Smart Money Habits for Business Owners
By Octavia Conner
There is something you should know about me. I like money!
Yes, yes, yes!
Therefore, creating this episode/article makes me happy!!
Now because I like money, I had to teach myself how to properly handle money so that I have more of it in my life and business. And today, I'm going to provide you the seven strategies I have implemented over the years for myself and my clients.
Consistently applying these strategies has enabled my company to save 25% of its total monthly revenue. Therefore, Say Yes To Profits effortlessly operate on 75% of the company's overall earnings. Also, I have been able to regularly contribute to my retirement plan and invest in the business growth consistently. Last, these smart money habits have positioned my firm to remain cash flow positive and profitable even during an economic crisis.
Sounds good, right? Yes?
Well, let's deep dive into those strategies so that you can achieve the same or higher results:
1. Operate on 80% or less of the company's monthly revenue.
When I receive a payment, no matter how large or small it may be, I complete two tasks immediately 1) pay my tithes, 2) save at least 25%. I quickly transfer at least 25% of that payment to a separate account called the Financial Peace account. Once deposited into this account, the money is off-limits. The purpose of this account is to build a cash reserve for the firm. My ultimate goal is to operate the business on less than 70% of its total monthly revenue. To implement this strategy in your business, I recommend you start small. Start as I did by saving 5% for the next 90 days. Once you have achieved that consistently, increase your savings to 10%, then 20%, and so on.
2. Create A Money (Budget) Plan.
Look at a budget like a money plan for your business and not something that is hindering your spending ability. A budget is an asset to your growing organization. We use and teach the Bottom-up budgeting method. With this budgeting method, we not only have a breakdown of the yearly, quarterly, and monthly costs, but we also outline the underlying costs by project, department, segment, and service. The goal is for there to be no surprises and for the company to remain below the budgeted amounts. Honestly, I have a budget for everything! Just call me Queen B – For Queen Budget, that is.
3. Cross-Examine Your Spending.
Before making a purchase, no matter how large or small the item may be, I ALWAYS ask myself several questions to determine if I should spend money on that item, service, or product.
- a. How will this item add value to my business?
- b. Will this item help generate more revenue?
- c. Will this item help save time?
- d. Is this needed to operate the business?
- e. What will the return on this investment be?
In addition to cross-examining my spending, I also implement the 24-hour rule. I wait 24 hours before making any purchases over a certain amount. During that 24-hour waiting period, I analyze the impact the investment will have on the company's short-term and long-term financial position. I don't allow anyone to pressure me into making a purchase. I have a firm belief that if it is for the good of the business, myself, or my team, it will be available after 24 hours. The 24-hour waiting period prevents impulse spending that can result in buyer's remorse and cash flow struggling later.
4. Create multiple streams of revenue.
I believe that no matter the business's industry or type, the company should have at least four revenue streams.
- a. Elite Level
- b. Target Level
- c. Lower Level
- d. Passive Income Level
To develop the four revenue streams, outline your ideal client's lifecycle, and how your business can serve them at each level. One of the main goals for developing multiple revenue streams is that you want to build the company to earn revenue at least weekly, if not daily.
5. Get Out of Debt.
Your most powerful business-building tool is your cash flow. The more money you have, the easier it will be to build wealth and sustain longevity in business. Unlike many traditional accountants, I believe getting business loans on top of current money troubles will only lead to more money problems. PERIOD!! The goal is to pay all debt off in your business and personal life so that you have more money in the bank. Okay?
6. Perform A Cash Flow Audit.
At least quarterly, you should complete a cash flow audit on your business. During a cash flow audit, you will examine the flow of money moving in and out of your business. As you are reviewing your cash cycle, you want to ask the questions outlined in strategy three. You also want to examine your prices to ensure that your services and products are priced for profit. There are additional steps for the cash flow audit, but these will get your started. The purpose of performing a cash flow audit is to find money leaks, cash flow shortages, and areas where you are leaving money on the table. If you desire a professional to perform a Cash Flow Audit for your business, don't hesitate to contact Say Yes To Profits.
7. Maintain a bookkeeping system.
During several videos, podcast episodes, and articles, I have shared the importance of maintaining a bookkeeping system; therefore, I won't go into detail here. However, what I will share is that regardless of the company's size, having accurate, reliable, and timely accounting records is highly important. Spend at least 30 minutes with your Financial Manager, Accountant, or CFO reviewing and comparing your financial records. Then leverage this information to scale your company faster, smarter, and consistently.
As the CEO, building your business on a solid financial foundation is highly important. If you are not implementing smart money habits, growing your business will forever be challenging, and every little obstacle can seem BIG. What new smart money habits have you implemented in your business? Leave your comments below.
About Octavia Conner
As the CEO of Say Yes To Profits, a virtual accounting firm, Octavia Conner is an award-winning financial strategist that specializes in helping businesses grow between 30% and 350% within 12-months while saving over 55% in taxes. For more information, visit https://sayyestoprofits.com
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