Quick Way to Know Your Costs and Set Authentic Revenue Goals (Go from Drama to Data)
Photo by Google DeepMind on Unsplash
Today I want to talk to you about two key numbers to know and my thoughts on how to start consciously working with numbers as DATA instead of DRAMA.
They are:
How much it personally costs to live each month, and how much do you need to contribute to that number via cash from your business?
How much does it cost to operate your business on a monthly basis?
Knowing these two numbers is a great way to start understanding what is happening in your business at a high level.
Knowing these numbers will help you set revenue goals that meet your business and personal needs. That way, you can personally connect to the revenue required for your business rather than pulling numbers out of thin air.
Does the thought of looking at these numbers scare you? Does it bring up feelings of scarcity, uncertainty, or shame? I could go on and on about what people tell me they feel when they look at their money, but you get the idea.
If you are experiencing some uncomfortable EMOTIONS around looking at your expenses, please know you are NOT ALONE.
You are STRONGER than you think you are.
You can be GREAT in this area.
If it doesn’t scare you, great! This will be easy for you.
But if looking at your numbers is stirring the pot for you, keep reading to find out how I reframed this for myself and got comfortable with the normal occurrence of the outflow of money.
My strategy for money management used to be to work hard, make as much money as possible, and try to spend as little as possible.
I am telling you now this is a recipe for disaster. It comes from a place of fear, lack, and restriction.
When I started to look at money in a NON-EMOTIONAL WAY and view it as the amount that comes in and the amount that goes out, one thing became apparent.
It costs money to live. It costs money to run a business, and by always fighting against the current of money that needed to go out to make life work, I was choking myself, my family, and my business. I was holding on so tightly, trying to stop the outflow, that I was exhausting myself and making things worse.
Then this thought came to me: Give yourself permission to have a life that costs money.
That felt better to me, and a lightness washed over me. It was like I had been holding my breath and could finally breathe normally. What a relief.
Money needs to be spent in life and in business. I could see this clearly for the first time in my life because of my experience working with my clients.
During Financial Forecasting sessions with my clients, I notice they get caught up in their emotions. They often make comments about how they feel about a particular purchase. As they go into story, I am able to see it as data in a detached way.
They judged themselves while I asked questions like:
What are the numbers?
Do they work?
And if they don’t, what needs to be adjusted?
This awareness that the situation can be handled drastically differently if you can take a NON-JUDGEMENTAL point of view helped me separate myself from the money drama that I was dragging along with me every time something needed to get paid, there was a need or want, I lost a client, gained a client, etc.
So much drama.
What is the truth? The truth is that I was not living a life of scarcity, but I was acting like I was!
So now, instead of trying to say no to spending money as much as possible, I say:
What is the purpose of this purchase?
Does it make good business sense?
Does it support what I value in my life?
Are there funds available to pay for it?
If I don’t have the funds, what has to happen to allow me to afford it?
I can peacefully spend money on things that align with my values, smart investments that I know will grow my business, even while paying for things I don’t enjoy, like taxes and insurance.
I have found great freedom in this shift of thinking, and the amount of money and ease of money in my life has significantly improved.
I feel expansiveness where there was once constriction.
[ACTION STEPS]
Figure out how much it costs each month to live and how much you need to contribute to that amount via cash from your business.
Determine how much it costs to run your business every month – If you use bookkeeping software, pull a Profit & Loss by Month Report and see the total expenses each month on average. You will need to add things like debt payments and payments to yourself if they aren’t included in the Profit & Loss Report.
Write these numbers down somewhere to start tracking them on a monthly basis. If you decide to join my new program, the Financial Forecasting Experience, we will use them together later to get more insight into your business.
Short-cut: To do this quickly without much fuss, you can gather your bank and credit card statements for the last three months and circle the charges, checks, and other withdrawals (the statements may total them for you) and add them up by month. The amount going out of your business accounts (including credit card charges) equals your business expenses, and the amount going out of your personal accounts equals your personal expenses. This is not an exact science, and I recommend having a more accurate method of looking at what is going on in detail, but this will quickly help you see the total costs. I offer this method because I don’t want the daunting task of figuring out the details to hold you back.
Once you know your monthly business costs and how much you need to pay yourself, add 30% more for taxes plus any debt payments, and this will give you a rough revenue goal.
Congratulate yourself for moving one step closer to knowing your numbers. I’m super proud of you.
In the Financial Forecasting Experience - a small group program that will get you KNOWING and LOVING your numbers, you will know your numbers intimately and learn to set authentic revenue goals that will have you connected and excited. Setting revenue goals based on what we read on social media that don’t connect to what we really need can feel empty and unreachable - even soulless.
Through Financial Forecasting, we improve our numbers by spending time with and getting to know them. It’s a relationship, and like any other relationship in your life, it will blossom if tended to.
Let’s do this together.
Click here if interested, and we will let you know when the next class will be offered. I would love to have you join our small group.