actually reflective of what I'm doing? If the answer is yes, then, okay, great. So maybe the issue isn't on the client delivery side or the product delivery side, the issue is that you're stressed out, maybe your nervous system just isn't able to cope with the amount of growth that you're having in your business.
And there are so many different ways that we can play with our nervous system to try to help it to just calm itself down. There's some really great short-term things you can do, like take your shoes off and get your feet onto some sand or dirt or water or any kind of natural thing. Get yourself out into nature.
Look at a tree. I get so much joy from looking at trees and most of the time I forget to even look at them because I'm in such a rush. You could think about doing things like, you know, going for a walk, getting yourself to the beach and just looking at the [00:17:00] ocean, spending time with people who make you feel calm, right?
So once you've identified whether you're actually over delivering on your products and services, you need to put your prices up or stop the scope creep, start delivering what you've promised and nothing more. So once you've addressed that, then you need to start working on that nervous system, that kind of jittery, anxiety, kind of frantic, panicked feeling that a lot of us business owners get.
And it's a really normal human response to feel that kind of franticness because when our business is growing, it's so exciting and there's adrenaline and all these amazing emotions and hormones going on in our body, but that can sometimes lead to us overspending and ending up not having as much money as if we had been more intentional about how we're doing things.
So just [00:18:00] to recap, making money is not the same as having money. The best way to make money is to make sure that you are selling your products and services to the client that values it the most, making sure that you are getting the best price that you can by delivering the best work of your life or the best that you can deliver with your products.
That's how to make the money. The way to stop yourself from spending all of it is to make sure that you are slowing yourself down enough to make rational decisions about how you're spending your money. Having a system like Profit First or something similar where you decide in advance how much money you wanna spend on your expenses, I recommend no more than 25% of your income.
When you can stick to that kind of program and slow yourself down, you will find that you will stop spending money on things that actually aren't relevant, and you will start to be able [00:19:00] to pay yourself more and to build up a profit or a kind of little cache of money in your business that can give you that comfort that if things quieten down or you wanna take some time off, you've got the money there to pay yourself during that time.
I really hope this episode was helpful. This is something that I see a lot in small business, so if you feel like I've looked directly into your eyes and recorded this podcast episode just for you, know that you are not alone. This is a really common thing. We get busy, we get stressed, we spend money. So these are some ways that you can start to get on top of that.
And if you've got any other questions about this episode, send me an email. My details are in the show notes and I love talking with business owners about their business and their money. So get in touch and I'll see you in the next episode.
Money Secrets Outro
Thank you so much for listening right up to the end. [00:20:00] 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.
