Ultimate Advice for Financial Success
Let’s talk about what I feel is the single most important thing you can do to improve your net profit and the amount of money you have. First, I want to share a story with you that describes how I adjusted my thinking around this and how I learned to “pay myself first”. My guess is many of you can relate to this.
When I was first starting out in my business, I had just recently hired my consultant, Lisa Suttora, and she asked me this question, “Leslie, do you pay yourself?”
I responded: “Well, what do you mean?”
Lisa said: “Do you pay yourself, do you pay: yourself?”
I said: “Well, you know I use the money for plane tickets, I use the money for going out to dinner, I use the money for different things, or to take my husband on vacation.”
Lisa said: “No, I didn't ask you that, I asked you, do you pay yourself?”
I said: “You mean like a salary?”
Lisa said: “Yeah, like a salary!”
I said: “I really didn't think about it, I just used the money that I had that was left over.”
With Lisa’s coaching, I quickly learned this was a huge mistake! Not paying yourself or setting a regular salary for yourself is the worst possible thing you can do to your business; to your own mental state; and to your relationships. It creates a mindset that your business is just “fun money” and not a serious endeavor.
Profit First Business Model
From that day forward I implemented a profit first system in my business. The money that comes in immediately goes into different business-related buckets such as taxes, administration, inventory, digital needs, and my own salary. Think of it like this: if you had an employee, you’d pay them first so why are you shortchanging yourself?
This is the one of the most powerful things you could possibly do for yourself and your business. To create this system for yourself, first set up your buckets to fit your revenue stream timing. When does the money come into your business or when do you do your accounting? Maybe it’s monthly, weekly, or quarterly. I chose every two weeks because my Back from Bali business was paid through my Amazon account on that schedule. So, whatever I get in those two weeks, I immediately put it into the profit first system and pay myself first; not last. Not after I’ve paid my Amex bill, ad budget, or my VA costs. I don’t wait to see what’s left for me. I’m first in line for the money I’ve earned!
Set up your own bucket system tailored to your business. Allocate the percentages needed in each category (include yourself!) and then set that percentage to go into each bucket. Then when the money comes in, you divide it up according to plan.
The beauty of setting it up on a percentage basis is that those percentages can change, including your salary. So, you move away from setting a dollar amount each month to instead having a salary tied to your revenue. This is a game changer! Not only does it create a more serious business system, it also gives you quick feedback when you have a really successful month or quarter.
I learned a lot about this method from the book “Profit First System” by Mike Michalowicz. I highly recommend reading it.
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Who is Leslie Kuster?
I became a 7-figure woman entrepreneur in my 50s -- with my successful Back from Bali clothing brand! It took some getting real with myself to finally say, “Damn it, I want money!” Now I am here to ignite women entrepreneurs -- like you -- to experience the empowerment, independence and joy of creating a business that brings you both money and freedom. Read more about my story here.