BUSINESS RE-SET: Your Business Finances|

Business and Marketing for Massage and Bodywork Therapists

Episode 35.

MINDY TOTTEN: Hey, Hey there. Welcome back to the Do It With Intention podcast. I'm your host Mindy Totten, and I am wondering, how are you doing out there? Really, how are you doing? I want you to know that I am thinking of you, that I am holding you in my heart.

Things have shifted now and some bodyworkers are getting ready to open their doors back up.

[00:00:22] Some have already done that and others are nowhere near. The place that they want to be before they can open their business again. And I want you to know that wherever you are on that spectrum, that this is a safe place. We talked about this a lot in the bodywork project these past two weeks, this being a no judgment zone.

[00:00:44] So I know that each of you out there listening, if you're attracted to the Do It With Intention podcast, and I know that you're the kind of person who is trying to figure out right. The very best, doing the very best that you can with the information that you have. The research that you have with your brain, your knowledge, your wisdom, but also you're trying to figure out this out with your heart and there is no one right way to do it.

[00:01:14] I mean, we're all doing the very best that we can to figure this out. So wherever you are on that spectrum, I want you to know that I'm thinking of you and that I'm holding you up and I'm wishing you all the very best for your health, for your safety, and for the health and safety of everyone. As we go forward these next couple of weeks and months, and as you get to that place where you may be opening your business doors and you, you might be starting up again, this is actually the perfect time for you to do a business reset.

[00:01:48] You know. No matter where you are on the,  the spectrum of revenue, like if you were making a hundred K before this all happened, or if you were just starting out before this all happened, this pandemic has probably been a wake up call for you around business finances. And so to have a business reset.

[00:02:09] Finances are a great place to start, and that's what we're going to talk about today. Over the next couple of weeks, I'm going to give you some more ideas for coming back stronger than ever with your business, and because this is the perfect time, right? We were forced to close down, and so when we open back up again, it's a perfect time for your business to have a reset to create a more intentional business.

[00:02:33] Type of business that you wanted to have from the very beginning, but maybe didn't know how to do. This is a perfect time to shift some of those things. And we can start with a couple of resources that I've got for you today around business finances. So let's start with a must read book. I don't know if you've read this before or not.

[00:02:52] It is called profit first. Transform your business from a cash eating monster to a moneymaking machine. By a guy named Mike , and I think this is such an important book for all small business owners or entrepreneurs, business owners like we are massage and bodywork therapists with our own businesses. It is such a terrific book, and I have to be completely honest with you.

[00:03:16] When I first read it, I read about 30 pages or so and I was like, Oh, no, no, no, this is, this is beyond me. Like it made me uncomfortable in some ways because it made me do exactly what I'm asking you to do. It made me take a really honest look at my business finances and realize that I needed to make some shifts that I needed to make some changes.

[00:03:37] You know, so much of what is written out there about business and entrepreneurship is. Wicked boring if you've tried to read business books or not. I used to be an English teacher, so I love reading. I'm always got my nose in a book someplace, and so I've read a lot of business books and they are. A tough slog, but not so with profit first.

[00:04:00] This is a book finally about finances that's written for entrepreneurs like us, good people who want to do good things in the world. So let me tell you a little bit about it. Mike  is an entrepreneur himself who has created and sold several successful companies. But what makes him stand out is his honesty and his humility.

[00:04:24] And I got to tell you his hilarious writing style. I mean, when was the last time you laughed out loud while right? Reading a business book write, never write. Well, you will laugh when you read profit first. So he begins the book by telling you about how he sold a business for multiple six figures and a few months later had no money left to his name.

[00:04:46] None. He made the mistakes that so many entrepreneurs make and he's brutally honest about them. And then he explains how you can avoid those same mistakes. And he calls the system profit first. Basically, he says that you need to start making a profit in your business from day one, even if that profit is just 1% of your earnings.

[00:05:07] So. If you earn a thousand dollars in a month, he's saying you need to set aside $10 or 1% for profit. Sounds easy, right? Well, as business owners, what we tend to do is to put everything back into our business and then we can't figure out why we don't have any money and why the business isn't working financially.

[00:05:29] What McCalla it says that we need to do is to divide up our revenue into four categories. He's got the profit that we were just talking about salary. Operating expenses and taxes that way. He says there'll always be enough of each of those accounts and our businesses can begin to grow. So the percentages that he suggests you work toward, and these are just his suggestions.

[00:05:53] Of course everyone is a little bit different, but as you're doing this business reset, keep some of these percentages in mind. He says that you're working toward. Taking 50% of your revenue, and that's your salary. That's what you pay yourself. That's what you live off of your business, your personal expenses, 50% of your revenue, 30% of your revenue, he says, should be put into operating expenses.

[00:06:17] So that's the account. That's the money that you use to actually run your business. 15% for taxes and then 5% for profit. Now, as I said, when I first started reading this, I was like, Oh, there is no way that I can do 5% for profit cause I'm barely making ends meet here. But what I recognized was just by starting with 1% you know, if I made a thousand dollars yeah I can put $10 aside.

[00:06:43] That profit started to grow and I started to get really excited about it. And then before I knew it. The percentages fell in line with what he suggest. And so now I'm easily making a 5% profit, usually much more in the business. So I know you may be wondering the same as I did when I first read this.

[00:07:03] Like don't most entrepreneurs just do what I used to do, which is basically earn the money, pay my bills, and anything that was left over, if there was anything left over was my salary. Does that sound familiar to anybody? Most entrepreneurs do that, and that is one of the reasons that 80% of businesses fail within the first two years.

[00:07:27] This is the perfect opportunity to take a closer look at your revenue and what you're doing with it. So even if you haven't been making very much money in the past couple of weeks and months maybe, or, um, drawing unemployment right now, no matter how you're earning an income, start thinking with that framework of.

[00:07:46] 1% in the beginning, just start with 1% going for profit and then try to use those other percentages. To see where you can create a balance with your revenue so that you can have about 50% for your salary, that 30% for your business, about 15% for taxes, and then 5% for the profit. You must must, must look at your business numbers and have a simple system for figuring it all out and profit first.

[00:08:14] We'll give you that system. It's really straightforward and it's easier. To understand, and this is why I like it so much. It's a book with practical ideas because I got to tell you, I'm pretty much over all of the books and the memes that say things like, you know, just to adjust your mindset and you'll be swimming enriches.

[00:08:33] That has never worked for me because. I didn't have a lot of money growing up. So how am I supposed to feel rich, quote unquote, feel rich? If you've never been rich and you don't know what that feels like. So this is not about mindset. This is much more accessible and a down to earth approach. So if you've been struggling and you want to do a business reset around your finances, profit first is a terrific first step.

[00:09:00] Now I want to end with another resource that I can share with you as part of your business reset. And that's your exhale number. You may have heard me talk about this before we dive deep into this inside of the bodywork project, but your exhale number is basically the baseline income that you need to earn every month to keep your business doors open.

[00:09:19] And I call it the exhale number because I know that so many of us basically go around holding our breath around our finances and we need to know what. Is that bottom line? What do we need to make so that we can exhale so that we can finally let our breath out? It's okay. Basically your personal expenses and your business expenses.

[00:09:41] You know, if you had to cut everything back to the bone, like we've all had to do the past couple of months, what's the bottom line that you need to keep your business doors open? This will give you so, so much clarity and in many cases I've seen this over and over inside the bodywork project, it gives people relief because it's not as much as you think it is.

[00:10:01] The exhale number will help you discover it's ballpark figure, but it'll help you get a really good handle on where you need to be financially to keep your business doors open. And you can find a downloadable bonus that I created. We'll link to it in the show notes so that you can figure out your own exhale number.

[00:10:21] the show notes are at MindyTotten.com/podcast/episode35. And I want to end by telling you, as much as it might not seem like it now, your business can come back stronger than ever. Just take advantage of these two resources to start getting a handle on your business finances. And then next week, join me again for part two of the business reset.

[00:10:47] This is the perfect opportunity for you to come back stronger than ever. As I said in the beginning, I'm here for you and I'm holding you in my heart. Until next week, keep going and keep doing it with intention.