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Posted on February 16, 2021 by dawnk

“I don’t pay myself; I just take a little bit here and there when I need it.” I hear this phrase all the time from entrepreneurs. Even from owners of businesses with employees. They just don’t take a check. But they do get paid. Here are some of the top objections to setting paydays, and some reasons you should really do it in your own business and for yourself.

Payday: image of someone counting money

1. Setting paydays: It’s all my money anyway

Maybe. Depending on the structure of your business that money belongs to your LLC or corporation. If you are a sole proprietor the argument can be made that yes, it’s all yours. But you are earning it in your business and keeping business and personal finances separate is important. Now, I know some business owners that still use their personal accounts for business transactions. They accept credit card payments to their personal accounts. That creates kind of a mess for business expenses. There are fees for accepting cards, and these are co-mingled with personal money. And oftentimes, business expenses are missed when they are mixed in with the personal.

Separating your finances is one of the easiest things you can do that protects the integrity of your business record keeping. All of your payments earned in your business go into the business account.

Your expenses stay clean and you can still get your money from the work you do in your business.

2. setting paydays: I don’t need take the extra step to write myself a check.

Taking the extra step to pay yourself protects your business and personal cashflow. Here’s what I often see happen. The electric bill is due, and “just this once” you are going to use the business debit for your personal expense. Or you just write a business check to the orthodontist because it is just “easier” than taking a check and depositing it in your personal account. In both of these very common occurrences you are potentially messing with your cash flow.

If you dip into your account throughout the month for expenses you are increasing the chance for a cash flow issue. There are always things that can happen to your income. You can have a chargeback. Or you can have a client pay late. Or you can have a down sales month. Many times, unexpected challenges affect our business financially for a time. If you set two days a month that you would take time to write that paycheck (for what you really need to support your personal expenses) you allow the cash in your business to build up throughout the month. For example, instead of 8 draws on your cash for personal bills, you would have two.

3. setting paydays: I don’t take that much anyway.

The tax liabilities on small business owners can be huge where the taxes aren’t withheld when money is taken from the accounts. More than once when the books are actually reviewed did the entrepreneur have to do a double-take to see what was actually taken. Owner’s draws, those little withdrawals from the account for personal use, add up and they are taxable as self-employment income. In the U.S. you have to pay Social Security and Medicare taxes on your personal income. It is very easy to take a little bit each week, and not pay taxes on it. Because it doesn’t feel like very much.

AUTHOR’S NOTE:

In reality, you can set up a process to withhold and deposit your taxes every time you take a paycheck. Having an online payment portal to the IRS is easy in the states. You can make a transfer when you pay yourself. Over the course of a year, it is very easy to take $20k or more from the business and not feel it. $20k a year is only $1667 a month, which is a little over $400.00 a week. Pay your car payment and insurance, grab a little bit for groceries, and buy a birthday gift for your mom and you can easily hit that a month. You will then owe taxes on that $20k.

Take the time to set yourself up to protect the integrity of your business records, protect your cash flow, and protect your personal income by setting up paydays for yourself. Taking a check every other week is a great way to also predict your income for your personal expenses and allow you to have some income security.

The Top Three Qualities of My Most Successful Clients

Posted on April 28, 2020 by dawnk

Most of my clients have lasting results with the money changes we make. But what makes some clients more successful than others? I don’t judge success by dollar amounts of debt paid or profit made. Some of my most successful clients had overall smaller dollar changes. I judge success by my clients reaching their financial goals, staying protected at their income milestone, paying themselves and having great job satisfaction. If my clients can remove the stress and uncertainty that can come up around money, I call it a win. But my most successful clients all have three qualities about them that made them “extra” successful.

1 – They have a money goal and a purpose for the money.

My most successful clients have a money goal. Saving to buy a building, leave the 9 to 5 job, open a day spa in 3 years are all examples of my client’s goals and purpose for a set amount of money. These goals aren’t fuzzy. They know how much they need, and they have a timeline to make it. If they don’t start that way, they get it when we work together. If your money goal is “as much as possible” or “as much as I need to cover overhead” you likely don’t have the same laser focus to create and make money as my most successful clients do. The truth is, if you aim at nothing, you’ll hit it every time. You need to define and write down your goals with a plan to reach them. Not that plans can’t grow, change, and evolve, but if you don’t start with one at all you aren’t going to be able to really measure your progress.

2 – They take immediate action to control their money.

They opened the holding account, they took the utilities off autopay, they started tracking income every day. Some of my clients have done those tasks the same day we have our session! Keeping their laser focus on the goal they take quick action and have wins immediately. I have seen less success with entrepreneurs who are slower to make necessary changes. The motivation to get it done quickly goes away, and often only about half of the recommendations make it into the business. They may pay their expenses intentionally, but they don’t make the time to create a monthly spending plan (budget). My most successful clients commit to making changes with their money quickly, one step at a time, and they follow through right away.

3 – They celebrate every financial win and use them to stay motivated.

Let’s face it, saving 5 years for a building can get a little boring. Every $200.00 deposit seems tiny in the face of the price for a building. But my most successful clients celebrate every single win, whether it is a deposit into a building fund, or a payday when they proudly sign both the front and the back of their paychecks. Staying motivated can be difficult sometimes, and we all have to deal with the sometime lack of motivation. Celebrating the little things brings joy into the progress, not the end state. If you aren’t celebrating and doing a little dance after every sale or payday, I challenge you to start today. Find a small money win and recognize it with gratitude.

Three Unexpected Benefits of Calculating Your Breakthrough Number

Posted on April 7, 2020 by dawnk

When the Breakthrough Number (B-Number) process was developing, I used it for the easy visualization of protecting the inside of your business four walls. It was first created to support a client who knew of the Dave Ramsey “7 Baby Steps” approach to personal finance. Each of the walls I identified for business helped her make decisions on how to spend money and to put processes in place for money management. Over time I continued to use the approach over and over and finally gave the process a name…

The Breakthrough Number

I know what should happen when people figure out their unique number. They should be more in control of their income. They will know their minimum monthly amount of money the business must bring in, reducing stress and uncertainty. Finally, they will see the wisdom of including their own salary in the business spending plan (budget).

What I didn’t foresee happening were these additional, unexpected benefits that came with working through the calculation process.

More accurate wholesale costs.

I’ve worked with several business owners who forgot something, some small or easily forgotten expense that affected their profit margin. Running through each of the walls carefully uncovered things like the cost of blank labels and ink for handmade products. That cost was easily overlooked because it was under $25.00/ month, but it needs to be included because it affects the real cost to the business and needs to be recovered.

2. Finding hidden money and a chance to become leaner.

The first time this happened I was actually in an airport helping a friend run through the breakthrough number process. We were discussing her critical operating expenses and remembered that she had a service she paid for every month that she was no longer using! This service was about $100.00/ year. More than once I have seen clients eliminate or change services and expenses when they take a hard look at deciding what is critical.

3. More confidence in making strategic business decisions.

This benefit was sort of foreseeable in that I knew people could use the process to calculate different scenarios such as hiring new people or adding a service because they would be able to forecast the new expense’s impact on the money. But the way my client uses it to make decisions is quite surprising! She literally just uses her known monthly B-number amount to help her make decisions. Her breakthrough number is about $5k a month and included her personal paycheck. Anytime she wants to do anything different she looks at how much she made over her number that month and how much she has in the bank. She can then say, “Oh, this is okay, I made an extra $2k and I can still pay myself for 3 months.” That was her quick ‘back of the envelope’ calculation for hiring her part-time VA and a business coach. Amazing!

If you are still without your unique number you can get it today, right now for free.

Just visit http://entremoneycoach.com to grab your free worksheets. You will have your number in under 30 minutes! Happy Entrepreneuring!

Top Five Money Mistakes Business Owners Make (and How to Avoid Them)

Posted on March 24, 2020 by dawnk

Not separating Business from Personal Accounts. You must have a separate financial identity for your business, even as a solopreneur or freelancer. Keep your money separate and write yourself a paycheck from the business. No living out of the till. Use a fee free checking account for all of your business income, and pay your expenses, including your paycheck, at regular intervals from that account.

Immediately Making Large Purchases for the Business. Often these large purchases are made on credit, putting the business immediately into the negative with debt. Do you need that new computer right now? How about that website? All of those services? Keep the business lean by purchasing only the necessities. Know your B-Number to determine the amount of money you need to make based on prioritized expenses and put large purchases on hold until you have the cash.

Having too Much Personal Debt. Personal income is often dipped into when businesses are first starting. Until the income really gets going, it’s not unusual to pay for certain expenses from personal funds. Having a large personal debt load means less money available for business expenses if needed for perhaps a marketing funnel or to pay a large expense that comes up. On the other hand, if you are relaying on your business to pay all of your bills, personal debt means more money needed from the business, and less money staying in the business for growth or new launches.

Not Saving for Emergencies and “Down Times.” Business is cyclical. It just is. Income will be variable, particularly in new businesses who are starting to get visibility and a steady income stream. It is always a good idea to keep an emergency fund on hand- set aside into a free checking account for those months where you don’t make enough to pay those B-Number expenses. Some advice for starting and funding an emergency fund can be found here.

1. Not Having a Clear Spending Plan for Your Business. Money can easily run off and spend itself when your business doesn’t have a spending plan. Always starting from the B-Number, where is any extra money going? You may get by for a bit, but having a plan ensures you can afford to take certain steps in your business. Taking 45 minutes a month to map out upcoming expenses or expansions and what you plan to spend where. If you need accountability or help with your plan, go ahead and check out our Business Money Planning Group.10

Three Steps for Making Business Cash Flow Management Easier

Posted on March 16, 2020 by dawnk

When I was at a conference in San Diego last month, I had an epiphany about most new business owners and their business money stuff. Typically, when I work with a family on personal financial management there is a history of making financial decisions that became habit. When we work together, we have to often change years of money habits so my clients can reach their goals. Business money management is different. Entrepreneurs are not generally “taught” how to manage their money. Rather than a habit to change, there is some learning that needs to happen.

In personal finance we are generally dealing with a set amount of money that consistently comes into a household as a regular paycheck on regular intervals. So, we can start from the income. Knowing how much you have to work with makes planning easier. You know how much it will take to cover all of your expenses. When we have a deficit, a second job can be a solution, and once again we adjust to the new income.

Business isn’t that way. You may have income in the first week of the month and nothing in the second. We may have extreme income differences each month, and we may not know how much we will have to work with when the month starts! This difference is what often leads to cash flow emergencies in business, and stress when you are running negative cash. You must know how much you need to make to cover all of your expenses, but you may not know exactly which week you will make what you need. Business money management is more dynamic and requires at least a weekly look at how things are going.

Here are three simple steps to managing your business income as it comes in, and to keep cash on hand.

Know your B-Number. You must know what you need to make, and you must prioritize the B-Number expenses first. Pay these above all other expenses to keep the business operating and able to keep generating income. If you do not have it, get your free worksheets at www.entremoneycoach.com.

Track your income as you make it. You don’t need to obsess over your money each day, I had a client who did that, and she never enjoyed being an entrepreneur. Just write down what you make every day you make money. For simplicity, go ahead and write the totals on a calendar the day it comes in.

Pay your expenses when cash flow is positive. You can pay the bills weekly or bi-weekly but know when you have made your B-Number, and when you are funding other things such as marketing, debt, and growth. Other coaches may disagree with me, but I have held the water bill for an extra week to ensure that my cash flow was positive, meaning I had more left over after I paid the bill, and didn’t let it run dry. I tend to be a little nervous about not having cash on hand, so I wait until I have sufficient cash to pay my expenses.

Finally, as you are making more and more over your B-Number each month, make sure you are funding an emergency fund. A good rule of thumb is three times your B-Number to keep on hand to protect against cash crunches. Just open a free checking account and start to put some money away.

Here’s a Pricing Tip: Add a Profit Line to Your Service Prices

Posted on March 10, 2020 by dawnk

Many entrepreneurs low ball their prices for products and services in the beginning. I did. For my own story, I had a coach that told me what I already knew, I was undercharging. Imposter syndrome is a real thing, and many of us tend to undervalue ourselves and the impact we make in the beginning of our entrepreneurial journey. This seems to be very common with service providers. Coaches, consultants, and freelancers typically start lower than they should, and are sometimes very slow to raise prices. Margins in service businesses are typically higher than many product-based businesses. Because there isn’t a “wholesale” cost, so to speak, many of us struggle to price our services. And if we don’t have a responding increase to the cost of doing business, we tend to struggle to “justify” a price increase to ourselves.

There are a lot of articles and methods for pricing yourself in the marketplace, and also ways to raise your prices. What I want to offer is a way to raise your prices when you are resisting the increase by identifying the increase with a name. We’ll simply call it the “profit line.” This can help with some of the hesitancy to increase prices, your “base price” remains the same but you add on an increase which you categorize and have a real purpose for the money.

This system works because many of us struggle with money mindset, and the thought that raising our prices might mean we are greedy. “I don’t need that much” is the cry of the resistance. But you aren’t in business only to solve your needs. You are also in business to create profit and to reach your financial goals. If you don’t have yours defined yet, let’s get some profit goals and the why behind them written.

You can decide what you want to add as a percentage or a number. For example, you charge $200.00 for a service. You add $20.00 as a 10% pure profit line, and the new price is $220.00 for your service. Your prices are raised, a bit, and moving forward every time you sell that service, you siphon off $20.00 to put into an account for profit. Give that account a name, a purpose. You don’t have to stop at 10%. You can add 50% profit and make your service $300.00. Your decision.

If you are resisting raising your service prices, give this method a try. Go ahead and figure out how much profit you will have in an account in a month if you add this line. Plan your next business move. What is this specific profit amount going to be for? Remember that any money without a name will run off and spend itself. Go ahead and raise your process. Just do it. Add a profit line this week. Happy Entrepreneuring!

Guest Blog: We Lived the Workaholic Entrepreneur Life- Never Again

Posted on February 12, 2020 by dawnk

by, Mike Kennedy

In April of 2011, Dawn and I decided to risk it all and start UNEQ consulting. I had spent the previous 14 years working at the Army’s Maneuver Battle Lab as an Experimentation Manager in the Unmanned Systems Team. My team and I conducted experiments with small unmanned aircraft systems, commonly referred to as drones, and unmanned ground systems, or ground robots. I loved my job; was very good at it; and had earned a great reputation in the unmanned systems community. But still, every day I got up and went to work at a government agency. Bureaucratic BS prevails at all government agencies and that was the part of the job that was troubling me. For months I had a nagging feeling that I was faced with a choice; succumb to the bureaucratic BS, keep my head down and just keep going; or resign my position and go do something else. I was making a six-figure salary, got to work around soldiers a lot, and my work helped to make their lives better. That was the good part. Putting up with the bureaucratic BS was the bad part. Go do something else won out and UNEQ Consulting was born. I closed my 401k, sold all my stock options, and away we went. Dawn agreed to keep working her job with the Army for the time being.

We thought briefly about renting some office space but after careful deliberation decided it was best to work from home. In the beginning, it was great. We had offices set up downstairs and called it the world headquarters of UNEQ Consulting. It was fun. I got to work in my pajamas most of the time and never had to drag myself to the car and drive to work. The first year we took a loss, but the second year we made more than $200,000. The problem with working from home, though, is that you are always at work. Soon enough, when the dogs got me up in the middle of the night to go outside, I would start working. From 2 or 3 am until 8 or 9 am I would be at my desk. I would take a short nap until 10 am or so then get back at it.

The thing is most of that work was just busy work. I was chasing clients. We had contracts with Georgia Tech Research Institute, the Defense Advanced Research Projects Agency and several companies that developed unmanned technology for the Armed Forces and/or First Responders. We were making great money, but I was working 16-18 hours a day trying to get more contracts and was spending near zero quality time with Dawn and the kids we still had at home. It got worse when Dawn’s contract with the Army expired and she started running operations for the company. Her work was invaluable; a definite asset, and truly made a big difference. That wasn’t the problem. I had become an obsessed workaholic jerk. Obsessed workaholic jerks find a way to manufacture arguments and fights over things that are not important. That was me and argue and fight we did. What’s worse than becoming an obsessed workaholic jerk? Knowing that you are one and not caring. I would tell myself that things would get better with Dawn and the kids when we were making millions and none of the fighting and arguments would matter then. For our third year we were on track to make $375,000, then the best thing that has ever happened to me happened.

On Friday, November 1, 2013, my two oldest sons and I were planning to spend the day at our training site getting ready for an event with first responders that was scheduled for the next day. Kevin, Patrick and I went first to a local tire store so Patrick could get new tires put on his car. Patrick was going to catch up to Kevin and me later in the day. Kevin and I got to work and a few hours into it, I climbed a ladder to about 18 feet to hang something on a light post. That is when the best thing that has ever happened to me happened. I fell off that ladder, fell the 18 feet or so and landed on my head on concrete. Wait- that doesn’t sound quite right, does it? How in the world can falling off a ladder and landing on your head on concrete be the best thing that ever happened to anybody? I’ll tell you. In the second that it took to fall that 18 feet, UNEQ Consulting died and with it, so did the obsessed workaholic jerk.

Of course, I am not actually dead. But in that second I went from obsessed workaholic jerk to helpless guy with 4 skull fractures, severed VIII Cranial Nerve, diffuse bleeding in the brain and catastrophic Traumatic Brain Injury who would spend the next 2 and a half months in the hospital learning to walk again. In that second, UNEQ died, the obsessed workaholic jerk died, but our marriage was saved. We wouldn’t know that our marriage was saved until a few years later because I had to recover and learn how to live with hearing loss, Oscillopsia (google it), swimmy brain, and getting to know the new Mike. That was extremely frustrating. Looking back now though, six and half years later, it is clear the accident saved our marriage.
Now, I sometimes think about it all and reflect. UNEQ probably would have gone on to make the millions of dollars I was obsessed with reaching. But, more likely than not, Mike and Dawn would have divorced, and the obsessed workaholic jerk I was would be all alone. That, my friends, is not worth it.

Here are the things I want you to take away from reading my story:

1. If you are working 16-18 hour days and not spending quality time with the people you love and who love you- you are a workaholic. Stop. It is not worth it.
2. If you are working 16-18 hour days, work is all you think about, and you know you are not spending quality time with family- you are an obsessed workaholic. Stop. It is not worth it.
3. If you are working 16-18 hour days, work is all you think about, you know you are not spending quality time with family, and you are fighting with them- you are an obsessed workaholic. Stop. It is not worth it.
4. If you are working 16-18 hour days, work is all you think about, you know you are not spending quality time with family, you are fighting with family, and you don’t care- you are an obsessed workaholic jerk. Stop. It is not worth it.

Finally, running your own business is only worth it if you keep the reason why you are building your business in the first place, front and center. You want a better for life for your family, you want your business to impact a lot of people and change the world, but what good is all that if you lose yourself and your family in the process?

The Art of the (Little) Pivot

Posted on February 4, 2020 by dawnk

The concept of the business pivot is not new, I learned about it several years ago when I was in the Syracuse University V-WISE program for women veteran entrepreneurs. Traditionally a pivot is a term to describe a strategy to turn a business when the current business model isn’t working, a plan “B” if you will. But I also see a pivot as a strategy that can aid expansion of a business. I don’t think a pivot is only a plan B, but can be a business strategy for small turns, little twists that steer the business to look in an additional direction.

Entrepreneurs are, by nature, change agents. Known for figuring out ways to do things better, ways to take calculated risks. We are also known for continually searching for the “next thing.” I believe that using a simple pivot analysis can help you find the next move for your business. Again, I don’t ascribe to a pivot as something to do only when things are going wrong. I believe that a little turn deserves a pivot analysis, so risks can be weighed in a structured, but simple, way. Use this three-step process to discover your next business move.

Commit to use openminded and unfiltered brainstorming. For best results, use the recommendations by Jennifer Jackson of Lucid Chartand just get every idea down on paper, and edit later.

Use the Entre Money Coach ADFP Formula. Ask open ended questions about your Audience, Delivery, Focus, and Processes for places to improve, serve, and expand. Get the Free ADFP Process and questions to ask by visiting> here.

Use market research to explore ideas. Don’t just throw out unusual ideas as bunk. Do a little market research to see if there is a fit. There are all kinds of free resources online to help you. Don’t forget to look at adjacent industries and at your own industry for ideas and changes going on that can support your ideas.

Some of the best business moves are those that seem to be a natural twist or progression. A pivot doesn’t have to be dramatic to impact your bottom line positively. Happy Entrepreneuring!

Entrepreneurs- Make 2020 the Year You Write Yourself Paychecks

Posted on January 5, 2020 by dawnk

The 2016 American Express OPEN Small Business Monitor reported that only 51% of entrepreneurs pay themselves a salary. By 2019, the statistic flipped,and 51% of entrepreneurs did NOT pay themselves a salary. In fact, 26% of business owners skipped pay for 2-6 months, and another 25% went OVER six months without a paycheck. What in the world?

Truth be told, many entrepreneurs pay themselves as an afterthought. I spoke with a restaurant owner just yesterday who admitted, “I could probably take a check, but I’m afraid if we slow down the business would struggle.” That’s a fairly common sentiment. Cash flow concerns have caused lost sleep and anxiety in 63% of entrepreneurs in a recent survey.

It is my personal experience that foregoing a paycheck caused even more anxiety because our personal income became unstable. I hear the wishful thinking that entrepreneurs can pay themselves, “someday.” Well, let’s start the habit now. You may not be able to pay yourself your dream salary, yet, but you need to get into the habit of budgeting for yourself.

1. Make sure you know your business “4 walls.” I like to envision your business as having 4 sides, like a house or a box, and your priority must be the expenses on the inside of that box. Expenses that cover your access to buyers, critical operating expenses and minimum inventory spend and a paycheck for yourself should be your priorities over anything else you may owe. The anxiety of worrying whether you have made “enough” this month will be alleviated by having this number. You can get the free worksheets on my website www.entremoneycoach.com.

2. Pick a number. Pick a number to pay yourself. Many entrepreneurs get stuck here. There are a few different ways to calculate your salary. One is to total up the personal expenses you need to cover your personal “four walls;” food, utilities, rent or mortgage, and transportation. When your electric and water is paid, you will be able to show up and serve with less stress.

Another method is to decide your ideal check, and take a percentage of it, say 40%. For example, if your ideal check is $1,000.00/ week, your 40% is $400/ week. Then add your taxes on top of that. So, you may take base pay of $500 week with a 20% tax rate. Every two weeks you write a $1000.00 check, deposit it and pay $200 to your self-employment taxes. Every dollar over that amount remains in operating account. As the business grows you can incrementally increase your salary.

3. Put your paydays on a calendar. And commit to paying yourself, even if it’s only $10.00. Do it. Celebrate your business, and yourself, with a tangible reward for two weeks of hard work. This pay must be in a paycheck. You are not going to live out of the till anymore. The money you earn between paydays stays in the operating account. Many entrepreneurs go through “petty cash” or take money directly from the business to pay personal expenses. This co-mingling is a nightmare for taxes and your personal finances.

The picture of the struggling entrepreneur working hard, starving even, until they make it big is the Cinderella story we love to read. But most small businesses grow slowly and incrementally. Those “overnight successes” we read about were likely in business for years before the “big break.” So, let’s pay ourselves, something, every other week in 2020. If you need a reminder, sign up for the Entre Pay Day newsletter at Entre Money Coach

Your Business. Thriving.

Tag: entrepreneurs