Slaves to the Business: You probably know a business owner like this. They work all the time. They have some clients, and they get paid, but just as soon as the money comes in the door… whoosh… it goes flying back out the door. They work and they work, but each month they are broke. Not only is there zero profit, but they are also likely bleeding money and a bit negative in some months.
Successful Business Owners: You also likely have seen some business owners in this category. They operate as the CEO of their business and their business seems always to be running smoothly. They take business trips to conferences and they leave their team in charge. They share at dinner parties about the bonuses they give their staff and the new equipment and software they are buying. They don’t come right out and say how profitable they are, but it is evident they have plenty of money and are thriving.
So, what makes one business so different from the other?
The answer is easy. One is a good money manager with systems. The other never learned how to balance the business and run the business like a real business. No judgment zone, law school didn’t teach me this stuff either.
So how can you take steps to be a good money manager?
1. Commit to Being Profitable
The first step is making a decision. Recognize that regardless of if you have a lot of money or just a little money, what matters is making the decision to be profitable.
Next, quit tolerating a life with financial ups and downs. You have the power to change this. As the owner of your business, you have to take 100% responsibility.
It may not happen overnight, but if you get clear on the outcome you want, it is so much easier to build a plan to get there.
2. Build the Systems
Good money managers create a framework through policies, procedures, examples, templates, and checklists to help them manage their money. This provides the financial team clarity on how to do the financial tasks each day, week, month, and quarter, as well as how to plan out the goals of the business. The key to making it all run well together is to build systems.
Systems for How Money Comes into The Business:
- Receiving Payments
- Depositing Money
- Checks and Balances
Systems for How Money Goes Out the Door:
- Accounts Payables
- Checks Written
- Credit Card Use
- Terms for Electronic Transfers
Systems for Growing the Business Profitably:
- Budgets and Budget Variance Reports
- Cash Flow Forecasts
- Quarterly Accountability Meetings
Systems for Reporting:
- Profit and Loss Statements
- Balance Sheets
- Pipeline or Work in Progress Reports
- Benchmarking Budget Reports
While building a detailed Financial Systems Manual, with the protocols for handling all these elements, takes time to build if you do it from scratch. There are ways you can fast-track by using systems that other successful business owners have used.
A key to growing a business fast is not to waste precious time and energy re-inventing the wheel.
Build out a plan by working with your financial team to tackle different chapters and then talk through how you want it done in your business.
The build phase can take anywhere from 6 weeks to 6 months depending on whether you have a template to work from.
3. Execute Your Plan
Once you make the decision and build the systems, executing the plan is super easy.
What is difficult is staying consistent! You will likely want a coach or an accountability partner by your side to help you stay on track. This is because sometimes, with numbers, you can lull yourself into thinking you are sufficiently on track and don’t stay on the rigorous plan to hit your targets.
None of this is rocket science, and with a little focal attention to these super easy steps, you will be amazed at what a good money manager you become!
Kristen David, a former trial lawyer and partner who went from working 85 hours a week and being a slave to her law firm, built it up to a million-dollar-plus business, then sold her shares and pivoted into a business coach guru. She is now an international speaker, bestselling author, and operates a successful business, empowering business owners to build thriving, profitable businesses that are self-managed with systems. She helps busy business owners build those systems by implementing policies and procedures the Fast Track Way.