5 Money Management Habits Consultants Should Implement

Octavia Conner

By Octavia Conner

Tags: All, Cash Flow, Maximize Profits, Accounting

Proper management of your finances could mean the difference between building a profitable, consistently cash flow-positive consulting firm and having a firm where cash is few and far between, and profit is nowhere in sight. 

 

Which one do you desire the most? 

 

What if I told you that you MUST implement a few critical money management habits to maintain a profitable, consistently cash flow-positive consulting firm - would you implement them immediately? 

 

I'm pretty sure you will. Therefore, let's deep dive into the habits that have positioned over 90% of our clients to maximize cash flow and profit. 

 

 

Money Management Habit 1

Create and follow a lean budget. Your budget should include a saving line item, your salary as the CEO any additional expenses your firm needs to operate effectively.

 

Your budget should identify how your firm will operate effectively on less. A comprehensive budget will also help you identify a realistic minimum revenue amount your firm should earn to generate a profit.

 

Money Management Habit 2

Have a weekly money day. For example, and for me, this is Financial Friday. On this day, you should update your accounting system, check on past due invoices, and forecast the cash that will enter and leave your firm over the next several weeks.

 

You should compare your progress against your goals and determine the next best steps to scale your firm.

 

Money Management Habit 3

Having a weekly money day leads to a monthly financial review. Each month, no later than the 10th, you should review your monthly financial reports from the previous month. Most consultants will only review their Profit & Loss Statement. However, your Balance Sheet and Statement of Cash Flow are also highly important. 

 

While your Income Statement (aka Profit & Loss) identifies your revenue, expense, and net income for the month, your Balance Sheet identifies a cumulative total of your assets and liabilities. If you have more liabilities than assets, you are operating your firm upside down.

 

Your cash flow statement identifies the flow of money in and out of your firm for a particular period of time. If on your income statement you generated a profit, however, when you log into your bank account, that money is not there. Your balance sheet and cash flow statement will identify where it is. 

 

Money Management Habit 4

After reviewing your financial reports, you want to save a portion of your net income for taxes. 

 

As a sole proprietor, partner, and S corporation shareholder, you must make estimated quarterly tax payments if you expect to owe $1,000 or more in taxes. 

 

Therefore, instead of waiting until it's time to pay estimated quarterly or annual taxes, I recommend you save at least 35% of your net income in an interest-bearing saving account. 

 

Money Management Habit 5

Perform a quarterly financial and business progress check. Each quarter you should perform an expense audit. Here, you review each expense over the last three months and identify those no longer needed or benefiting your firm.

 

You also review your progress against your yearly plan. Next, you eliminate excess spending and plan for how you will achieve the next quarter's goals. When planning for the next quarter, identify the action items you must take to earn more and keep more money in your firm.

 

It's not good to only focus on earning revenue. You must implement a plan that allows you to generate a profit and maintain a positive cash flow. Cash is your firm's superpower, and profit is how you keep score in business. Therefore revenue, cash flow, and profit are all necessary, and each should be monitored with a laser eye focus. 

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These five money habits will position the average consulting firm owner to never have money worries again!

 

To further assist you, I have a free video training called 7 Financial Mistakes Keeping Consultants from 7-figures

 

Mistake number three and four, when corrected, will be your firm's ultimate financial game changer!

 

Again, gain on-demand access today by visiting sayyestoprofits.com/mistakes.

 

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