Posts Tagged ‘business finance’

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How You Do Your Money…

May 24, 2011

…is how you do the rest of your life.

I was talking to a yoga teacher about a friend of hers who was having money problems. Actually, he had been having money problems for most of his life. She told me that there is a saying in yoga: “How you do yoga is how you do the rest of your life.” In my years of working with others around their money, I’ve found this to be equally true: “How you do your money is how you do the rest of your life.”

If I gave you a list of all of the clients’ businesses and professions that I’ve ever worked with, and asked you to select which one of those clients was, by far, the most at peace with his or her financial past, present and future, you would never select the right one. If I gave you a list of all of their gross revenues, you would never select the right one. If I gave you a list of their net profits, you would never select the right one.

But, if I gave you a list of other attributes of each of these clients, it would be clear to many of you which is most at peace.

Do you have set work hours, take regular vacations, fund your retirement every month, pay yourself a steady salary, don’t draw additional money from your business, have proper insurances in place and utilize appropriate professional advice? In your personal life, do you eat well, exercise, and balance playtime with responsibility time? How do you do the rest of your life? Does it look like how you do your money?

I’ve learned a lot from this client. How did she come to be at peace? Consistency, and years of it. Paying a little extra on her mortgage every month, no matter what. Funding her retirement every year, no matter what. Using business debt very carefully and cautiously.

What could you do, in your life, to be at peace with your money?

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Stacey Powell, creating more financial clarity at CreatingAnswers.com, tweeting at @CreatingAnswers and showing off Financial Art at Facebook.

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My Dad: Lessons In How NOT to Own A Small Business

March 3, 2011

My Dad: Small Business Owner Mickey PowellToday is the anniversary of my dad’s passing. I learned a lot from him, many lessons to share with all of you about small business ownership. In summary: do not do it the way my Dad did!

First, to alleviate any perception that I am speaking ill of him, I want to share what a fine man he was. My love of community service comes from him. His dedication to making this world a better place is clear in this tribute:

http://www.fedflyfishers.org/Default.aspx?tabid=4520

Even his business ownership was, in a way, community service. He was ‘saving the family business.’ http://www.davidlnelson.md/FFF_FlyTyingGroup/Buszeks/BuszekHistory.htm

Now, on to telling the truth. As a child I watched my father work, work, work, and then work some more. He came home late for dinner, went back to work at night, and worked most weekends. Even our few vacations were often spent at work-related fly fishing conclaves or networking conferences. Both of my parents worked, hard, yet we never seemed to have any money. We weren’t destitute; dinner was always on the table. But money was always an uncomfortable issue. Always having a keen sense of numbers and business, even at a young age it was apparent to me that something wasn’t right. I often wondered, weren’t business owners supposed to be rich?

As a teenager, I became the bookkeeper for my dad’s business, and my childhood observations were clarified. The business was barely profitable. My dad either trusted me enough to let me see his truth, or he thought I was so inexperienced I wouldn’t get it. It wasn’t my place to ask.

But the questions I kept to myself then are the exact kinds of questions I ask clients now. And they are questions I want you to ask yourself if you own a business, no matter how large or small. Yes, even a side Tupperware business, or a little consulting gig, or do a bit of wedding photography. These are all businesses, and they do impact your family!

Here are 12 questions to ask yourself.

  • Do you spend less time with your children, spouse, or friends as a result of your business?
  • Have you ever paid an employee late?
  • Are there months that your business doesn’t pay you?
  • Do you ever put off buying basic things your family needs because your business needs the money more?
  • Have you ever lied (or avoided the truth) about your business’ finances to your spouse?
  • When was the last time you took a real vacation?
  • Do you avoid asking for professional advice about your business’ health?
  • Do you truly know how profitable your business is?
  • Is your business contributing to a retirement fund?
  • Do you have partnership agreements that aren’t in writing?
  • How much have you borrowed against your family’s home, retirement, savings, children’s college fund or inheritance?
  • Does your spouse’s income support your business?

If you don’t like your answer to more than a couple of these questions, it’s time to find a trusted advisor, a business coach, an external CFO, or a mastermind group and tell the truth. Print this blog out and put it in the front of a binder titled “Making My Business Better.” Make an action plan. Make it better. In six months, ask yourself the questions again. Then repeat.

What would my dad’s answers to these questions have been? 100% not good. In the 32 years I watched him run his business, I only saw his business run him. I’ve taken these lessons and have been committed to reverse engineer his mistakes into a balanced plan for running my business. I haven’t always been successful, but one of my life’s quests is to be just like my dad when it comes to community service, and exactly opposite my dad when it comes to small business ownership.

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10 Decisions Not to Make Alone

February 11, 2011

We all make financial decisions every single day, some small, some large. Do I cook at home or go out to eat? Do I change banks? Do I clean my own home or hire a housecleaner? Do I buy a used car, a new car or lease a car? Do I start my own business or buy a franchise?

The original title for this blog was “10 things you might want to talk with your CFO about,” but most people don’t have a Chief Financial Officer (though I’m trying to change that.) Many people do, however, have a financial planner, a tax accountant, a business coach, or some trusted advisor. Rising in popularity is the type of financial and money coaching that I believe is so valuable.

Over the years I’ve had many a client announce, during their scheduled monthly appointment, “I leased a building last week,” or “my attorney submitted all the paperwork to change my business to an S corporation,” or “I took out a home equity loan.” I always wonder why they wouldn’t have waited just one more week to discuss the decision with me. I suspect it’s often our subconscious telling us to move forward before someone tells us “no.”

Accountants get accused of being naysayers, and there’s a bit of truth to that. We’re conservative by nature. I’ll be the first to tell you: don’t always take your accountant’s advice. But: do always ask for it. Discussing the facts of major decisions, as well as the feelings and the what-if’s, is invaluable.

What are the 10 things you should discuss before you jump in?
Read the rest of this entry ?

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Creative Brain vs. Business Brain

January 21, 2011

I love working with creatives: artists, actors, healing professionals, writers, photographers, all of them. Our society has created a “right brain vs. left brain” mentality. If you’re creative, you aren’t a strong business person. If you’re a strong business person, you aren’t creative. But we know black and white statements aren’t true. Creatives can make great business people, especially when they provide themselves with structure. Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business.

One of my inspiring clients decided, as a strategic business decision, that 2010 was going to be her year of “living as an artist.” She had long worked hard on her business; she had tethered herself to do the work, bring in the clients and earn a living. She had been successful enough, but by the time she got to me she wasn’t enjoying it much. Something needed to change.

“Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business.”

So 2010 was her year of living as an artist. Her mission was to fully embrace her creativity and joy of being an artist. Her goals, strategies and actions all supported that mission. There was still some structure: billable work, marketing, financial coaching and professional development. But the focus was on enjoying her creative talents, not on meeting her monthly revenue goals.

And what were the results? November and December were two of the most profitable months she’s ever had. And, she’s happy. It was a year of transformation and expansion for her. She’s well positioned to focus on revenue growth in 2011. Most important of all, she was well cared for, and she is, after all, the most valuable asset in her business.

Why would I, an accountant, support that kind of strategy? Because I’ve seen its effectiveness and profitability, over and over and over. If it’s done with intention and structure, it can be a very effective business decision for both creatives and for any other kind of business owner.

What’s your mission for 2011? Does it include creativity? Art? Health? If not, weave it in, and then write down what kind of return on investment you expect from giving yourself that gift.

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15 Days til New Year’s Eve…The Time is Now

December 16, 2010

Countdown to New Year'sWhile everyone else is busy counting days until Christmas, accountants are busy counting days until New Year’s Eve. And here’s why:

Do you itemize your deductions? If yes, look at your spending plan for charitable contributions. You have 15 days to maximize your gifts. Plus your favorite nonprofits are busily trying to meet their year-end goals, so gifts that come in during December are hugely appreciated! Have you spent out your Health/Flexible Spending Accounts? Now is the time.

Are you a business owner? If yes (and you file cash basis) then every dollar you spend in the next 15 days saves you in the neighborhood of 25 to 40 cents. Our advice to clients at year end: Any equipment you plan to buy in the next six months, buy it now. Any bills scheduled to pay at the beginning of January? Pay them now. And on the income side, for every dollar you put in the bank, you’ll be sending 25 to 40 cents to the IRS on April 15th. This is the one time of year you ease up on your receivables calls, slow down your invoicing process, walk to the bank very slowly.

And for my nonprofit clients? You have 15 days to maximize contributions for the year. Call one key donor every day until the 31st. You can ask for support, or just wish them a happy holiday and thank them for their support. Craft one last personal email solicitation. People want to give this time of year, and it’s your job to remind them.

Happy New Year!

(The accountant’s disclaimer: this is clearly generalized advice. It’s something to be discussed with your trusted advisor. If you don’t have a trusted advisor, we know some great ones!)