Do you have your map to 2021?
My first year in college, the bank gave me an ATM card and an overdraft! I mean what were they thinking. Of course, I spent it. Then the letters began to arrive at my home. At first every few weeks, then weekly and then….my mother intervened.
She told me to turn it into a loan and pay it off each week from my salary. Phew, I thought I was going to be in trouble, I didn’t know you could do that. I didn’t know that there was a specific skill, or language in understanding how finance works.
I’ve spoken a lot about how I was protected from all my bad spending habits by having a good job and salary. Yet, I was living from pay cheque to pay cheque. Which is fine, once you continue to have a job and/or pension but not so good if you have an emergency. When I started my own business, I had a rude awakening.
I have read several books about managing your money, and they all start with understanding where you are.
In business, you need to understand where your business stands right now. What is your bank balance, what money is due in and what money is due out. Only the, is it possible to know where you need to go.
The accounting word for 2020 has been CASHFLOW. The businesses that did not have any reserves in their bank accounts and a good handle on their spending found it harder to survive than the more prepared companies. It isn’t fool proof, in 2020 there have been some really hard knocks for some industries, yet, once you have a good understanding of the cash in your business, gives you time. Time to find options, time to look at these options and time to implement. This time can be a company life saver when it hits hard times.
So let us learn from this and make sure we make our businesses as fool proof as possible for the next hit. Lets give ourselves options.
Where are you now!
“If you don’t measure it, you can’t manage it.” (Peter Drucker) As you want to get control of your spending, you need to know where our money is going. Some people call it ‘Counting’ some call it ‘Recording’, I like to say, ‘Track the Cash’, however, no matter what you call it, it all amounts to the same thing, keep track of every item you buy. Know and understand where your money goes.
For those of you that are sole traders, it can be difficult to separate your business expenses with your personal expenses. Keeping a business bank account, and putting all of your business expenses through it, will help you keep on track.
For those of you are already set up as a limited company, it can be very useful to look at what you are spending.
You should always look at your bank, daily. Spend a few minutes checking the numbers and seeing what is coming in and going out. It helps you understand the flow of money in your business.
Where do you want to go – your vision board!
‘If you don’t know where you are going, any road will get you there’ Lewis Carroll
Once you know where you are, and you have an understanding of how money flows in and out of your business, the next step is detailing what you want to achieve and how you will achieve it.
It is a great time of year to start planning your next 12 months. Setting goals is a powerful way of clarifying what you want to achieve and how you plan to achieve it. I like to plan ‘Soulful Goals’ which tie in with my values and life goals as well and my business development goals.
Using your vision board, to dream and create your future, move this into your soulful goals and then you will see things start to happen. When everything is rowing in the same direction, you are more motivated and likely to achieve your goals.
Forecasting as your Map!
Once you know where you want to go, the next step is working out a map. Forecasting does not sound anywhere near as nice as vision boards or visualising your goals, however, forecasting is deciding on the route you want to take to achieve your goals.
There may be only one road going to where you want to go, or there may be many. Normally, there are many routes you can take. Finding the right one for you, requires planning. I outline a simple cashflow process here, to get you started. However, a deep dive into your numbers always provides better results.
Join me on Thursday 12th November @ 6.30 for a Free Webinar, where I talk about how to map your future business by using both your head (processes and systems) with your heart (vision boards and soulful goals), grab your spot here.
You can also join me in my Facebook Group, which is a safe space to talk about money and success. Running your own businesses is hard, let me help you on your journey. Have a specific question? Contact me here.
I’d love if you shared this article with your business friends or anyone you think may be interested.