When it comes to setting and achieving financial goals, most new business owners make one simple mistake.
And it’s the reason they don’t achieve their financial goals.
In this episode I’ll share what this mistake is and explain how to set financial goals in business – and actually achieve them – by simply asking yourself the right questions.
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Ok, first let’s talk about this very simple, but common mistake that has massive consequences.
And please don’t feel bad if you’ve done this – because I did it too! In fact, most new business owners do.
The simple mistake is that they start a business – but keep thinking like an employee!
They’re not used to crunching the numbers on the basis of running a business. And they don’t know how to set financial goals that are appropriate for a business, rather than someone on a wage or salary.
Starting to think like a business owner comes with time. It’s simply a matter of learning how to ask yourself the right questions.
When I first started my own business I made the same mistake. I was still thinking like an employee. I set my income goal at $10,000 per month because I thought that would solve all my problems. But when I hit the $10,000 a month, my problems were far from over. In fact, they were BIGGER because I was running a business! And that business had expenses and I had tax to pay. There were these things I hadn’t allowed for.
In this episode, I’m going to take you through the quick & simple questions you need to ask yourself, so that you can set and achieve the financial goals that are going to give you the outcome, the lifestyle, the peace of mind that you’re looking for.
So how do you set the right financial goals as a business owner? Well, there are 3 key questions you need to ask yourself:
Number 1: What are my personal expenses?
How much does your business need to pay you?
A handy hint: If you want to really smash this, make sure it includes your next financial goal. For example, if you’re planning to pay off a $5,000 credit card over the next 10 months, you need that extra $500 per month of personal income.
Number 2: How much does my business need to operate?
How much money do you need to run your business? Your business has its own ‘living expenses’ – known as operating expenses. You need to pay those bills to stay in business. So make sure you have those thoroughly covered.
Number 3: How much tax will I need to pay?
This is the biggest difference between being an employee and being a business owner. You don’t get to keep all the money… you need to pay some of it to the government in taxes. As an employee, your employer did it for you and the rest was yours to keep.
Knowing how much of your gross income you need to put aside for tax is really important.
Putting tax money aside from the beginning also shows that you’re EXPECTING to make a profit, which makes you magnetic to more.
Check out this episode here for more info on how to manage your money to make you more magnetic. And you might also want to check out this episode here, which takes you through the 5 rules for a money management system that helps you pay your bills and reach your financial goals.
Ok, let’s get back to your income goal, which of course is the sum of all 3 answers above.
Your income goal is the sum of your personal living expenses, your business operating expenses and tax.
Now I’d love to know in the comments: When you’ve set financial goals in the past, did you allow for tax or did you forget? Because I know I did, especially the first time (Ok, and maybe the second). So let me know whether you did the same thing!
Ok, we’re not done yet because this episode is about how to set and ACHIEVE your financial goals.
So let’s talk about how to achieve them.
This is of course a combination of mindset and business strategy. You’ll find plenty of other episodes here with tips for sorting out your mindset to help you attract that income goal.
So today, let’s talk about the strategy. In particular, let’s ask one more simple, but very critical question.
Are you ready?
The question you need to ask yourself after you set that income goal is: Can my business actually make that much?
Given your current business model, your current pricing products and services – is it actually possible for you to generate that level of income? Because if you’re charging $50 an hour and you can only work 20 hours per week because you have young children, then making $10,000 per week will be impossible.
A really simple process my business coach taught me a long time ago is what she referred to as “Income Stacking’. All you do is list every single product and service that people can buy from you & how much it costs, and then work out how many of those you need to sell to achieve that income goal.
Then you ask, Is that achievable?
From there, you can make some decisions and changes as you need. Maybe you need to increase your prices, maybe you need to focus more on leveraged products where you don’t need to put in more hours – where all you need to do is improve the system and funnel that sells them for you.
So by asking that simple question, “Can I actually make that much money given my current business model,” you get to work out very quickly whether the goal you set is achievable or whether you need to make changes.
If you’d like a handy calculator to help you put those numbers together so you can work out what your income goal should be, then grab my free Income Target Calculator. The link is below, so scroll down & download it now.
I hope you enjoyed this episode and found it really useful? I can’t read your mind, so please let me know by leaving a comment below.
Remember – it’s time to embrace your unlimited potential. and you’re ready to take the next step.
xx Miriam
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