I don’t know about you, but I’ve gotten into *plenty* of fights with my money. You know the kind- those fights where everything starts off hunky dory. A trip to the mall. A frozen yogurt. And then your money does something that really annoys you and you can’t help but say something about it.
The next thing you know you’re vowing to never speak to each other again even though you have to sit together on the bus tomorrow. You want to ignore your money but the truth is, you can’t live without it.
Welcome to frenemy territory.
A few weeks ago I had the wonderful opportunity to chat with Jennifer Hottle on her new podcast Cru$h the Journey about the importance of creating a healthy friendship with your business finances.
Often we think about our money from a practical place of systems and numbers, but there is a deeper friendship that needs to happen if we want to propel our business and our dollars to the next level.
Here are the key take away from the episode (and where to find them) about why it’s time to stop the side eye and start being besties with your dollars:
How small business owners become estranged from their finances (3:00)
Many small business owners are estranged from their money and don’t have a relationship with it at all. We are so busy with all the other parts of running our business that the financial stuff comes last or not at all. Often, the money stuff is the last thing to get cleared from the plate and will linger there, rotting.
The consequences of not having a relationship with your money (5:00)
One of the biggest ways not having a relationship with your money shows up is that people don’t know how much money they are making. Especially for service based business, there is a lot of daily cash inflow, which creates a feel of being rich and “rolling in the dough”.
However, without a proper tracking system or taking the time to look at the profitability of your business, you may feel really rich, but as it turns out, you aren’t earning as much money as your think or you’re taking a loss. Many times, people are so fixated on what’s coming in that they don’t take the time to really analyze what’s going out, which can cause problems later.
What types of problems come up when people ignore their finances (7:10)
There are so many! Struggling to pay your bills on time, struggling to pay yourself a livable wage, struggling to pay for taxes, not saving for taxes, not saving for retirement, not saving for a vacation or sick time, and ignoring business debt.
There are so many ways that this shows up, especially when new businesses don’t take the time to do proper systems planning.
The importance of talking to your business through money (9:00)
I like to think of talking to your business through your money like when you’re a kid with two tin cans with a rope between them and you talk through the cans. You are one tin can, your business is the other, and the rope is your finances.
There is so much information that connects what you need to know about your business in your finances. This comes from the financial information and data that you can get from a proper record keeping system.
What’s underneath that data is juicy information about your business in the past, present, and future which can help you make important decisions. This becomes more than just learning to manage your money- it’s about learning how to communicate with it.
How to rebuild your friendship with money (11:35)
The first thing to do is become aware of the problem! Often what people believe is happening is their business is not really what’s going on. Start by looking at reports and learning how to read them. Learn how to break down the numbers you are seeing into information.
Next, get curious and ask questions. Don’t be afraid to wonder about your finances because that’s what leads to the deeper analysis. As you get more curious, you will shift your mindset from being “bad at money” to being interested in what your finances are telling you about your business.
The result of having a friendship with your money (13:55)
The most exciting part of having information about your business is not having to seek information out after the fact. You will begin to see potential problems ahead of time and look for solutions before the problem starts.
Instead of always trying to figure out went wrong, you will begin to plan for the hard times or avoid them completely. This is a major mindset shift because now you have more control over what happens to their business.
How having a healthy financial system impacts you as an owner (22:30)
Having a healthy financial system can help owners plan for expenses and costs that can benefit the business and improve your quality of life. As small business owners, we are doing everything!
Often we start a business because we are passionate about something and love doing it. Then, we spend a lot of time learning how to do all the other stuff running a business requires. These tasks are a major time suck and distract us from what we really love!
When people begin to make decisions about getting support, they can focus on the stuff they are really good at and put more of their creative/passion energy into their business. You reconnect with the sense of possibility you felt when you first started your business, which leads to greater happiness.