Are you a deadline dancer – a kind of lastminute.com person, who always waits until something becomes urgent before you take action on it?!
To be clear, there’s no judgement from me. There’s stuff I never get sorted until I absolutely have to, either (it’s December as I write this – wrapping the kids Christmas presents and posting cards in time springs to mind!).
But I do want to chat today about planning in advance and getting things organised, to avoid the panic and stress that kicks in when you suddenly realise that you’ve got an impending deadline. Especially when it comes to your business and making the money you REALLY want next year!
As we get towards the end of the year, it might be that you’ve planned out the whole of 2023 already. You know where you’re going on holiday, when and who with. You know what you’re going to do in your business, which products you’re going to sell and when you’re going to launch them.
Maybe you’ve set income and profit targets; goals to grow to your audience and finish your book and all the other things that are important to you.
Maybe you’ve been meaning to get around to it at some point, but just seem to keep putting it off. Perhaps you’re thinking you’ll do it when you have time between Christmas and New Year.
Let’s be honest, some of us like to be planned and organised, and some of us like to just wing it and fly by the seat of our pants. I’m probably a bit in the middle – I think it’s important to know where you’re headed and what you’re aiming for, but also to be flexible in terms of how you approach it!
So let’s think about 2023 now and some quick and easy ways to feel organised, when it comes to your business and your finances and making the money you REALLY want next year.
The first thing to look at is what’s happened this last year. Because if we don’t know where we’re starting from, it’s really hard to make any decisions moving forward!
Dig out the paperwork for the last year and see what your sales look like. Were they the same each month? Did they go up and down? Are there any trends that you can spot?
Then have a look at your profit too. Whether you use a spreadsheet, or online accounting software like Xero or Quickbooks, run a quick report and see what your profit looks like.
When you look at your sales and your profit for these last 12 months…are the numbers what you were expecting? How do you feel about them? Are you happy with what you see?
And if not, well, now really IS the time to do some planning, so you’re not in the same boat this time next year!
If you’re a service-based business online – especially if you work with a small team or on your own – it might be that your profit margin is really high. If you just have a few costs that mean you get to keep 85% – 90% of the money coming in, your profit may well be very healthy (even after tax).
Going the other way, if your business needs a big team to run it or lots of products and equipment, your profit may well be much lower.
But the profit is the figure that really counts, because the profit is the figure that pays your wages (or drawings or salary or dividends – however you take the money out!).
Ultimately, money comes in from sales; you pay the costs of running your business and what is left at the end is what YOU get. Which is why it’s so important that you look at these things regularly.
Some of my clients like to do this monthly, others quarterly. But to be fair, even looking at it once a year is better than not looking at it at all.
If we’re agreed that profit needs to be the driver in your business, because that’s how you get paid – and you’re inwardly vowing to get more organised with knowing your numbers next year – then it might be time for you to look at things differently.
I use a simplified version of Profit First with my clients. It’s a book by Mike Michalowicz, where he talks about having different pots of money for different purposes. It might not be rocket science but ultimately what he does is he turn the idea of profit on its head (hence the title!).
And it’s a great way to make sure you’re earning the amount of money you actually want, rather than flogging away in your business and still never quite feeling like you’re ‘there’.
The traditional thing to: start with your sales; take off your costs and you’re left with your profit.
BUT the problem with this is that if your costs go up and your sales don’t, then your profit goes down and the only person that suffers is you.
If you’re not looking at your numbers often enough to realise the extent to which this is happening, it compounds the problem even further, because you can’t do anything about it until it’s too late.
I love to approach profit very differently with my clients, using my simplified version of Profit First that I mentioned earlier. Namely:
- Decide how much money you want to earn each month;
- Work out how much will it cost you to deliver your product or service;
- And that then informs a) the price point you need to set it at and b) the number of sales you need to make, to reach your target.
When you’re looking at what you want to achieve next year, this is a brilliant way of setting goals, because it ensures the money will actually be there for you to pull out at the bottom end.
Rather than just picking some arbitrary figure that gets bandied about online – ‘£10k months’ or ‘multi 6 figures’ or whatever – look at your costs to run your home and fund the lifestyle you want. Use that number to decide how much money you want to earn from your business. Then work out how much you need to make in sales, to be able to draw that amount of money out of your business each month. And THAT is what you then use, to set your goals and targets for the year.
I worked with a client earlier this year who was pleasantly surprised when she realised that she didn’t need to make nearly as many sales as she thought, to get the amount of income she needed.
We sat down together, got organised with her numbers and she decided that she wanted £3,000 a month to cover her bills and costs. She’s got a small mortgage and wants to live a nice lifestyle that involves her dog and her travel, the things that are most important to her.
After taking off her costs and putting money away for tax, we worked out that she could make sales of £4,500 – £5,000 a month and that would create enough profit to live the lifestyle she wants.
She doesn’t WANT to be pushing so hard all the time to make ‘£10k months’ and more importantly, once we got organised with her figures, nor does she NEED to.
Ultimately, life is not all about money. So I’m hoping that this blog today has maybe helped you think about a different way of planning 2023 and picking some goals that truly mean something to you and that feel achievable.
Of course, once you’ve set your goals, we do need to check in regularly to see how we’re doing and make sure that the sales and profits and costs are all on track and heading in the right direction (and that no nasty surprises are creeping in, without our noticing!).
If you think you’ll struggle to find the time to monitor your figures and keep on top of things – especially if really DO want to feel more organised next year! – there are a couple of ways that I can help you.
The first is with our Monthly Implementation Sessions, which happen on the first Monday of each month on Zoom. We come together as a group (while keeping your personal finances private) and each take that dedicated time to track our assets and liabilities, grow our net worth and take action on those money things that you know you need to get done (like sorting your pension or finding a new mortgage deal or setting up that ISA!).
Depending on how much support you need, these Monthly Implementation Sessions are built into both my Asset Accelerator™ or, if you want even more support, Magnetic Wealth™. Just click either of those links to find out more about both on my website.
Please don’t forget that if you ever need help with this, all you need to do is get in touch and we can chat through the ways we can work together, to help you move forward.
Wishing you a very happy, healthy and prosperous (and organised) 2023!
Until next time,