[smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-PUTTING_THE_P_IN_PROFIT-2017.mp3″ title=”Putting the P in Profit: Money Lessons From the New Economy” social=”true” social_twitter=”true” social_facebook=”true” social_pinterest=”true” social_email=”true” ]
Welcome to Profit. Power. Pursuit., I’m your host, Tara Gentile.
Most weeks, I take you behind the scenes with a New Economy business owner and expose the nitty-gritty of what it really takes to successfully run and grow a digital small business today.
This week, I’m going to take some extra time with one of our 3 P’s: Profit.
When my friends at CreativeLive and I started this podcast over a year and a half ago, we were determined to get real about the money stuff that comes from growing a company you love.
When you set out to build a company you love, it’s easy to put all the emphasis on doing the work, loving your customers or clients, and spreading your mission to the masses. But without getting clear about how the money works in your business, any progress you make in those 3 areas is sure to be short-lived.
I’ve dealt with my fair share of money issues over the years.
And it all started with my very first post-college job at the now defunct Borders Books & Music…
I worked my way up from a summer time, minimum wage job, to cafe supervisor and then on to sales manager for our $5m per year location. I was in charge of visual merchandising, events, bookseller training, even scheduling & HR.
For these responsibilities and the 50-60 hours per week I was expected to be at work, I was compensated $28,000. Now I had a lot of mixed feelings about this amount of money:
First, it was the most money I had ever earned week after week.
But second, it evaporated very quickly and made it hard to start my journey to financial independence.
Still, it seemed like what I deserved: I had a BA in Religion. I’d quit grad school before it started. I’d never worked on employable skills… I should be lucky to even have a full-time job!
It was that story that would plague me for years: I was earning what I deserved.
You see, about 5 years after starting at Borders, I gave birth to my daughter Lola and decided to figure out how to make working from home work. I figured that if there were other women out there working from home, I could do it too.
That’s when I discovered the New Economy and digital small business.
I saw coaches, consultants, social media experts, makers, designers, and writers earning a good living, doing work they loved, and staying home—either with the kids or on their own.
I was ready to claim my piece of that pie.
So I started my business with a local arts & crafts blog and hung up my shingle.
I earned some initial traction and that gave me the encouragement I needed to plow ahead. I bought a second website 6 months later and, thanks to getting creative with selling advertising, I started making more than I earned at Borders.
It was a huge victory.
But it wasn’t the revelation I ultimately needed to experience.
You see, between earning “what I deserved” at Borders and telling myself a story about how much I could ever hope to earn in my life as someone who had chosen work I loved over work that paid well, I had created a personal earning ceiling for myself.
When I started to “think ambitiously” about my goals, they topped out at about $40-50,000 per year.
All of the decisions I made about my business were based on those numbers: how much I could afford to spend on web hosting, how much I should charge for my time, how much I should invest in my own training…
Luckily, I got exposed to some amazing money mentors like Amanda Steinberg and Danielle LaPorte—more on them in a bit.
Through both their personal and internet guidance, I could start to envision earning more.
When I set a much, much bigger target on my business—$100,000—I learned my first big New Economy Money Lesson:
Setting Bigger Money Targets Exposes Bigger Problems
Maybe that doesn’t sound helpful to you—but I can assure you it is!
You see, when you set a much bigger money target, not only do you start to make new decisions about how much you charge, who you hire, or how you invest in new tools, but you start to see the structural and systemic challenges lying dormant in your business.
You realize you’ve run out of advertising inventory (my problem), or that your sales pipeline is nearly empty, or that, if you hit your target, you couldn’t handle the customer service demands.
You realize that your lack of earning ambition has limited your capacity as a business—and that means that you’ve limited your ability to make an impact, do the work you love, and love up on your customers!
If this story sounds familiar and you recognize that your limited goals have limited your business, I’d recommend going back to my interview with Corey Whitaker & Parker Stevenson from Evolved Finance.
[smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-COREY-PARKER-2016.mp3″ title=”Analyzing Your Business Finances with the Evolved Finance Team” social=”true” social_twitter=”true” social_facebook=”true” social_gplus=”true” ]
In that interview, they talked about the importance of having a budget that you’re working toward. In other words, it’s not enough to have a sales goal—you also need to know how you’ll spend that money.
By considering how you’ll spend that money, you’ll uncover the structural and systemic issues in your own business. You’ll see where you have opportunities to invest and sure up existing systems.
Most of all, you’ll start to see how the revenue you earn in your business can be used to grow your business… which leads us to our second lesson:
Separating Your Finances Isn’t About Saving Yourself From The IRS
I learned this lesson later than I should have which is probably why it feels so profound.
We all know—I hope—that we’re supposed to be managing our business money separate from our personal money. You have a separate bank account, separate credit card, and separate check book for each.
This makes your accounting easier and it offers some personal protection should anything go wrong.
But here’s what else it does: it reminds you that your business is separate from you.
When your finances are separate, you start to see how the money your business earns can be put to good use. Every expense, team member, or training opportunity isn’t less money in your pocket, it’s a chance to earn more down the line.
Now, that doesn’t mean I recommend investing everything back into your business! But it does help you become more objective about what’s yours and what’s the business’s and that will help you grow a more sustainable, stable, and wealth-building business in the long-run.
Now let’s shift gears a bit for our third lesson:
I am no master negotiator. I would much rather rely on simple price tags or tables to tell me how much something costs. I would also rather reply on a simple sales page and buy now button to tell you how much something I’m selling costs.
But I’ve learned to embrace negotiation—and if not the art of the deal, at least asking for what I want.
The first person who got me excited about negotiation was Kari Chapin. In fact, I interviewed her on exactly that subject early on for Profit. Power. Pursuit.
[smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-008-KARICHAPIN-2015-FINAL.mp3″ title=”Interview with Kari Chapin” social=”true” social_twitter=”true” social_facebook=”true” social_gplus=”true” ]
The secret to negotiation, from in this novice’s perspective, is simply realizing that every day you are presented with an opportunity to ask for what you want: whether that’s brussel sprouts instead of fries, blue instead of orange, or 15% instead of 10%.
Stop feeling disappointed about the way things are. Recognize the opportunity. And ask for what you want instead.
Be polite, respectful, and detached from the ultimate outcome of your ask.
Also, know when it’s a deal breaker and when it’s not.
There are sometimes when it’s nice to get a few extra percentage points and there are times when it’s the difference between saying yes and saying no.
The more you practice, the better you’ll get—and the faster you’ll be able to spot opportunities and make decisions.
Also, check out friend of the pod Vanessa Van Edwards CreativeLive course: The Power of Negotiation!
That brings us to the fourth money lesson:
Cultivate An Investment Mindset
If, like me, you grew up in a household where money was tight, it’s likely that you didn’t see “investment” modeled as a way of getting ahead, building wealth, or tackling your mission.
My mom—now my COO—taught me that you could always find what you needed for the things that mattered most. But we just didn’t have the opportunity to plant seeds for future financial growth.
So I operated my business in the same way for a long time. Instead of looking at high-ticket expenses as planting seeds, they just looked scary and hard to overcome.
When I met Megan Auman, back in 2009, things really started to change. Megan grew up in an entrepreneurial family and she had seen what an investment could turn into.
So when the opportunity to spend thousands of dollars on a tradeshow booth presented itself, Megan didn’t bat an eye. She’s used savings, credit, and sales windfalls to finance big leaps forward in her business and it’s paid off handsomely.
Instead of evaluating every expense through the lens of “can I afford it?” what if you first asked yourself what the results of investing in it would be? Could you earn more? Save more time? Propel your business forward?
Not every investment pays off. And not every opportunity to spend money on your business is a good investment. But it pays to cultivate an investment mindset.
The fifth money lesson is:
Money Can Be Creative
Invite money into every aspect of your business. Don’t silo it away from the part of your business that’s authentic, connected, spiritual, or mission-driven.
Money is a reflection of or a stand-in for value. If you can’t connect to money or make it an authentic part of how you show up, you’ll have a hard time connecting to the value your company creates.
Embrace money and all your ambition around it so your whole business becomes more integrated.
I mentioned that learning from Danielle LaPorte has been a huge part of this lesson from me. As you can hear in my Profit. Power. Pursuit. interview with her, Danielle never shies away from speaking about currency and connection in the same breath.
[smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-015-DANIELLE-LAPORTE-2016-recut.mp3″ title=”List-Building, Discerning Priorities, and Choosing Creative Freedom with Danielle LaPorte” social=”true” social_twitter=”true” social_facebook=”true” social_pinterest=”true” social_email=”true” ]
Her ambition is self-expressive and so is the way she plays with money.
And that leads me to our sixth and final money lesson for today:
Don’t Let Anyone (Including Yourself) Put Limits On Your Potential
And with this lesson, we come full circle. Whether it’s an old boss, a well-meaning but unhelpful parent, a partner, or your own anxious psyche, don’t let anyone put limits on the amount you can earn and the ways you can show up.
I talked about the dangerous ways limitations can affect our actions with Amanda Steinberg in my second PPP interview with her. And I talked about the more personal limitations that affect the ways we reach for our goals with Nilofer Merchant. Both interviews are must-listens as far as I’m concerned. They’ll help expose the limitations that are all around you so that you can consciously and intentionally bust through them.
[smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-AMANDA_STEINBERG-SPECIALEPISODE-2017_1_.mp3″ title=”Setting Business & Personal Financial Goals with Worth It Author Amanda Steinberg” social=”true” social_twitter=”true” social_facebook=”true” social_pinterest=”true” social_email=”true” ][smart_track_player url=”http://media.blubrry.com/creativelive/content.blubrry.com/creativelive/PPP-NILOFERMERCHANT-2016.mp3″ title=”The Inner World of an Entrepreneur with Nilofer Merchant” social=”true” social_twitter=”true” social_facebook=”true” social_pinterest=”true” ]
Bottom line: constantly evaluate what you think is impossible, not for you, or “too much.”
These have been just 6 of the money lessons I’ve learned over the years, through trial & error, through mentorship, and through the insider conversations I have right here on Profit. Power. Pursuit.
Learning about money, how we each engage with it, and what stories we tell ourselves about it is a continual and continually important step on our path to creating a real impact in the communities we operate in.
If you fail to get a handle on money or you fail to revisit your assumptions about money, your business will never have the impact it otherwise could.
That’s why I’ve set aside June 1, 2017 to examine how we talk and think about money as business owners.
We’re hosting a virtual conference, The New Economy & Your Money, over at CoCommercial, the business association for digital small businesses.
If you’re using the internet, social media, or any other facet of the New Economy to grow your small business, this conference is for you! The best part? You can participate absolutely free.
All you need to do is start your FREE 30-day all-access trial of CoCommercial today by clicking here.
Then, on June 1 you can join in the conversation with Amanda Steinberg, founder of DailyWorth & WorthFM, Mark Butler, founder of Budget Nerd, Jaime Masters, host of Eventual Millionaire, Jacquette Timmons, author of Financial Intimacy, and, of course, me!
We’ll be talking about:
- How to create a business budget that helps you grow
- How to make your money choices truly personal
- How to have tricky money conversations with people you love
- How to avoid overspending as you grow your business
- And much more!
Again, you can participate free of charge in this all-day virtual conference just by starting your trial of CoCommercial.