Greater Than Business Podcast – Episode 01
This is episode 14 of the greater than business podcast. And today we are going to be talking about one of my favorite subjects and that is money, specifically money management and how as a business owner, regardless of if you have a bookkeeper, have an accountant, you need to be managing your business money as well as your personal money. But for this episode I'm going to focus on your business, money, finances, everything. So sit back. This episode is probably not going to be that long because I only want to touch on a couple points, but I want to make sure that you understand that managing your money in your business is key. You need to know an account for every dollar that comes in the door and every dollar that goes out because every dollar that goes out should be on something that makes sense. So you're not just frivolously spending money for no reason and really kind of do an audit of everything in your business and make sure that what you're spending your money on makes sense.
And also everything that's bringing in money into your business makes sense. So what I am going to talk about is getting your expenses in order, making sure that your income is in order, making sure that you know how to calculate your profit and why you should always be saving your profit, making sure that you look after your finances at the end of every month and at the end of every year, nothing will make you happier at tax time than building this habit. Now trust me on that one. The other thing that I want to talk about is how one book specifically changed my entire business and specifically my money management side of my business. So that book is called Profit First and it is by Mike Michalowicz. And if you listened to episode, I believe episode four, you will know that Mike Michalowicz has done several things in my business and I have read every single one of his books.
But in episode four, I talk all about how clock working my business saved me in the long run. It saved my sanity. Um, it saved my mental state. It saved everything. Trust me. If without that book, I probably still would not have a business or I wouldn't have a business at this point. So trust me when I say I am a huge fan of Mike Michalowicz, but Profit First was what really started it for me. And the reason why I love this book so much is because he forces you to really look at your life and how you are spending your money and what you're doing with your income when it comes in. So I'm not going to get into too many details about profit first because actually the next episode I'm going to go full right into Profit First. And I'm going to show you and tell you exactly how I look after my business.
So a little bit of a background, um, I am Canadian and I operate in US dollars. So that adds an extra level of craziness when it comes to money. And if you are a Canadian and you operate in US dollars, email me, I've got so many tips for you about managing your money as a Canadian charging US dollars. So that's a side note there for all of my Canadian friends. Um, but definitely there are so many things that you need to get in place for that side of your business if you are a Canadian and operating and running all of your stuff in US dollars. So I've got some tips on that, but I also wanted to let you know how I manage my profit first that way as well. So I actually have three different levels of profit first that I deal with. So I have my us dollar income that comes into my business and then I allocate that to spend to cover all of my u s dollar expenses.
So I have that very specifically sorted. And then what I do from there is I will pay myself, but I will pay myself in Canadian dollars. So I will only pull out from my draw account, my whatever I want to pay myself in Canadian dollars. And then from there I will then pay my, um, or not pay. I will disperse that money into my personal profit first. So I've got one channel for my business that is US dollars. And that all gets profit first. And if that's a word, I'm making it one now. And then from there I've got my Canadian dollar profit first thing on the side of my business. And then I have my personal profit first where I have actually profit first did my husband's income as well. So he actually runs, um, he works on his own. Um, he works for company and when he gets his paycheck, I treat it as if it's the same as my business income almost.
So I will take his paycheck and I actually profit first his paycheck. But I, I guess on our personal side of things, it's more considered a savings first, not really profit because like his taxes and all of that stuff are already taken out. But it's, it's, uh, I'm getting get into that really deep in the next episode. So stay tuned for that. It'll be released next week and that is where I'm going to go fully in depth with exactly how I have used profit first in my business. So today what I want to talk about is gathering all of your expenses, gathering up all of your income and taking a look at the difference between the two, which would then be your profit. And the reason why I want you to start getting in the habit of looking at your monthly expenses and looking at your monthly income is I really want you to see if there's any holes in your money and how you are managing it.
So if you're like me or how I used to be where I would just keep all of my receipts in my email and then hope at some point I would eventually get around to gathering them all up and printing them out or saving them in a folder in Dropbox or something. Then you really need to listen to this. So doing that is not going to benefit you and you can't have a healthy business unless you have your money managed and it doesn't need to be managed by a professional necessarily. If you are just a small, small business and you want to manage it yourself, you can. And even if you are a big business and you have somebody that is managing your money for you and looking after your basically and now are analyzing your profits and all of that stuff and trying to make business decisions based upon the income and the profit and the expenses and all that fun stuff.
You still as the business owner ultimately need to know your numbers and you need to know how much money's coming in every month. You need to know how much money's going out every month. You need to make sure that those two numbers are not completely lopsided and you need to make sure that you are accounting for everything that could possibly happen in your business. So building up by a, um, kind of like a plan B, um, a savings and making sure that you are being super responsible with your money, 100% super responsible with your money and you have to make sure that you are managing it in a way that will bring the best and amount of success into your business. So if you don't know how much money you're making in a month, then how do you know if your businesses is successful? If you don't know how much you're spending on expenses, then how can you make a logical choice on if you should spend money on that next investment?
If you want to take a course online and it's $1,000, do you have the ability right now in your business to spend that $1,000? Are you going to be able to get the return on that thousand dollar investment? Do you have the time to be able to dedicate to getting that return? If you are too busy with doing client work and you're never ever going to be able to actually do that course, then why are you taking it? Do you have the ability to maybe tone down your client, work for a little bit and take this course at the same time or will that bankrupt your business? Things like that you need to know as the business owner. And the only way that you will know that is by managing your money. So what I want you to do is sit down and go through your, basically the last year of all of your expenses.
And I want you to write down everything that you have spent money on. The best way to do this is go back through your email, look for invoices, receipts, credit card statements, um, your bank statements, Your Business Bank statements, Personal Bank statements, personal credit card, business, credit card, like anything where you could have possibly transferred money to pay for a service or something related to expenses in your business. And I need you to come up with a monthly average. And even if you pay, say, um, I, I myself have a big bill that comes out every August and it's $1,500 us and it happens every single August. So I don't consider that just an August expense. What I do is I actually divide that by 12 and kind of count it as an expense each month so that I'm consciously always aware of this expense so that when it does hit an August, I have that money saved in my expense account.
So that bill doesn't hurt me. And throughout the year I am slowly building that account. So I may have $7,000 sitting in that account right now, and I know that that's going to cover not only my monthly expenses, but if I have a $5,000 bill that I'm anticipating coming out in September, then I know that expense account is going to have that factored in. So it makes managing your money so much easier when you can just go by whatever your monthly amount is. And the trick with this that I use is every one of my expenses. So let's say I am buying, I have infusionsoft, okay? And it costs me $159 a month for my infusion soft. So I know without a doubt every single month infusionsoft is going to charge me $159 so that is an expense that basically it just auto drafts from my account. I know that it comes out every month.
I know that there's never going to be a problem and I know that I'm always going to have that $159 sitting there waiting for infusion soft to come into my account and take it out. That is the dream goal because you can kind of set it and forget it and you don't need to worry about these things because you know that it's always going to be factored in. You will know that your bill is always going to get paid. You don't need to worry about writing checks, finding things out, paying this, paying that like you. You just know it's always going to come out of the account. And that is one of the key things with getting your business sorted by using the Profit First Method is you have an account that strictly for expenses and you know that every dollar in that account is not yours to touch because that is going out out to whoever it is that you are paying.
And that gives you a good idea of exactly what funds you have available because you will know that you can't touch anything in that account because it's all spoken for and what you have left over in your profit account or your um, miscellaneous account. That is the money that you can actually spend. And what I find is a good trick is when I have money in my profit account, I don't actually spend it because I like seeing that account growing and growing and growing. And then if I see something that I really want to make an investment with, so say I see a new course that I really, really want to take and I look at my profit account and I go, all right, that's going to be a big chunk. Do I want to take it? Do I want to take that out of there?
I can afford it because I know I've got the money sitting there and I know all of my expenses are handled because I've got the $7,000 sitting in my expense account. So do I want to take this? Do I want to pay for it right now? Do I want to make this investment or do I want to keep my profit account looking nice and pretty? And it really makes you kind of check yourself and think about every single investment that you're making in your business. And it makes you a better business owner by having these things in place. And the other thing is too, you can look at your income and see, like for me, I've done this in the past where I've looked at the clients that I'm working with and the students that I have and I always think, okay, I could afford to maybe take on like three more students this month.
Do I really want to? Like, it would be fantastic, but I also really wanted to take a vacation. So maybe I'll take that vacation now and then see where I sit when I get back and if I want to take on this additional income. Because anytime you take on additional income, chances are you're going to be giving away more of your time and is it worth it? And that's something that you will be allowed and or basically be able to decide if you have your money managed. Another thing is that you can kind of see your average income versus your expenses each month. So it's a simple, simple thing to be able to see if you are overextending yourself or if maybe you're working too hard. It can go both ways because sometimes there's going to be months where you might want to take some time off and you might have to let clients go for a month and they might not be paying you.
And can you afford to go a month without income or, um, do you have to think of another way of building up that income if you wanted to take that month off? So making sure that you're super clear on your numbers and super clear on your money management. Getting a system in place to manage your money. So putting receipts and Dropbox or saving them specifically in your email, sorting them by month, reconciling all of your transactions at the end of the month, making sure that everything lines up, making, oh, here's a big one. Making sure that all of those expenses that you've accounted for are actually being drafted out of your account. That's another big one to check because I've actually had that happen before where I had a big payment that I thought was going to come out and it didn't and I thought that it did. And then he couldn't figure out why.
I had all this extra money until I went to go use that service and it ended up that my credit card had expired and it didn't actually charge. So I had already got it set up that my credit card was automatically paying or paid by an auto deposit. And it ended up that I had a positive balance on my credit card and there was no transaction because the card number had updated and I didn't realize it. So little things like that are detrimental to your business. Like if that had been a service that I needed to operate my business and I had no idea and I didn't have it for like a month and a half, that could have potentially ruined my whole business if I just assumed it was working in the background and it actually wasn't. So things like that are really, really super key to have in place and you want to make sure that you're taking a look at your finances and your money management at the end of every single month.
No, if, ands or buts every month. And you also need to be making sure that at the end of the year everything is lining up and that you are anticipating, um, emergencies in your business as well as kind of building up that little nest egg and savings just in case you need it. And then obviously your profit and all of that fun stuff. But I said that we are going to get into Profit First in great depth in the next episode. So this one, what I want you to really do is get your expenses sorted, take a look at everything that you are spending money on and kind of audit yourself. Then take a look at your income and take a look too at the different forms of income that you're bringing in and the different income streams and go back as far as you can to be able to get a really good picture and look at the averages of each.
And then you'll also be able to see where you should be spending your time. So if you're making 90% of your income through a passive course, then awesome. What else can you do? What other courses could could you make? If you're making 90% of your income from clients, then is there a way that you could bring on someone else onto your team that would help you manage that, that client loads you could take on more clients, men build your business forward? Or are you wanting to get out of doing client work and what other ways could you possibly make money? And then you can look and go, well that one time I did an affiliate campaign for somebody else and handed up making 10 grand from that. Well then why don't you try that again? Reach out to some of your other contacts and see if you can get an affiliate agreement with them and see if you can duplicate that success.
And if you do, try it again. And if you do again, then try it again. And then Bam, you have a brand new income stream coming into your business, but you may not have seen that opportunity if you weren't paying attention to your money. So this episode is kind of all over the place. I'm going to admit it. But what I really want you to take away from this is expenses and income. You need to know both those numbers so that you can then take the next step, which is what we're going to talk about in the next episode, and really get your profit sorted and situate your business by using the profit first method and really make sure that you are building your business in the best and smartest way possible. And you're taking into consideration all of those random things that could possibly happen in your business.
And all of those little tiny expenses that you may not realize can really add up. And that is going to be a big one. And once you've sorted those out, you can really take a look and see if what you're spending your money on is really pushing your business forward. Or if it's something that maybe you can let go and it's not going to be the end of the world. And hopefully it'll give you a little bit more clarity into your finances and your money management and all of that fun stuff. So as I said, this episode has been kind of all over the place, but it's definitely a topic that I really wanted to share and talk about because money is super important and it's the whole reason why you're probably running a business in the first place and making sure that you're getting the most out of the money that you have and getting the most out of the money that you're spending is going to be a lifesaver in your business.
So I hope that you got some value out of this. If not, what I want you to do is stay tuned for next week when I'm going to give you a step by step walk through of how I have used profit first to benefit me and why you should too. If you haven't already read the book, I highly, highly recommend it. I'm going to link to it in the show notes, which you can find at greaterthanbusiness.com/014 and from there you can purchase your copy of the book and start getting a headstart on reading it and then you will be ready for the next episode when I'm going to explain how I use my three different systems for profit first in order to build my finances and keep my business healthy. And the last thing that I wanted to do was just touch on the homework that I assigned you in the middle of this episode where I want you to sit down and think about your expenses.
Think about everything that you are using in your business, see if there's anything that you can cut, if there's any other services that you might need. And always, always, always take a look at your income and make sure that your income is always higher than your expenses. And if your expenses are higher than your income, then you really have to sit down and cut some expenses in your business or you need to boost your income. So that is the starting point where I want you to kind of sit down and all of this will build into the next episode when we were talking about Profit First, because all of this little homework for money management is going to help you to really be able to hit the ground running with Profit First. So I hope you enjoyed this episode. As always, if you have any questions, please email me. I am an open book. My email address is email@example.com and I look forward to hearing from you and I can't wait to share all of my Profit First secrets with you next week.
Greater Than Business Podcast – Episode 014