5 Practical Ways to Ensure Good Management of Your Money
Y’all know that I am a champion of aligning your gifts, skills, and passions with your professional pursuits. Specifically, I would argue that entrepreneurship or entrepreneurial thinking can position you to both explore and develop your uniqueness and contribute to the world through your work in the marketplace. However, I feel the need to make something very clear.
We (the self-employed and other like-minded people) are in business to make money. We like money. And there is absolutely nothing wrong with that.
Money is not evil, nor wrong to want. It is a neutral element; it takes on the character of the person or entity that manages it. Money in the hands of a person who cares deeply about eradicating inequality, like Bill Gates, can be used to for good. His foundation commits resources to uncovering real solutions to long-standing problems such as poverty and barriers to quality education, among other things.
Without money, I wouldn’t be able to do what I do…care for my family, enjoy activities and vacations with them, give to my church and charities that I care about, and prepare a legacy for my children’s children to enjoy. So, if it was not clear, I am not against earning or having money!
Frankly, who is???
I must admit that I have experienced my share of scarcity thinking when it comes to my resources. There are moments when I still get assaulted by thoughts that are clearly contradictory to my money agenda. And when you are self-employed, there is no room for that sort of mindset. It will cause you to make desperate decisions that do not serve your goals.
Actions follow thoughts. This I know to be true. I have also learned that I cannot afford to wait for my mind to “get right” before doing the right thing. Sometimes, actions can help to influence what is going on in my head.
Here are five practical actions for your business that will keep you on track even when you are dealing with a mind-war about your finances.
SET IT AND FORGET IT
No, this is not an infomercial. 😆 Seriously, what I mean is: set your prices and stick to them.
When I first started out, I was uncomfortable asking for what I was worth. I had come from an industry that generally underpays its people. I had to first resolve my value-identity crisis and recognize what I am worth.
Then, after I did, I still would make allowances for clients. As a result, I had clients who did not value my time or expertise to the degree that was appropriate. Do not be afraid to position your rates competitively. First, value your skills set, time, and competency. Then require others to do so, as well.
FRIENDS…HOW MANY OF US HAVE THEM?
There will be friends and family members who will want to utilize your services or products. Consider having a predetermined set of “friends & family” rates. That way, when asked, you have a ready response.
These rates can be comprised of reduced prices or an increase in product or service time. For example, if you make natural body butter and creams, you may consider giving a purse size along with the purchase of a regular size jar of cream (increase in product). Or you may drop your regular price by 5% (reduced price). In the future when your prices increase, you would have a formula for your special rate customers.
KEEP YOUR CARDS ON THE TABLE
As you begin your business relationships, have frank conversations about the expectations you have and ask your potential clients to outline their expectations. It is easier to start off on the same page than to begin to work together and find that you’re not even operating from the same book!
These expectation conversations are not a one-and-done type of deal. Schedule a time to have these talks regularly to ensure that the relationship remains open and healthy.
DETERMINE WHAT’S OUT OF BOUNDS
Boundaries are best set in business relationships through a contract. Many entrepreneurs admit to having a fear of contracts, or at least rigid ones. Their fear is not of the actual contracts. It is a fear of requiring strict perimeters that may scare off the potential client. They fear specificity and accept vague, ambiguous contract terms that could end up being detrimental.
Set boundaries around your responsibilities, payment cycle, and production or service execution. Always enlist a lawyer to review contracts provided by the potential client. Also, have your attorney review your standard contract based on what is best for you.
WHAT ARE YOUR MONEY GOALS?
I list this last but in fact, your money goals drive your business offerings. Set your revenue goals for the year, quarter, and month. Then link the goals to your products and/or services. To have a revenue of 75K in product sales this quarter, how many jars of body butter does a business owner need to sell? How many need to be sold per month? Per week? Daily? The numbers attached to the offerings tell a story. This makes the revenue goals appear real, more accessible and attainable. Also, it helps to determine what action items must be in play to meet each revenue goal.
Whether you are an entrepreneur or not, it is critical to employ these practical guidelines in your overall financial management plan. They will help you to avoid the wondering of where the money has gone when you just got paid from your client or employer. I remember those days…
One more thing…although actions can influence the mindset in this area, and vice-versa, both are rooted in beliefs. When I weeded out the negative beliefs that I had about money, my thoughts and actions began to shift. I don't have it mastered yet. 😉 Like any growth in life, it is a process.
Be patient with your process as you progress through levels of financial freedom.
Until next time…