Episode 8: Erika’s Money Mindset Mantras

“What’s the utility of buying this phone over this other phone?”

“What’s the ROI of this purchase?”

“How can I be sure this purchase is the best for me?”

“You control the cashflow, the cashflow does not control you”

First we start with planning and intentions. Having the intentionality with money is important - it speaks to what we value and what we need. I often get teased about my spreadsheets and 3-5 year forecasts.

Budget isn’t a bad word. Budgets aren’t meant to be restrictive, I approach them as a guide. I know that I want my software fees to be a certain amount, I know that payroll is certain amount, I know how much revenue we have on a monthly basis.

Being proactive versus reactive

Setting aside money on a monthly basis for income tax and sales tax is important. Even if you’re making installment payments, regularly comparing your installments to what is required of you will make sure you’re staying on track, and not over or under.

Learning from mistakes

At Signal, and in life, I try to learn from mistakes I’ve made. I bring a lot of money related thoughts from my early twenties into my business now - don’t subscribe to every software, explore how much a tool can do before I pick another, pay bills early, get paid first.

I can’t tell you how many money mistakes I’ve made, whether from buying cheap quality things, hiring the wrong people, or just wasting money on interest charges. The biggest take away from money mistakes is lessons learned, not dwelling on it, and moving forward.

Will this help me grow or make my life easier?

When it comes to making large purchases inside my business, I ask myself if it will help me grow? Whether that is business coaching and getting clarity or buying a new monitor, I ask what it will do for me and/or the team. This is two fold, because if I want or need something to be better it helps me re-center my money AND my energy. When it’s all feeling a little too complicated, it’s because it is complicated. It should flow and be easy.

For example, when choosing a business coach - you have many options. You have coaches that will sell you their systems that made them have 5 figure months in days (prove it). You have coaches that act more as a mentor. And then you have somewhere in the middle. Just like I don’t believe in crazy growth ($0 - 5 figure months in days), I do need some way to act in my business to grow. The ramp up to 5 figure months, the right systems sliding into place so that the business can scale in a healthy way.

I chose my business coach because I had already worked with her in small ways - quick workshops, a few laser sessions here and there. When I was finally ready - and financially able - I did a full program with her. It isn’t a long term situation - it’s a short term advisement and clarity focus.

If you have a coach you want to work with but maybe can’t afford it right away, try to see if there are smaller ways to work together to get help with smaller asks. Work up to the big win.

Large payments are the worst for cashflow

I really pay attention to large outlays of cash. I hate paying large tax bills all at once if I’m not prepared. With the right planning, saving, or even instalment plans, you can make this work.

I see thousands of dollars a day between all of my clients. I see lots of small numbers, many large numbers, and after awhile money starts to take on a different meaning. Sometimes working on our mindset and refocusing what we value. From a personal and business perspective and making sure we’re investing our dollars where it makes sense.

At home, my spouse and I have regular ‘family’ meetings where we discuss any new financial goals we want to work towards - car, mortgage, savings, retirement. But we also look at where we’ve been - what have our spending habits been like and how can we change those?

Now, this is a business podcast, but I have to make some real life correlations - Some people would call it nerdy, but I’ve broken down our household expenses into our total revenue (paycheques), total cost of goods sold (what it takes to at a bare minimum run our house), and then ‘operating expenses’

Those help keep me grounded to make sure we’re not over inflating our life.

When it comes to business, it’s no different. I have quarterly finance reviews with our team. They are recorded and saved for future reference. I ask the team for feedback on how we’re doing and if they have any comments, questions or suggestions. I have my own ‘savings’ goals and how I want to structure that for the business. I have goals of hiring and helping clients.

Finally, my ultimate mindset is that I need to invest in ways that help me grow personally or professionally. Invest in quality, invest in time, and see the rewards.

If you feel like you’re ready for a money mindset reset or have questions about your business finances? Book an Ask A Bookkeeper call at signaloperations.com/contact.

Episode Transcript

00:00-00:28

Erika [Intro]:  As health, wellness, and beauty experts, you know all about keeping a calm, peaceful space. But what about your business? Is that pretty calm? I'm Erika Dowell, business operations expert and your host of the Business Flow Formula podcast. Each episode, you'll get real-world advice and strategy. From people who have been there and done that and love to tell the tale, so you can clarify, streamline, and elevate your practice from the inside out.

00:29-03:19

Erika: What's the ROI of buying this iPhone instead of this iPhone? What's the utility of this purchase? Or how can I make sure that this purchase is the best for me? If you know me or if you've ever worked with me in the past, you have probably heard me say these words or ask these questions. I laugh a little bit of myself because this is some of the mindset that I get into when it comes to buying things, either in my business or even in my personal life.

Back when I was a teenager, I was told that when it comes to managing money, I control the cash flow; the cash flow does not control me. And I know that sounds a little silly at first, but when you think about it, if you're able to really control your money in and your money out, you really start to control how the money moves around in your life a little bit more.

When it comes to my money management and mindset, I like to start with planning and the intentions behind it. Having the intentionality with money is important. It speaks to what we value and also what we need. I often get teased about my spreadsheets and my three-to-five-year forecast that I've done historically.

The other mindset piece that I have is making sure that budget isn't a bad word. It's not about being restrictive; it's about approaching them as a guide in our day-to-day life. Again, business or personal. I know that I want my software fees to be a certain amount, and I know what my payroll is. And I know how much revenue that I have on a monthly basis in order to pay for all of those things.

And so it's not necessarily that a budget, again, is restrictive. It's all about guiding me and how I can make sure that I am spending and earning properly in my business and personal life.

Next. I like to be proactive versus reactive. This means setting aside money on a monthly basis for income tax and sales tax. Even if you're making installment payments, regularly comparing your installments to what is required of you will make sure that you're staying on track and not over and not under. You might be wondering, well, why does it matter if I'm over? I'd rather have a refund at tax time. Well, loaning someone money that is not making you any interest or anything like that kind of seems like a waste of cash flow to me.

It also is very restrictive. If you overpaid your taxes, getting a bunch of money back is great, but it's restricting your cash flow throughout the year. Similarly, if you're under on your sales tax or income tax, that means that you have a large lump sum that you need to pay out that you might not be expecting. And so, making sure that you're staying on track, regularly comparing that, make sure that you're being proactive versus reactive. 

03:20-07:02

Erika: Next, I like to learn from my mistakes. At Signal, my business, and in my life, I try to learn from the mistakes that I've made. I bring a lot of money-related thoughts from my early twenties into my business now. 

Don't subscribe to every software, for example. I explore how much a tool can do before I pick another one, and I try to pay my bills early and get paid first. That means that I start to automate my accounts receivable (money coming in). I try to, where possible, pay my bills early, especially if I already have the funds that I need to pay those bills.

And then finally, software is such a slippery slope. We see that not only in business, but in our personal life, where we have so many different streaming services, so many different software for fitness, mindsets, those kinds of things. Getting one tool that can do multiple things will be a game-changer. And then trying to find little quick free wins that can supplement where a software might be lacking. 

Now, I can't tell you how many money mistakes that I've made, whether that's buying cheap quality things or hiring the wrong people, or just wasting money on interest charges. Been there, done that. The biggest takeaway from money mistakes is lessons learned; don't dwell on it and just move forward. 

Next on my money mindset list, or just how I approach things, is it gonna help me grow or make my life easier? When it comes to making large purchases inside my business, I ask myself if it will help me grow, whether that's me growing mentally or if it will help my business grow.

Whether that's in business coaching and getting clarity or buying a new monitor, I ask what it will do for me or my team. This is twofold because if I want or need something to be better, it helps me recenter my money and my energy. When it's feeling a little too complicated, it's because it's complicated, and it should flow and be easy. So getting clarity in my business is absolutely worth that money. 

For example, I hired a business coach a couple years ago now, and there's so many options. Who do you choose? Who do you work with? You have coaches that will sell you their systems that made them five figures in a month and days. Then, in my opinion, prove it. I want to see your income statement. 

You have coaches that will act more as a mentor. They got to show up for the meeting, and then they check out. And then you have somewhere in the middle, just like I don't believe in crazy growth, that means the $0 to five-figure months and days, I do need some way to act in my business in order for it to grow. I need actionable things that I can do in order to grow the ramp-up to those five-figure months, the right system sliding into place, so the business can scale in a healthy way. All of those things can be done in slow, steady progress. That's one of the mindsets that I believe in.

I chose my business coach because I had already worked with her in small ways, quick workshops, a few laser sessions here and there. And then, when I was finally ready and financially able, I did a full program with her. It wasn't a long-term situation, it was a shorter-term, advisement and clarity focus, working on a specific problem in the business that we solved together.

If you have a coach or someone that you want to work with, but maybe you can't afford it right away because it's a large purchase outright, try to see if there's smaller ways that you can work together with them and get help with your smaller asks or smaller problems, and then work up to that big win. 

07:03-10:26

Erika: And that kind of goes to my next mindset, that I've alluded to a little bit here, is large payments are the worst for cash flow.

I really pay attention to when there's large outlays of cash. I hate paying large tax bills all at once if I'm not prepared. But with the right planning, saving, and installment plans, you can make this work. You'll even start seeing business coaches, for example, start offering installment plans in order to work with them.

There's also the large outlay of payroll or those kinds of things. Having those broken out more regularly can help with the business cash flow. So whether that's going from a monthly payroll to biweekly or even semi-monthly, that can really help with things. 

Finally, I want to talk about the walking through the tough and weird days and the ebbs and flows of money.

I want to acknowledge that I'm a bookkeeper first. I see thousands of dollars a day between all of my clients. I see a lot of small numbers, many large numbers, and after a while, money starts to take on a different meaning for me. Sometimes, working on our mindset and refocusing what we value is a practice that I need to go through, and some of my clients also need to go through.

And that's not a bad thing. It just means that for a little while, we let things go on autopilot, maybe a little bit too long. From a personal and business perspective, and making sure we're investing our dollars where it makes sense, taking that time and energy to making sure that we refocus on what we value and where we want to invest needs to be intentional.

For example, at home, my spouse and I have regular family meetings where we discuss any new financial goals we want to work towards or have been working towards, such as buying a new car or mortgage savings, retirement. Maybe something fun that we want to do, but we also look at where we've been, what have our spending habits been like, and how can we change those?

I know in the summertime we all have a habit of going out to grab some meals with friends or drinks with friends, or perhaps we just went and got a little bit too many iced coffees…looking at myself. Now this is a business podcast, but we got to keep it real. Some people could call it nerdy, but I've broken down our household expenses and our total revenue so that it makes sense, so we can make decisions off of those.

So then we have our total revenue, which is our paychecks, and then the total cost of goods sold, which is what it takes to, at a bare minimum, run our household, including utilities, groceries (because we got to eat food), car payments or anything like that, bare minimum to run the household. 

And then, from there, we have our operating expenses. Those are the fun items like dining out or grabbing a bottle of wine at the store, or going to movies, entertainment, those kinds of things. Those help me keep grounded to make sure that we're not over-inflating our life based on our total revenue, but also helps me ground myself after working on client monies or bookkeeping and those kinds of things to making sure that I'm going from thousands of dollars to a few hundred dollars (helps ground me a little bit). 

10:27-12:22

Erika: When it comes to business, it's no different. I have quarterly finance reviews with our team. They're recorded and saved for future reference, and I also share them with my inner circle so that they can see my wins, my successes, and sometimes even my challenges. 

I do ask the team for feedback on how we're doing, if they have any comments, questions, or suggestions. I like to say any comments, concerns, questions, or outbursts. And of course, I own my own savings goals, how I want to structure that for the business. And I do have goals of hiring and helping clients, through those are normal KPIs to have in our business. That goes back to the budgeting mindset, where it's not restrictive, but rather it's a guide.

The team has access to that. They have full access to our finances, so they can see how we're doing at any point in time. That transparency is important to me, but also again, helps ground me and making sure that I'm staying focused on what matters. 

Finally, my ultimate mindset is that I need to invest in ways to help me grow personally or professionally. Whether that's investing in quality, investing in time, and how do I see the rewards that come from those investments. And that's not literally investing in the stock market or anything like that,  that's investing in quality friendships, quality community building. Investing in time and mentoring new business owners, or just chatting with a friend about something that they're going through, seeing the rewards of those new business owners achieving their successes, that's a pretty solid ROI. 

If you feel like you're ready for a mindset reset or have questions about your business finances, book an Ask a Bookkeeper Call at www.signaloperations.com/contact. 

Erika [Outro]: Are you ready to turn your chaos into calm? Subscribe and follow the Business Flow Formula. Let's create more profit efficiency and flow together.