Welcome to 2018, friends! As I’m writing this, we’ve just entered a brand new year and the air is filled with the promise of a fresh start, a new beginning, and a chance to make this our best year yet.
To help you start 2018 on the right foot, today we’re talking about all things finance. I’ve partnered up with my friend Rebekah Zobel Jones from The Centsible Bookkeeper to bring you this special collaborative post (the first of several coming your way in 2018!)
First, you’ll learn the top 3 reports that will help you determine the health of your business finances (courtesy of the wonderful Rebekah), and second, I’ll be sharing my top 3 tips for cultivating a healthy and abundant money mindset.
Ready to have your most abundant & financially healthy year yet? Let’s dive into Rebekah’s tips for examining the health of your business finances…
Step 1. Healthy Business Finances
Is your business financially healthy? How can you tell?
“My bank balance is $XXX and no overdraft fees, so I’m good!”
If that is your answer, then I hate to break it to ya darlin’, but your biz might not be as healthy as you think it is! Profit is so much more than the amount of money in your bank. It’s more than “making ends meet” or not going into the negative in your bank account.
A profitable business knows where money is coming from and where it is going, what funds are due to you (and what you owe other folks!), and — most of all — what the cash flow patterns are.
Did I just scare you? Don’t give up! I’m going to walk you through how to understand all three of those areas so you will have a handle on the financial position of your business.
Grab a notebook, your favorite pen, and coffee… 🙂
Have you ever watched a TV show where they solve mysteries? I love detective stories, though I prefer them in book form vs. television! Either way, you know that when trying to solve a case, the detective team looks at pictures from the crime scene. Not just one photo, but a series of photos from different angles to get a well-rounded image of the scene. More often than not, valuable clues are discovered in the different angles.
That’s what we’re going to do right now. Take “pictures” of your business finances from different angles to get the whole picture!
If you are using a bookkeeping program to keep track of your books, then there are reports built into the system that will help you identify these items. It will give you a leg up, but you still have to review the reports to understand what is going on with your books.
#1. Balance Sheet
The very first thing to do is to get a snapshot of your current financial situation. If you use software, you’ll want to create a “Balance Sheet” report. This report shows you what you own (Assets), what you owe (Liabilities), and what’s left over (Equity).
I won’t get too deep here, but you need to review these numbers carefully to understand the full picture of your business. The bank balance is important (it’s one of the first line items on this report), but there’s so much more to it than that!
Don’t have software? Check your spreadsheets or files or database or whatever you do use to understand what invoices are outstanding and what bills need to be paid. You’ll want to identify any liabilities (credit card debt, etc.) as well, in order to have that clear picture of the actual financial state of your business.
#2. Income Statement
Next, we need a close up photo! This image will reveal your current income streams and your current expenses.
If you are using software, you’ll want to generate an Income Statement. Some may call it a Profit & Loss Statement. This is a key element in our discovery process. The main idea here is to compare your income with your expenses and ensure you are spending less than you are making. Seems simple enough, right?
Easier said than done, I’m afraid. I have a tool that can help, but in the meantime, explore your Income Statement to see how much you are spending and where you might be able to cut back. Some things are more valuable than others, so focus on the elements that don’t play a key role in generating your income.
Don’t have software? Create a spreadsheet showing income and expenses for the past three months. This will give you a great idea of how the money is flowing in and out of your business.
BONUS TIP: To get really wild and crazy with this, evaluate each of your income streams by comparing the money you made with the time you invested. This will help you determine your “ROI” or “Return on Investment” for that income stream. Spent 10 hours to make $50? Maybe you want to drop that activity and use those hours elsewhere. Maybe on the project where you spent 10 hours and made $500!
#3. Cash Flow
The third angle we need for our complete picture is cash flow, and this one is kinda tricky. The best financial software apps have a report, Statement of Cash Flows, that shows the change in your cash accounts over a period of time. This is beneficial to understanding the patterns your cash flow takes.
Did your cash increase over the past month? Why? Maybe it decreased. Again, figuring out why is hugely beneficial to understanding the ebbs and flows of your business.
If you don’t have software, or if yours doesn’t generate that report, how can you get a handle on your cash flow and truly understand your profitability?
You see that a shiny new eBook just launched, or your favorite blogger just put her course on sale. Your bank balance will cover it, but can you truly afford it? Enter my fave tool of all time, a simple cash management system that really works.
I have a great review/overview of the app right here that goes into all the deets, but it’s called “You Need a Budget” and it’s seriously the best thing since sliced bread. And butter. With my mom’s homemade raspberry jam. Darn, now I want some!
This cash management tool seriously has made all the difference in my personal life and in my business. I know exactly what I can spend and where I can spend it. I know that taxes are covered and I can predict pretty comfortably when I’ll be able to upgrade my social media scheduling program to the paid version.
Each of these three “pictures” of your financial situation are important and share valuable information individually. But put them all together and you’ll be able to “solve the case” and enjoy a profitable business!
Understanding your financial position is critical to ensuring you are able to pay yourself from your business and continue to grow and flourish!
Step 2. An Abundant Money Mindset
Once you’ve examined your business finances and have a clear picture of what’s working well and what can be improved, it’s time to focus on your money mindset. In this section, Krista’s stepping in to share her top money mindset tips for bloggers and business owners (hey, guys!)
No matter how hard you work on your blog and business, without the right money mindset, you can only grow so much. Today, I want to share three abundance-boosting habits that will drastically improve your mindset and help you attract more money, wealth, and success into your life. Starting with…
#1. Track every cent that comes your way (and be thankful for each one!)
Gratitude is one of the most powerful emotions when it comes to manifesting. When you express gratitude for everything that comes your way, you’re upping your energetic frequency and becoming an energetic match for MORE money to flow into your life.
Every time you receive money – whether it’s $100, $1,000, or a single penny – there are two things I want you to do:
1. Track it. I use the Money Tracker App by Denise Duffield-Thomas (one of my fave money gurus) to record every single penny that enters my life. The fun part is that after you enter the specific amount you received into the app, your phone will make a super satisfying “Cha-Ching” sound. Obsessed!
2. Thank the universe for it. A simple “thank you” (mentally or verbally) will do, but I like to take things a step further and use this phrase I got from Jess Lively:
“Happy, thank you, more please.”
Not only does this signal your gratitude to the universe, it also shows that you’re ready for more. More money, more wealth, more abundance!
#2. Set monthly money goals.
To manifest anything successfully, the first step is to get crystal clear on exactly what it is that you want. In other words: Exactly how much money do you want to attract into your life? Simply saying, “I want more money,” may not give you the results you’re truly after. In fact, if “more money” is your goal, you might be disappointed to find that you only manifest a few extra dollars per month.
Be CLEAR and CONFIDENT with your money goals. They should be expansive, but realistic – because if you don’t believe that you can achieve them, you probably won’t.
Also, consider why you want this specific amount of money. What will it do for you? Will it help you carry out your life’s work or fulfill your potential? The universe always acts in your best interests, so if receiving that money – or NOT receiving it – will put you on the perfect path, then that’s exactly what will happen.
In terms of declaring your monthly money goals, this is another reason I love Denise’s app (simply search “Money Tracker” in the App store to download it). Every month you’ll be prompted to enter a new monthly money goal, and as you record the money that flows your way, it shows the progress you’re making towards that goal. Super motivating!
#3. Daily money affirmations.
Affirmations are positive statements made in the present tense, repeated over and over until your subconscious absorbs them and starts viewing them as “fact”. Here are a few of my current favorite money affirmations:
“It’s safe for me to make money doing what I Love.”
“I now have XYZ in my bank account.”
“It’s safe for me to make money while I sleep (or while I’m not at work).”
Say your affirmations out loud or write them in your journal – over and over, day after day. Over time, your subconscious mind will put you on the path of least resistance toward making these affirmations a reality in your phsyical life.
There are hundreds, if not thousands of affirmations or “money mantras” on the internet, so browse around and choose ones that resonate most with you. And of course, you can always create your own!
The key with affirmations is to say them consistently and frequently. Find a way to weave this practice into your daily life until it becomes ingrained and you do it every day without fail. I like to select 3-4 affirmations every morning and journal them down right after I write my daily gratitude list. I then read them aloud 3-5 times each, while focusing on feeling the positive emotions associated with abundance.
Here are a few other ways you could incorporate affirmations into your daily routine:
#1. Repeat your affirmations every morning while you’re making coffee
#2. Repeat your affirmations every day in the shower while you’re sudsing up the shampoo
#3. Repeat your affirmations every day when you sit down at your desk (try writing some of your fave affirmations on sticky notes and posting them in your office space)
Find a way that works for you, and stick with it! The results will come soon enough.
So love, what changes will you make this year to improve the health of your biz finances or your money mindset?
When you pair a practical financial strategy with an energetic approach to mastering your abundance, there’s nothing that can stop you! 🙂
P.S. A huge thank you to our lovely guest expert for collaborating with me on this post! Be sure to check her out at the links below.
ABOUT TODAY’S GUEST AUTHOR
Rebekah Zobel Jones is The Centsible Bookkeeper. With a deep financial heritage (her grandmother, father, and aunt were all accountants/bookkeepers), digging into the books is always an adventure. She irons out the difficulties and automates as much as possible — giving you peace of mind and clarity about your financial position. Grab her quick guide to reduce expenses, 5 Steps to Shrinking Your Financial Waistline, here.