Creating flexibility in your business

Creating flexibility in your business

Last week, we looked at why and how to start leveraging your time to create more freedom and flexibility in your business, and part of that discussion included looking at your business model and in particular your pricing. This week, we’re going to ‘double-click’ on this piece and look at how you can get the financials right in your business.

When I first left my corporate job back in 2013, I landed on my feet with several big consulting projects for well-known companies. I was earning as much, or more, as I had been in my full-time job, but with the freedom to take time off between contracts to travel and do other fun things. Although I was earning a lot of money, however, I didn’t quite have the autonomy and flexibility that I had been after when I quit, and I was still tied to the clients’ offices and to standard (overtime) working hours.

After a couple of years of consulting, I ‘quit’ that kind of work and took my business online, travelling full time to become an oh-so-fashionable digital nomad. I had the most amazing few years, with incredible adventures, experiences and personal growth – but during this, what I like to call my ‘hippy’, time, I wasn’t earning a lot of money and instead I was working through my savings.

My focus these last few years has been on getting the balance right, between earning money on the one hand, and having the “freedom, flexibility and fulfilment” on the other…

Why are the financials so important?

The irony is that worrying about money is the biggest reason why people stay in their full-time corporate jobs, despite longing to do something else. They hold onto beliefs that a stable salary from one employer is the safest way to live and work, that freelancing or running your own business is inherently risky and poorly rewarded, and that their mortgage payments and very comfortable lifestyle would suffer if they were ever to quit their job.

It’s easy, then, to go to the other extreme when you do manage to quit your job (as I myself experienced!). You question all those beliefs you’ve held onto for so long, you discover that money is not actually an important personal value to you and that there are many other more important things in your life, and you head off optimistically into the world of working for yourself. You start casually dabbling, paying little attention to your business strategy and income level and just believe that the money will follow from your passion.

The truth, of course, is somewhere in between these two extremes: holding onto a full-time corporate job and stable salary is not the only, or even safest, way to manage your income and financial obligations; but managing your own business so that it meets your income goals takes hard work and focus on the right things.

Money is not an end in itself but something that enables the very freedom, flexibility and fulfilment that you’re after. Earning sufficient and consistent money in your business means that…

  • people are willing to pay for your services, which means you’re doing something of value and having a real impact;
  • you can choose to work with clients and customers who are a fit for your values and strategy, rather than feeling desperate to say “yes” to anyone who comes along;
  • you can afford to take time off, whether to travel, to return to your studies, or to spend time with your loved ones – or maybe to have a baby;
  • you can reinvest some of your profit into growing the business, creating more freedom for yourself and making even more of an impact; and
  • your business is viable and will be sustainable, so that you can keep serving people and keep living this new life that you’ve chosen for yourself, rather than have to resort to taking up another full-time job.

So if you recognise that money is important to your goals of creating more freedom and flexibility – now what? What do you need to do in order to get the financials right in your business?

Mindset first

1.   Mindset first

Before even getting to the numbers themselves, you really have to start with your mindset. A lot of us have money ‘stories’ that we’ve developed over the years, inherited from our parents and from our personal experiences. Maybe your parents argued about money when you were growing up, or it was a taboo subject that no one talked about…

As a result, you have a lot of beliefs on the topic of money, beliefs that can hold you back when it comes to running your business successfully. For example:

  • “I need a full-time job for the stable salary and security it gives me”
  • “Running your own business is inherently risky and means compromising on your standard of living”
  • “You can’t earn a lot of money doing work that you love”
  • “Creative work pays less”
  • “Rich people are selfish and greedy”

You can see how these beliefs can become self-fulfilling – if you believe that work that you enjoy is not going to make you a lot of money, then that’s how you’ll go about your business! You won’t even try to make more money – or maybe you think you’re trying but you’re sabotaging your own attempts.

So take a look at your own money story and beliefs, and see how you can start to challenge those beliefs and re-frame them into more constructive ones.

For more on mindset, have a listen to episode 8 of the Reimagining Success podcast, where I looked at 9 mindset shifts you need to make when working for yourself. We’ll also be digging deeper into this topic next week!

2.   Deciding on a business model

Once you’ve worked on your mindset – bearing in mind that this is an ongoing process, not just a one-off exercise – you need to take a look at the underlying business model that you’re following. Maybe you have no business model in place at all, or you have something but it’s not actually giving you what you want and need from your business. As we said when we started this series on setting up your business in the right way, your business model is absolutely fundamental to determining whether or not you’ll get that freedom and flexibility from the work you’re doing.

In this context, important aspects to consider include…

  • defining your overall business goals, so that you know what you’re working towards and can track how you’re doing, adjusting your actions if necessary;
  • identifying a customer or client target who has an urgent and important problem, sees value in the solution that you can provide, and is willing and able to pay for that solution;
  • establishing your credibility and authority so that you become the go-to person in this area and can charge accordingly;
  • creating the right products and services that will address the pain points of your audience; and
  • creating packages with both pricing and mechanics that will help you reach your goals (remember last week’s post on leveraging your time).

This is a massive topic, and will require quite some strategic thinking and validation, so take your time and make sure that your model reflects your goals on the one hand, and that you’re translating it into daily, consistent action on the other.

3.   Staying on top of your numbers

You may be a maths whizz who loves Excel and/or gets excited by budgets and income targets and accounting reports… If not, however, you don’t want to be sticking your head in the sand and ignoring those numbers altogether! You don’t need to become an accounting expert, but you definitely need to understand at least the basics of how your business works, what you’re spending, and what you’re actually earning.

A quick Google of business finance gives you all sorts of detailed articles on your balance sheet and your P&L (profit and loss statement) and, while these are important (especially if you set up a limited company), you can start with the very basics:

  • What are your business expenses? Consider…

o  One-off set-up costs as well as ongoing costs, which may be fixed or variable

o  Different categories e.g. web hosting and software, accounting, training

  • What are your sales figures? Consider…

o  Your sales targets (e.g. based on x clients at y price, you are aiming for z sales this quarter / this year)

o  Your sales actuals (what you actually make each quarter)

  • What is your profit? Your profit is as simple as your total sales minus your total expenses, i.e. the money that’s left over once you’ve paid all your bills.

If this is an area where you’re not at all comfortable, you should really consider getting an accountant to support you so that you don’t make any costly mistakes.

4.   Tracking results

Of course, it’s not enough to create a business model with income targets and pricing once and then, phew, forget all about it! While it can be disheartening when you’re just starting out to see that you’re not making a lot of money, it’s much better to face this reality head on and then to really put in the effort and get the help you need to step things up and get on a growth curve – rather than ignore it and just hope for the best.

In terms of what you should be tracking, aside from the obvious expenses, sales and profit numbers, you could also consider:

  • Who are your most profitable clients (and who are the least profitable)?
  • What amount of time are you actually spending on each client or project, compared to the time you estimated at the start?
  • What proportion of your time are you spending on actual fee-earning work for clients, compared to the time you’re spending on business development, marketing, accounting, admin, etc.?

Remember also that results are never instant: the work you’re putting in today will take at least three months to show up in your business (whether as more traffic to your site, more leads or even more sales), so be patient and keep doing what you’re doing even when you don’t see the impact right away.

5.   Profit first

Finally, a word on your overall approach to your finances…

Traditional accounting, as highlighted above, uses the simple equation:

sales – expenses = profit.

However, in this model, there is no guarantee that you’ll make any profit at all and, as you increase your income, you’re likely to be spending more as well, investing in fancy new tools, and so on. (This has always been my experience personally as well: when you get a salary increase as an employee, the danger is that you simply increase your spending habits accordingly!)

A newer model, put forward by Mike Michalowicz, flips this equation so that you get:

sales – profit = expenses.

This model is based on “paying yourself first”, putting aside any tax due and then taking a predetermined percentage of profit from every sale – and only then using what’s left to spend on everything else. This also means that you’re making sure that you’re eliminating or at least minimising unnecessary expenses that can easily eat into your profit.

I’m by no means an expert on this model, but it’s definitely food for thought and if it sounds intriguing, I’d encourage you to check out this short overview and, then, the book.

This whole topic of financials is a huge topic, but I hope this has given you at least some pointers and new insights to help you begin to get your financials to where they need to be for you to achieve your personal and professional goals with your business.

Next week, we’ll take a step back from the concrete strategies and tactics of your business to look at your mindset and how that can be so critical to getting you what you what for your business.

If you find the financials a bit overwhelming but you recognise how important they are and you’d like to get on top of your numbers, then get in touch to book a free consultation with me. We’ll look in particular at the core elements of your business, including your client target, packages and pricing, and how I can support you in adjusting your model to create more freedom and flexibility.

Apply for your session here >>

SHARE THIS ARTICLE
Facebook
Pinterest
Twitter
LinkedIn
Email

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

You might also be interested in these articles

“Everything you’ve ever
wanted is one step outside
your comfort zone.”

Book a free consultation

If you’re feeling a bit stuck and not sure how to move forward, let’s get on the phone to explore how we can work together to help you achieve your goals, and which option is the best fit for you.

Get a free assessment of your business

Download this scorecard to review where you are on each of the 5 pillars of building a life outside of the 9 to 5, and get clear action steps to help you fill the gaps.

We will use and protect your data in accordance with our Privacy Policy.

Get a free assessment of your business

Download this scorecard to review where you are on each of the 5 pillars of building a life outside of the 9 to 5, and get clear action steps to help you fill the gaps.

We will use and protect your data in accordance with our Privacy Policy.

Outside of the 9 to 5

Anna continues the journey in her new book, where she details what’s needed to sustain your initial escape from the 9 to 5 in a guide to designing and building a profitable business that gives you more freedom, flexibility and fulfilment.

We will use and protect your data in accordance with our Privacy Policy.

Privacy Policy

This privacy policy sets out how One Step Outside uses and protects any information that you give One Step Outside when you use this website (https://onestepoutside.com/).

One Step Outside is committed to ensuring that your privacy is protected. Should we ask you to provide certain information by which you can be identified when using this website, then you can be assured that it will only be used in accordance with this privacy statement.

One Step Outside may change this policy from time to time by updating this page. You should check this page from time to time to ensure that you are happy with any changes.

What information we collect and why

We only ever collect the information that we need in order to serve you.

Generally, this just means collecting your first name and email address that you enter, for example, when you request a resource, register for a webinar, or submit a message via a contact form.

If you are a paying customer, we also collect your billing information including your last name and your postal address.

Comments

When visitors leave comments on the site we collect the data shown in the comments form, and also the visitor’s IP address and browser user agent string to help spam detection.

An anonymised string created from your email address (also called a hash) may be provided to the Gravatar service to see if you are using it. The Gravatar service privacy policy is available here: https://automattic.com/privacy/. After approval of your comment, your profile picture is visible to the public in the context of your comment.

Contact forms

We use Gravity Forms to allow you to contact us via the website. We will use the information you submit for the sole purpose of that specific form and will explicitly ask you to provide your consent to allow us to do so.

Embedded content from other websites

Articles on this site may include embedded content (e.g. videos, images, articles, etc.). Embedded content from other websites behaves in the exact same way as if the visitor has visited the other website.

These websites may collect data about you, use cookies, embed additional third-party tracking, and monitor your interaction with that embedded content, including tracking your interaction with the embedded content if you have an account and are logged in to that website.

Advertising and Analytics

Google

We use Google Analytics to track and optimise performance on this site as well as embedding video content from YouTube, and this means that your web browser automatically sends certain information to Google. This includes the URL of the page that you’re visiting and your IP address. Google may also set cookies on your browser or read cookies that are already there. Apps that use Google advertising services also share information with Google, such as the name of the app and a unique identifier for advertising.

Google uses the information shared by sites and apps to deliver our services, maintain and improve them, develop new services, measure the effectiveness of advertising, protect against fraud and abuse and personalise content and ads that you see on Google and on our partners’ sites and apps. See their Privacy Policy to learn more about how they process data for each of these purposes, and their Advertising page for more about Google ads, how your information is used in the context of advertising and how long Google stores this information.

Facebook

We use the conversion tracking and custom audiences via the Facebook pixel on our website. This allows user behaviour to be tracked after they have been redirected to our website by clicking on a Facebook ad and enables us to measure the effectiveness of our Facebook ads. The data collected in this way is anonymous to us, i.e. we do not see the personal data of individual users. However, this data is stored and processed by Facebook, who may link this information to your Facebook account and also use it for its own promotional purposes, in accordance with Facebook’s Data Usage Policy https://www.facebook.com/about/privacy/.

You can allow Facebook and its partners to place ads on and off Facebook. A cookie may also be stored on your computer for these purposes. You can revoke your permission directly on Facebook here: https://www.facebook.com/ads/preferences/?entry_product=ad_settings_screen. For more guidance on opting out you can also consult http://www.aboutads.info/choices.

Who we share your data with

We use a number of third parties to provide us with services which are necessary to run our business or to assist us with running our business and who process your information for us on our behalf. These include a hosting and email provider (Siteground), mailing list provider (GetResponse), and a payment provider (Stripe).

Your information will be shared with these service providers only where necessary to enable us to run our business.

How long we maintain your data

If you leave a comment, the comment and its metadata are retained indefinitely. This is so we can recognise and approve any follow-up comments automatically instead of holding them in a moderation queue.

For users that register on our website, we also store the personal information they provide in their user profile. All users can see, edit, or delete their personal information at any time (except they cannot change their username). Website administrators can also see and edit that information.

The main reason for collecting this information is to be able to send you resources, updates and, sometimes, information and products and services, as well as for internal record keeping.

The rights you have over your data

If you have an account on this site, or have left comments, you can request to receive an exported file of the personal data we hold about you, including any data you have provided to us. You can also request that we erase any personal data we hold about you. This does not include any data we are obliged to keep for administrative, legal, or security purposes.

How we protect your data

We are committed to ensuring that your information is secure.

Where we have given you (or where you have chosen) a password that lets you access certain parts of our site, you are responsible for keeping this password confidential and we ask you not to share a password with anyone.

Unfortunately, the transmission of information via the internet is not completely secure. Although we will do our best to protect your personal data, we cannot guarantee the security of your data transmitted to our site; any transmission is at your own risk. Once we have received your information, we will use strict procedures and security features to try to prevent unauthorised access.

Links to other websites

Our website contains links to other websites. This privacy policy only applies to this website so once you have used these links to leave our site, you should note that we do not have any control over that other website. You should exercise caution and look at the privacy statement applicable to the website in question.

Changes to our privacy policy

We keep our privacy policy under regular review. Initially created on 18th November 2016, it was last updated on 23rd May 2018 to be compliant with GDPR.

Contact information

If you have any questions or concerns related to your privacy, you can get in touch here >>