We’re delighted to share with you a guest blog from Hannah Xu, who will be speaking at our upcoming Making Your Cash Flow event on 22nd November. The event is dedicated to help Women in Business get a handle of their numbers in order to increase their bottom line.
Do you love your numbers or shy away?
A lot of entrepreneurs understand the importance of the role numbers pay in their business. However, they’ve also seen it is far too complicated and intimidating. They’d rather leave it to their accountants/bookkeepers to manage the numbers for them.
Leaving your financial power to your finance professionals can be dangerous! That is also an affirmation, in spiritual aspect, that you are not willing to pay loving attention to your own money.
Throughout my professional experiences, the clients who has got the most out of accountancy help and saved money are the ones who are self-aware and willing to learn their numbers. I’m not a fan of forcing everyone to fall in love with accounting. But I’m a firm believer that by interpreting finances in a fun and down-to-earth way, more people will be interested in knowing more about their finances and gain more clarity on it.
In fact, everyone has whatever it takes to be good with money! Here are 3 ways to help you find managing finances not just less daunting, but also allow you feel fun and abundant.
1.Naming things differently
There are a lot of jargon and daunting terms, such as tracking expenses, debtors, creditors, etc. In the money book, Money A Love Story (by Kate Northrup) she mentioned that renaming those terms in a way that make you feel abundant will shift your energy and see it in a more positive way.
Here are some examples:
Tracking Expenses = Abundance Tracker
Calling everything ‘expenses’ sounds not just daunting, but also gave a sense of guilt of spending the money. However, it is what money can provide for us that matters. When looking at your ‘expense items’, you may recall the trip you took that you’ve met amazing people, or the training courses you attended that gave you so much ‘Aha moment’, etc. Instead of seeing them as a sign of your spending guilt, calling it ‘Abundance Tracker’ enables you to see how your life has been well provided by the money you have and give you sense of gratitude.
Debts = Invoices for Blessings Already Received
We all feel guilty and resentful for the debts. Being in debt is not a great feeling. I get it! However, in fact, debt is neither good nor bad. Our economy is a form of value exchange. Incurring debt simply means that you’ve received value from your vendors but you have yet given the value back.
So instead of letting that ‘debt’ feeling stop you from taking action, calling it Invoices for Blessings Already Received enables you appreciate the services your vendors already provided to you. All you have to do is take steps to give the value back with gratitude.
Whichever names you decide to give, make sure that resonate with you and make you feel abundant.
2. Making it simple and intuitive
A lot of business owners are not paying themselves! And they end up resenting the money they are earning.
It is human nature to live pay check by pay check. When a sale comes in, a business owner may use the money to pay for all the expenses first. But at the end of the day, they may find not enough cash to pay themselves.
But in fact, you don’t have to force yourself to analyse your budget, and feel deprived about sticking to it. There’s a simple and intuitive way to help you make pay yourself possible!
Put your Profit First!
When you’ve made a sale, instead of spending and paying the bills, make sure you put a small percentage to a separate bank account as ‘profit’. As a small portion of the ‘profit’ is out of sight, it is out of mind, so you will only spend whatever is left over.
When there’s not enough money left over to pay for all the expenses, this is the time you will need to re-evaluate how you can shave off some expenses, e.g. the membership subscriptions do not use, etc.
Similarly, you can also set aside a percentage of the money for owner’s pay, tax, etc for your own clarity.
Take baby steps
In order to start implementing this, it is best to avoid being overly enthusiastic and put an unrealistic portion of the money into those accounts. You may end up finding yourself not having enough to invest in the necessities in your business.
Make sure you review your last 6 -12 months profit margin as well as the amount you’ve been able to afford to pay yourself, and take baby steps. You may start by 1% for your profit then increase it over time. It is all about momentum, not about being perfect!
And that portion of profit can later on be used by re-investing in the business or treat yourself a profit share.
3. Do not feel intimidated by the taxes
If you ‘moan’ about the taxes, take a look at the developing countries where there’s no concrete road and no developed healthcare system. In Britain, we have free public health, as well as good public facilities, those are all from the money we paid into the system.
To be more specific, in the UK, taxes are used to fund our public health and public facilities that build the base of our lifestyle. National Insurance (Social security) are used to fund the unemployment benefits, maternity allowances, state pension, etc that gives us security in the event of job loss, unable to work, etc. All these are benefiting us indirectly or in the long run.
So next time when you look at the amount of tax and social security bills, appreciate the things that those ‘contributions’ have been providing for us. Remember that ‘Money you pay into the system is still YOURS‘.
If you enjoyed this content, just so you know I will be speaking at the event Making Your Cash Flow, where I go more in depth with how to make your numbers easy and fun. Please register your ticket here: http://ow.ly/SZTP30fLPXw