As a previously irresponsible human with finances, I can say that these things are a must-have. If it weren't for putting these things into place, either myself or by handing it over to other people, you would not be reading this blog right now. I would no longer be married, and I would likely be back nursing or something to pay the bills. Once upon a time, I was clueless when it came to financial intelligence, and I hated money. I just wanted to be rid of it so I spent all the time, and I didn't want to know my position. I just always put my head in the sand.
If any of this sounds like you, read on and get on our stuff because it's friggin awesome and changes lives – we guarantee it. Here are some tips:
1. KNOW YOUR NUMBERS – In business, you need to know a few sets of numbers in order to understand if you are making or breaking your business. If you don't know these, you NEED to as a matter of urgency. The numbers we are talking about that MUST HAVES on a monthly minimum basis are your break-even, your KPIs - wages %, operating expenses %, COGs %, Net profit %. If this is all another language to you, you have big problems team. This is non-negotiable shit.
2. HAVE ONE PERSON WHO IS FINANCIALLY RESPONSIBLE MANAGING MONEY – When there are too many cooks in the kitchen trying to run the financials, it can end up really difficult to manage because we all have different behaviours and ideals when it comes to managing money. A person who is a little more conservative and wants to 'protect' the business financially is the best person for this. Someone diligent, who will have your suppliers paid, manage cash flow, negotiate with lenders, who will chase the money owed is the person you want in this seat. In our business, this is Josie. When I was in charge, there was never any money because I was not a financially responsible personality type. I like shiny things, I love doing all the shit, and it was killing my business financially. Bring in Josie, there's always amazing money management, and we have set rules of the game around how money is invested in our company and our people. If you are not good with money, that is ok. I am not. But I have the stop gaps in place now by having a person who is financially responsible.
3. DECIDE ON THE AMOUNT OF INCOME YOU NEED THROUGH A PERSONAL BUDGET – YES, I hear you all moan and groan, but if you don't sort out what you need to live comfortably, you will never get on top of your business finances. If you don't have your bank accounts working for you by separating business from personal, you are living a dangerous game. Not just from a business perspective, but from a personal perspective. Because those Iced coffees you are putting on the business card at the servo for smoko are all considered your personal drawings, which means PERSONAL TAX implications, people!! No matter what you do, you must pay tax on your drawings one way or another, so you best be planned with how much you take out rather than getting smacked with a hefty tax bill you are not ready for. At LWT, we are not asking you to cut costs and be frugal with your money, unless you really need to because your business is in a shit place. But we do want to see you MANAGE your money and manage YOURSELF with your money.
4. REVIEW REGULARLY - Your numbers and financial position should be monitored at a minimum monthly. I am not just talking about looking at your ins and outs or at whom you owe money and who owes you money. I am talking about a deep dive into the nitty-gritty of your Profit and Loss, your cash flows, and your asset and liability position. So many businesses are trading insolvent, which is ILLEGAL, and they don't even know it! It makes me feel physically ill knowing this. Do you know your asset to debt ratio? If not, please call us and learn this stuff because you could be in a hole before you know it! Also, those of you who are flush with cash need to have regular reviews too. We see the successful cashed up businesses still making bad decisions. Blowing cash or being too tight with it and being super lazy with their money. If you don't look at your financial position when you are abundant with cash, chances are you are missing lost opportunities. So being lazy with your money can be just as bad as not having any at all!
5. SET ASIDE THE CASH THAT IS NOT YOURS - Team, GST/BAS is not your money, so stop spending it and saying to yourself 'I'll put that tax money back when…' because you won't, and then you will be in the tax hole in no time. Set up separate accounts and move the money weekly or monthly out of the way and don't touch it. The same goes for superannuation. These are non-negotiables for doing business. If you are a company that is always complaining about putting super, BAS/GST away, and it is a constant stress, you need to be introduced to our Tools4Profit system that will ensure that you are always across and comfortable in your financial position to run a successful, profitable business.
The thing is, your business is not financially successful because of your own choices. Our businesses are a reflection of who we are. If you have no money, it's a reflection that you are too cheap, or too good a bloke, or financially irresponsible. If you are flush with cash, it's a reflection that you are playing too small, or safe, or being lazy with your money. Either way, we have plenty of solutions for you, and all of them will be the biggest relief of your life. So you can work the trade and live the life.
