Financial Success for Small Business Owners – The No.1 Rule

Financial Success for Small Business Owners – The No.1 Rule

by | Sep 7, 2022 | 6 Figure Business

Did YOU know about it when you started your business?

The No.1 rule for financial success for small business owners.

For many business owners, starting our business is about freedom, the potential for unlimited income, creating a lifestyle we choose and escaping the rate race.

We want to follow our passion, live with purpose and make a difference by tapping into our gifts and zone of genius.

But all too often, a little further down the track, new business owners suffer a rude awakening on the subject of money. And it can become a major source of stress!

And it’s all because people don’t honour this ONE rule for financial success… that is ESPECIALLY important for small business owners.

So let’s talk about:

  •  what this rule is and 
  • give you some practical ideas and tips to help you honor it 
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Because we want your business to be a financial success.
And we want YOU to avoid unnecessary money stress.

 

Of course, along with money stress come the mindset wobbles. Because you might start thinking your business isn’t doing well, that you’re not cut out for it, that it’s not meant to be. And that can cause you to want to give up – when you absolutely don’t need to!

It just takes a few little tweaks to help you honor this very important rule.

So what is this rule?

It’s that CASH IS KING.

When you’re in business, your cash flow needs to be protected above all else.

And if you don’t have the right systems in place, it’s way too easy to go off track and get yourself into a pickle where your business is struggling to pay its bills – or to pay you!

There’s a bunch of episodes where I cover some key concepts to help your business succeed. You’ll find those links below.

But let’s look at two that especially help to protect your cashflow so that cash can continue to be king:

The first is making a deal with yourself to take a long term view.


This comes in a couple of different forms.

From a mindset point of view, people will often convince themselves their business isn’t doing well on the basis of just one or two months’ trading. They don’t look at the bigger picture.

When I started my finance business, I made an agreement with myself. I promised myself to ONLY ever judge my business doing based on the last six months’ average.

Now let’s translate that into PRACTICAL ways to protect your cash flow.

This is about also looking FORWARD. Knowing where you plan to spend money in the future and having a plan for that.

(ie… not just spending more money because you just had a great month…. yes, I see you!)

Having a great money system to smooth your cash flow by using your actual income to create a consistent source of funds for expenses, growth and expansion, alongside some forward planning is the magic combo.

A great money system, such as the Magnetic Money™️ System will help you do that. Want my help to set yours up? Check out the Bootcamp here.

OK, let’s take a break and check in.

Is this ringing some bells for you?

Are you suddenly realising that you’ve been taking a short term view?

Have you been panicking way too soon?
Or not planning properly and spending too quickly on all the wrong things? 

Let me know in the comments below!

Now, the second thing you want to do is get really clear on STARTUP CAPITAL.


Most small business owners and entrepreneurs invest personal funds to start our business.

But what are the rules around that?

Are you investing a lump sum designed to keep the business going for a certain period of time? Are you drip feeding income from savings, a job or maybe a partner’s income into the business? How long will that go on for? Where will you draw the line? And what’s the plan to help make it happen? 

Being really clear on those things upfront avoids you getting into a situation where you keep putting more and more personal money into the business… and feel awful about it.

Because when you’ve not been clear upfront, you’ll get emotional. You’ll feel the pressure. And that kind of energy won’t help your business succeed.

You may also let it drag on & on. Because you have no idea where to draw the line… and no plan to ensure your business will take over and pay its own way by the deadline.

Being clear on the rules around start-up capital helps you:
a – avoid panicking way too soon
b – make a plan so your business can stand on its own feet by the due date

By being clear, you give yourself breathing space to focus on getting the business up and running.

And by knowing what the boundaries are, you can develop a business plan and strategy that works.

This clarity allows you to protect your cash flow and use it wisely.

In the Magnetic Money™️ System Bootcamp, we show you how to smooth your cash flow and spend money wisely so you don’t run into a cash flow crisis.

If you need to get your money system then check out the Magnetic Money™️ System Bootcamp. In Bootcamp, I take you through my entire M-A-G-N-E-T-I-C process to help you sort your business and your personal finances.

The best part? Once it’s set up, it only takes 5 minutes a week to manage your money!
I love that!!

If you want to start by dipping your toe in the water and organizing your banking, be sure to jump on my free workshop called ‘Organize and Tidy Your Banking’. The link is below.

OK, tell me – Did you enjoy this episode?
What’s your biggest take-away? Let me know in the comments!

See you in the next episode – or in the Magnetic Money™️ System Bootcamp 😊

xx Miriam 

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The formula for getting rich – that changes EVERYTHING

The formula for getting rich – that changes EVERYTHING

by | Aug 31, 2022 | Money Management

Let’s talk about the formula for getting rich.

If you‘ve been struggling to save money no matter how hard you try, this episode is for you! Today I’m sharing something I learned from Bob Proctor a long time ago. It’s called the formula for getting rich.

What will blow you away is how incredibly simple it is – yet it’s unbelievably powerful in turning things around. It’ll take you from feeling like you’re not going anywhere financially to suddenly powering ahead.

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When I first started my personal growth journey, I was broke and on the bones of my butt. So of course, I was a personal growth junkie. I went to every seminar, I read every book and all the courses (that I couldn’t afford and didn’t even complete) 

But one of the best things I ever did was ‘You Were Born Rich’ by Bob Proctor. And the formula for getting rich is one of the most profound teachings from that course. 

When I finally understood this, it turned my world upside down. I went from feeling like there was never enough money to save or get ahead, to the total opposite being the case.

So before we get to the formula for getting rich, let’s talk about the formula for staying broke. This is what most people do.

Here it is: 

INCOME – EXPENSES = SAVINGS

They take their income, subtract all their expenses then save what’s left. Now, what do you think the problem with that might be? That’s right – usually there’s little or nothing left .

Because Parkinson’s Law kicks in. Parkinson’s Law basically says that the amount of resource required to accomplish any given thing is the amount of resource available. This applies to all sorts of things, including money. It means that if I have $5,000 available to go on a holiday, I’ll go on a $5,000 holiday. And if I have $50,000, I’ll go on a $50,000 holiday.

For most people, as their income grows, their expenses grow to match. They get a pay rise and think, “Great! I can upgrade my car, live in a fancier house, update my wardrobe.” And the money quickly disappears.

Then they’re left wondering why they’re not getting ahead financially.

I saw this over and over again in my finance business. People on higher incomes had much higher expenses. More expensive cars, bigger car loans, bigger homes, bigger mortgages. In fact, the people on lower incomes often did better in terms of getting ahead, saving and creating wealth for themselves.

Maybe that’s because they knew what that I’m about to share with you….

But first I want to hear from you! 

Let me know in the comments if this is ringing some bells. Have you also found that extra money kind of just disappears for you because Parkinson’s law kicks in?

Okay, let’s move on to the formula for getting rich (cause I know that’s what you want to find out about)

But before we go there, let me point out that this is mainly a shift in perspective. It’s a shift in attitude and mindset that needs to be mirrored in the way you MANAGE your finances.

So here it is – the formula for getting rich:

SAVINGS + EXPENSES = INCOME

So you might notice that this includes exactly the same 3 variables as the formula for staying broke. We’ve just shuffled them around – but the meaning is totally different.

What it now says is that the amount of money for savings, ie, wealth creation, PLUS  your expenses needs to equal your income.

So although it’s the same three variables, we’ve got a total change in focus, perspective and mindset because we’re not just saying, “Hey, I’ll save what’s left,” anymore.

What we’re now saying is, “I have a financial goal, wealth I want to create for myself and I’m going to prioritize that. And I have expenses just like everyone else. And so if I add those together, that gives me the income goal I need to shoot for.”

And guess what? Chances are, if you’re reading this, you’re a business owner or entrepreneur – which means your income potential is unlimited!

Even if you don’t have a business, you can have a side hustle or invest. You can do all sorts of things to increase your income. And by shifting things around, you’re prioritizing what’s most important to you and creating a goal and a focus to help you achieve it.

By approaching things through the lens of the formula for getting rich, you achieve 3  very important things.

Number 1:
A mindset shift. You prioritize your goal and can set an income target to help you achieve it. And when you have the vehicle of a business, you’re able to plan for success. By now prioritizing growth and financial stability, you’ve shifted your mindset.

Number 2:
Looking at your finances via the formula for getting rich also helps you set up your money system to achieve those goals. You can set things up to prioritize that goal and chip away at it until it’s achieved.

Number 3:
The third really important thing is that you’re no longer just leaving your financial destiny to chance. You’re not plodding along like an unconscious victim anymore. You’re putting yourself in a position of power and taking charge of your financial future and destiny.

What’s really cool is that at the end of the day, this is nothing more than a shift in perspective. You’ve simply chosen to no longer look at life one way & chosen to look at the same thing in a totally new way.

It’s just a shift in perspective, but it changes everything.

 

To be able to implement the formula for getting rich, you need to have the correct infrastructure in place. If you haven’t done it yet, be sure to jump on my free workshop to help you organize and tidy your banking.

These 35 minutes will help you get the right structure in place to implement the formula for getting rich. We also cover important principles to help you succeed in your business and achieve your financial goals.

The link is below so you can get started right now.

There are also a couple more episodes below you might want to watch next.

It’s your time to create more abundance – both inside & out.

xx Miriam

 

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How to budget with variable income – 3 hot tips

How to budget with variable income – 3 hot tips

by | Aug 24, 2022 | Money Management

Have you wanted to give up on budgeting because your income is variable?

Then this episode is for you!

Budgets and irregular income don’t mix very well. And it can make you think your business is failing – when it’s really not!

In this episode, I cover 3 practical and mindset shifts to help you budget with variable income – so you can get back on track.

We will cover:

  • Why the rules are different in business
  • 3 mindset – and practical – shifts you need to make
  • The No.1 practise to keep your cash flow on track

 

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If you’ve wanted to give up on budgeting because your variable income just seems to make it impossible, I absolutely hear you. And you are definitely not alone!

Sadly, it can make you feel like your business isn’t doing well – when it’s actually doing fine!

The problem is that budgets work well when you have steady, predictable income – when you have a JOB. But as entrepreneurs and business owners, we left the security of the job because we wanted the opportunity to have unlimited income.

But the rules around money are different in business. Mostly, because of this variable income issue.

And so it simply requires a different approach – both from a practical and a mindset point of view.

That’s why we’re going to cover 3 mindset and practical shifts that go hand in hand to help you navigate your variable income and get back on track.

Over the years, I’ve definitely had a love-hate relationship with budgeting. In fact, I don’t even like that word – I mainly use it because people relate to it. I much prefer to talk about having a money plan and a system to help you implement it.

Budgeting is something that I tried on and off over the years. At times I felt like I didn’t need to budget because I had plenty of income. And at other times, I felt like I didn’t have enough money to budget!

But it was the period I spent utterly broke after my marriage split, that made me apply some of the principles which I then took into business…  and which I still teach and implement today. 

So the 3 things I’m sharing with you today are really helpful from both a practical point of view and a mindset point of view –  whether your irregular income is because you have a business… or because of something else.

The principal idea that flows through all of these is that you need to know your numbers. And then you need to be willing to make real-time adjustments as you go!


NUMBER 1: Let’s talk about variable income.

It’s really critical that you smooth your cash flow as much as possible. Because if your income is on a roller coaster, the last thing you want is for your emotions to follow!

This is a common issue – especially for new business owners. They go on an emotional roller coaster that matches the income roller coaster.

They go from feeling rich to feeling poor. From celebrating to worrying. From congratulating themselves for firing the boss, to stressing out about paying the bills. Sometimes all in the same day!

And that’s not healthy for you and also not helpful to your business because if you’re feeling stressed and worried about money, you’re going to make decisions driven by fear and coming from a lack mentality.

And then energetically you’re going to attract more of the same. You’ll go into a downward spiral of negative thinking and won’t be showing up as your best self.

Clients and customers can smell that ‘Eau de Desperation’ – nothing makes them run for the hills faster!

I recently released an episode that shows you how to smooth your cash flow in just a couple of simple steps. It’ll be linked for you below so you can watch that next.

So you want to smooth that cash flow, and you also want to smooth the emotional rollercoaster and not have your inner world so linked to how much money came in today or this week or even this month.

Here’s a practical thing I did in my own business:

I made a decision and a promise to myself to never judge my business on anything other than the last 6 months average.

I recognized there would be a bit of a roller coaster and didn’t want to get sucked into that emotionally. So any time I was tempted to worry, I would just look at the last 6 months’ average. And pretty much every single time, everything was absolutely fine.

Smoothing your cash flow and smoothing your emotions about your income are two things that really go hand in hand.

 

NUMBER 2:  Separation is Peace!

The next one is the principle that your business pays YOU.

A lot of people into business, still having the mindset of an employee. (I talked about this in a previous episode which I’ll also link below)

But the mindset of an employee has no place in business!

You need to start thinking like a business owner. And that means that you are both YOU with your personal finances… and you are also now in charge of the business’ finances. But the two are SEPARATE.

So you need to create separation between them and have your business pay you. From a practical point of view, be sure to actually put that in place. In Magnetic Money, we do our business income distribution every week. It only takes 5 minutes, but it’s critical to ensuring that your business keeps running and that YOU get paid so you can pay your bills.

The most important part of this process is smoothing your cash flow.

So from a mindset (and a practical) point of view, create that separation and always ask yourself, “Am I looking at my business’ finances right now – or my personal ones?”

Do you have that separation? Do you have separate bank accounts for your business?
Let me know in the comments!

See, you and your business are separate legal and ENERGETIC entities. So creating separation in the way you manage your money and in the way you think of it are both critical.

 

NUMBER 3:  Plan & adjust!

Yes, you should be doing some forecasting. You should be planning your future income and expenses – doing those projections.

Where will your business income come from? How much do you expect? What expenses do you have ongoing & what others are coming up?

But it’s not set & forget! It’s a dynamic, ever-changing thing.

And because the income is planned – but not predictable – you’ll need to smooth your cashflow and adjust as you go.

So by all means, have a forecast, have a plan, but be sure to make real-time adjustments as you go…. so you can smooth your cashflow & reset expectations.

Here’s the practical way I would approach that, which will also address the mindset side of things:

Sit down to do your business forecast. Look at what your goals & plans are – and whether they’re achievable. Maybe you’ll need to raise your prices or sell more/other products and services to meet your goal.

Plan what you want to achieve.

You want to revisit that, say quarterly to make any adjustments. So that’s your planning.

 

But then you need to also track what’s ACTUALLY coming in and distribute that income properly. I recommend tracking weekly or even daily and distributing weekly.

This will help you reconnect with your money – rather than sticking your head in the sand, hoping for the best. 

 

Tracking your income every day is also a very insightful mindset practice that allows you to notice your thought patterns around your income and business.

You will notice things like a worry pattern kicking in the moment you have one or two low income days. Or maybe that you start beating up on yourself for being ‘lazy’ and having taken the weekend off if your income dips.

These are amazing opportunities to find room for improvement in your mindset. They give you deep insight into the way you think about your business…  and the way you talk to and treat yourself. 

 

So the practice of tracking your income is handy because it helps you do your income distribution at the end of the week. But it’s also a really awesome mindset practice!

Above all else, please be as loving and kind to yourself as possible. If self judgment kicks in, just notice it and think, “Oh, look at that. I’m judging myself. I’m beating up on myself. Isn’t that interesting? I wonder what that’s all about? I wonder what I can do to shift and heal that, so I can start having a much better attitude about my abilities, my worth, my business, and start treating myself more kindly.”

These practical strategies are also amazing mindset strategies.

And between the two, you’ll be able to come to a place of beautiful new balance, where you have the right mindset to run a business successfully – and where you’ll have the daily practical habits that make you a successful business owner.

So those are 3 things I wanted to cover off for you today.

Again, my main message is to know your numbers, then make real-time adjustments as you go. Because when you’re operating a business, your income is going to vary. It’s going to fluctuate. That’s just how it goes.

Now, an important place to start is by getting your banking all sorted. So if you need a bit of help with that, be sure to grab my ‘Organize & Tidy Your Banking’ workshop at the link below. It’s free.

In this punchy 35 minute workshop we start to organize and tidy your banking so your money can flow more easily from your business into your personal accounts. We also cover some important principles – both from a practical and a mindset point of view – that will help you become a more successful and abundant-feeling business owner.

The link is below.

Before you go!
Did you enjoy this episode?
What did you learn? What’s your biggest takeaway?
Let me know in the comments below!

Remember that abundance is a state of being. And yes, it’s about money in the bank, but most importantly, it’s about feeling abundant, worthy, and loving life.

And that’s what we’re here to help you do. See you next time! 

Ready to go deeper?

 

 

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10 everyday money saving tips that make you feel more abundant

10 everyday money saving tips that make you feel more abundant

by | Aug 17, 2022 | Money Management

It’s time for some show ‘n tell!

In this episode, I share 10 everyday money saving tips – that help you feel totally abundant.

Plus, I share some of my favorite recent purchases and tell you how I got them for an absolute steal!

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See, saving money doesn’t have to be about feeling poor and like there’s not enough.
Saving money can be done in a way that feels utterly empowering, helps you create wealth AND makes you magnetic to more!

And as you save money on things you don’t really need to be spending extra on, you have more available to ‘make money babies’, creating financial stability and freedom for yourself and your family.

Back when I was going through my ‘broke single mum’ phase, I had no choice but to save money –  because I didn’t have any. 

There was both good and bad in that. Because on one hand, I felt poor and was totally stressed about money. But on the other hand, it also taught me that you can do with very little money pretty much the same things you can do with A LOT of money! 

In a recent episode, I talked about bargain shopping with an abundance mindset (you’ll find the link below). Because at the end of the day, what’s important is not so much what you do. What’s important is how you FEEL about what you do.

If you bargain shop from a place of excitement and empowerment about saving money so you can accelerate your wealth creation, it cultivates an abundance mindset.

It feels empowering to take charge of your financial destiny like that.

Plus, bargain shopping is a whole lot of fun! 

OK, let’s get into these 10 tips. These are not necessarily my top 10, but they’re 10 wide-ranging tips that are super easy to implement.

TIP NUMBER 1:
Capsule shopping list

Let’s start at the grocery store. Firstly, always have a list – obviously. Make that list based on the meals you’re planning to make. The trick here is to make those as MODULAR as possible. 

 

You know how we have capsule wardrobes? Think about having a capsule shopping list! So if you say, buy broccoli, plan to use some of it in a stir fry and the rest steamed on the side of some fish.

So you’re buying the one thing, but you’re planning to make more than one meal with it. This is awesome for avoiding leftovers and waste.

An extra little bonus tip is to shop and plan for one meal LESS than you think you need. Because there are always some leftovers and sometimes it’ll just end up being takeout night.

TIP NUMBER 2:

Keep it basic, then glam it up!

 

Let’s move on to your wardrobe. Stick to buying good quality, basic pieces. Then dress them up and accessorize them with things that you buy recycled and secondhand!


For example, I’m very much a top and jeans kind of girl. And I love jackets. I have A LOT of jackets! And you might look at my wardrobe and think, “Oh my God, woman, how many jackets does one person need?” But the thing is, that I can just wear a plain tee-shirt or top with my jeans and swap out my jackets for a whole variety of different looks.

Same goes for jewelry and handbags (which I also like to buy recycled where possible)

In the video of this episode, I do a little show’n tell, sharing my favorite recent purchases, so be sure to watch it!

I share some of my favorite coats, leather jackets, and handbags, which only cost me a few hundred bucks and allow me to create a bunch of different outfits.
And sometimes, I’ll sell my handbags when it’s time for a change.. which is why it’s so important to buy quality and take good care of things.


Less really is more – as long as you absolutely love and adore every single piece. And if you also make them modular and keep things simple, you end up being able to dress in really abundant, luxurious feeling ways, for very little money.

TIP NUMBER 3:

Create space!

I’ve touched on this already and it’s to sell something before you buy something new.

Because we all have enough stuff in our lives, right? So if you decide you need something new, get rid of something first. It creates space and shows you have an attitude of abundance. If you can get a few dollars for it, awesome! You can put that money towards your current number 1 financial priority. 😊

TIP NUMBER 4:

Going – going – gone!

As you’ve probably realized, I love thrift and recycled stores. To me, it really is a treasure hunt. It’s fun and exciting and you can really find those statement pieces like jewelry, handbags and coats to make whatever you’re wearing really pop.

It also gives me a deep sense of satisfaction knowing I’m not adding to waste to the planet or contributing to industries that are rife with moral, ethical and environmental issues.

And you can do the same with furniture! In fact, most of the furniture in our home I bought back when I had no money. I went to local auction houses and found things that I liked. I’d leave absentee bids which took away any temptation to spend more money and eliminated the pressure and stress of being at an auction.

 

And I ended up with furniture that we still use and enjoy every single day. I wouldn’t part with it for anything. It’s all great quality and would cost a fortune to replace!


TIP NUMBER 5:

Sell the car!

We did this. We sold the second car! 

Now, if you still have young kids and are always driving off in different directions, this may not be for you… yet. But once you get past that stage, you really don’t need two cars.

We realized we were paying insurance, registration and maintenance on a vehicle we didn’t really need. So we sold the second car.

We realised that if we had a schedule clash and one of us needed to catch an Uber every now and then, it was still going to be worth it.  But it’s never happened yet!

We did however buy a scooter instead, which we absolutely love because it reminds us of Bali. Anytime the weather’s good, we fight over who gets to ride the scooter.

It’s what I take to my yoga class, or when I head out for a coffee. We don’t really go very far so the scooter is super handy.

On the weekends, if the weather is nice, we both jump on and go for a ride along the beach, grab an ice cream or coffee and pretend we’re in Bali.

TIP NUMBER 6:

Get solar panels!

Then run your electrical equipment during the day! You’ll use the power of the sun to run your home, your electricity bill will be next to nothing – and you’ll have spent that money adding value to your home instead.


TIP NUMBER 7:
Shop around and review your basic home bills.

I’m talking about your phone bill, internet, insurances and all those basic home bills we tend to kind of forget about.

Because you know what? Chances are you’re paying way too much. Remember how back when you signed up for them, you shopped around to make sure you got a good deal? Do that again! Review them each year..

If you can’t be bothered doing it yourself, pay someone else to do it! There are services who are impartial and will guarantee to save you money. Every time I’ve done a review of our basic home bills, I’ve saved at least a thousand dollars – which is pretty cool.


TIP NUMBER 8:

Review your rates!

Be sure to regularly review the interest rate on your mortgages (as well as any other loans and debts you have). 

When we operated our mortgage broking business, this was standard practice. We reviewed every single customer’s loans every year. We didn’t wait for them to call us and ask for this. We just did it.

It was awesome to send out emails saying, “Hey, we just saved you a few thousand dollars a year! ”

If you have a broker, that’s their job. And if you don’t have a broker, please find a good broker. Don’t go directly to the bank. Their job is to sell you what they’ve got, not what their competitor has.


OK, intermission time…


Let me know in the comments below:
What are your favorite tips for saving money? 

I’d love to hear them!

 

TIP NUMBER 9:

This is a really fun one! Look for relocation deals on motorhomes and campervans. 


Martin and I have done this several times where we drove a motorhome that needed to be moved from Alice Springs to Adelaide. You literally get paid to drive the motorhome, rather than paying to rent it.

You get to see different places without having to pay for accommodation. You get to be on the road, build fires at night and camp in unusual locations. It’s so much fun!

My favorite site for this is www.imoover.com so go check it out!

There’s cars, motorhomes and campervans available. And often you can hire the vehicle for a couple of extra days at a reduced rate. That way, you can make your trip a little more leisurely rather than rush from A to B.

Plus of course, the benefit of a motorhome is that you have a traveling kitchen and bathroom with you. You can stock up at the supermarket and make really simple, easy meals to enjoy by the campfire at night.

It’s a lovely way to get away.

 

TIP NUMBER 10: 

Here’s another travel one!

Look for house swaps or house-sits! There are websites and apps dedicated to this. Or you can ask friends if they know anybody who would like to do a house swap.

There are always people looking to have somebody look after their pets, water their pot plants, etc while they’re away.

It’s a great way to stay in a comfortable home and avoid paying for accommodation.


BONUS TIP!

A little bonus tip… Going back to meals and meal prep for a moment.
When you cook at night, make enough to cover lunch the next day. It avoids having to make something else for lunch or buying lunch.

I find the easiest thing is to just put that extra serve aside as you’re plating up dinner. In our house, everyone works from home in their track pants, but if you have someone in your home who actually gets dressed and leaves the house for work, they will ESPECIALLY love you for having their lunch ready like this.

Ok, that’s it for today’s episode. Did you enjoy it? What was your favorite tip? Let me know below, please!

When you save money in a way that makes you feel abundant and empowered, it makes you magnetic to more.

And when you’re saving money, you can reduce your debts, accumulate savings, invest and grow your wealth so much faster.

And all of that helps you create a more abundant life, inside & out.

Ready to go deeper?

 

 

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Splitting income by percentage – why it doesn’t work for entrepreneurs

Splitting income by percentage – why it doesn’t work for entrepreneurs

by | Aug 10, 2022 | 6 Figure Business

Do you use percentages to distribute your business income?

If you feel like your business still isn’t doing well enough, you need to STOP splitting income by percentage right now!

Lots of people will recommend splitting your income by percentages. But the truth is, that for most entrepreneurs, this approach is completely inappropriate & doesn’t work!

And worst of all – it can make you feel like your business isn’t succeeding, when it’s actually doing just fine.

In this episode, we’ll talk about why that is & what strategy to adopt instead, so you can stop feeling like there’s not enough money & start celebrating your success instead!

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WATCH THE VIDEO :

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OR READ THE TRANSCRIPT:

When I first started my finance business, I also split my income by percentages. Because it’s what everyone said to do.  But it just didn’t work!

At first I thought it was because I wasn’t making enough money … but as I started to understand numbers better, I realised that wasn’t the case.

Percentages just weren’t appropriate for my stage of business!

So I developed a better way, that you can start using from the very beginning – and continue to use as your business matures. I call it the Magnetic Money™️ System.

I frequently see students come into the Magnetic Money Program with the same issue. They’ve been using percentages to split their income but it’s not appropriate for their stage of business and so it doesn’t work!

Unfortunately, they usually don’t know that the problem is and just assume their business isn’t doing well enough.

Let’s talk about the idea behind using percentages:

  • Why do people advocate this system of using percentages to split income? 
  • What’s the thought process behind it? 
  • And who’s it really designed for? 

The idea behind using percentages to distribute your income is that you’re always splitting the pie equally.

During big income months, you have more money available for your business, for yourself and of course, you need to put more tax money aside.
And on slow income months, you split the pie by the same proportions.

The idea is that it all evens out in the end. Except it doesn’t!

Because here’s what happens:

On big income months, you get more money. Your business gets more income, you get more income and you put more aside for tax.

The problem is that people usually SPEND that money.
Even if you’re paying it towards a credit card, it’s still gone. You no longer have access to that cash.

So if the next month is a LOW income month… what happens?

Well, you have less money to go round. The DOLLAR amounts are smaller. Your  business gets paid less and YOU get paid less. It may not even be enough to cover the bills.

And that money you spent last month? Gone.

So the problem with percentages is that there’s no accountability & no SYSTEM to ensure that things will even out as intended.

Because this system of percentages is designed for people whose business brings in at least their ‘baseline income’ every single month.

Then it’s not a problem.

But for most entrepreneurs – especially in the early years – there are plenty of months where they do NOT meet their baseline income target.

And this can cause an ongoing problem they can’t seem to get on top of.

It can leave you stressing about money and feeling like your business isn’t doing well – when in fact, if you were to average yoru income, it’s actually enough.


So tell me in the comments:
Is this making sense?
Have you tried to use percentages? How did it go?

So if percentages are not right for you, then what can you do instead?

Well instead of using percentages – which can lead to a feast and famine rollercoaster, where you go from jubilation to depression – you want to smooth that cash flow.

You want the low income months where you fall below your baseline income to be offset and balanced out by the higher income months.

In order to do that, you need to PROACTIVELY smooth your cash flow.

That means tracking any shortfalls and then making them up with surplus. I’ll link an episode below where I talk you through how to do that.

It actually only takes 2 steps to smooth your cash flow – but you do need to do them religiously. And when you do that, everything changes.

When you’re proactively smoothing your cash flow, you’re no longer giving away money one month, that you may need next month.

That’s why it’s so critical that your money system helps you smooth your cash flow.

And this is why I developed the Magnetic Money™️ System. It helps you achieve your financial goals, pay off debts, accumulate savings, spend your fun money guilt-free and very critically… it helps you smooth your cash flow if you have irregular income.

You can check out & enrol in the Magnetic Money™️ System Bootcamp HERE.
It guides you through the entire process of setting up your Magnetic Money™️ System.

It’s time to create more abundance, inside & out, gorgeous. And you’re ready for the next step.

Have a great day, gorgeous!

Ready to go deeper?

 

 

FREE LIVE WORKSHOP

Organize & Tidy Your Banking

‘Spark the joy’ of becoming magnetic – for women entrepreneurs.

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The Secret Code to Unlocking Your 6-Figure Income - PLAIN HEADER

Why you need to STOP using percentages to split your income - especially if you’re still building your business! https://youtu.be/bfm_aqbbBq0 Click to Tweet

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