Do you struggle to pay yourself well?
There are many reason why business owners don’t pay themselves, but, in a recent survey, three key challenges to paying yourself well came through loud and clear.
Challenge #1: There isn’t enough money
This can obviously be a problem when you are first starting out but shouldn’t become a permanent problem. There can be several underlying causes: not charging enough for your services, spending too much, having too many staff, maybe all of these together.
The good news? This is easily solvable. Using the Profit First system we can easily identify where the problem is, so you can do something about it.
It’s common to hear people talking about their 7-figure, 8-figure businesses as the goal to aspire to. But if you also have 7-figure, 8-figure expenses, is it really worth-while?
I’ve seen businesses who have managed to grow their businesses to $2M in turnover, with over 30 staff, but after 10 years, they still haven’t increased the amount of money they were paying themselves when it was just them and a couple of staff, so with inflation, they were going backwards. Plus, they were super stressed, with no social life.
What we really need to do is step back and look at why you started this business in the first place and how it supports your life. This is what makes Profit First such a great tool as it focuses on sustainability and, of course, profit.
You don’t need to! Well at least not all of them anyway.
If you have the right support on your team and build just a simple understanding of where your money is going – you’ll be fine.
My grandmother used the envelope system for managing the home finances, taking the money my grandfather gave her (his wages less the third he took for his cigarettes) and she would put it aside into different envelopes for rent, food, power, TV licence, whatever else she needed. And she could only spend what she had, and she knew where everything was going.
It can be that simple. Just with virtual envelopes instead of paper ones.
This is how Profit First works for your business, by dividing your money up into separate bank accounts for every important purpose, so you can understand what is happening with your finances, without attempting to read confusing reports.
Want help?
If you’d like a bit of help to get started, I offer a Profit First Power Hour session. It’s designed for business owners who want to implement Profit First but have got a bit stuck doing it on their own. The most common thing I hear is “I am confused about my percentages”. So in this session, we will work out your starting percentages, compare your business against the standard targets, and adjust as necessary. We will identify the priority areas for you to work on, design a strategy to do this, and put a plan in place for improving your percentages over the next 12 months.
Learn more here.
Ready to book? you can schedule a time here