This is the first in a series about Money.

In business, we want to attract the right clients, generate an income to support our lifestyle, grow our business in a way that reflects ourselves and the direction we want to go, and feel valued and appreciated so that our customers want to share our products and services with others.

The question is, how do you do that and make money? How much do you need or want to make, to make your business worth your time, effort and energy? Where do you spend or invest the money?

Let’s start with the last question and work backwards!

Where do you spend or invest the money?

We need to budget, whether it’s personally or for business. The bottom line is, without a budget you’re setting yourself and/or your business up for failure; and a range of financial problems down the line.

Learn about budgeting and how to stay on top of business financials. Strategically it’s a no-brainer and will save you hours of worry.

Without a surplus cashflow, that is more money coming in than going out, you will not be able to save or invest, including reinvesting in your business.

Unless you’ve mastered the fundamentals of saving (or using other people’s money), then building a better financial future may be just a pleasant daydream.

Transitioning from a spender to a saver can be hard, but it is doable; and it’s important to make better use of our money and investments, to build financial security and have more freedom and choice.

Here’s a few tips that you can apply personally or in business:

  • Be mindful and track your spending and savings. Little cutbacks are relatively painless and a few minutes of your time so worth it. Did you know saving 1% per year on a loan of $150,000, by negotiating with your lender to reduce interest rates, is $1,500 in 1 year and could be as much as $23,000 in 10 years time through the magic of compounding. Likewise, earning 1% more on your $150,000 investment would deliver the same reward.
  • Starting small helps to pave the way for greater savings in the future. What value could you add to your business and investments if you only bought what you need when you need it?
  • Creating greater financial discipline doesn’t have to be hard or mean you can’t have any fun! Set yourself goals and use them to become more disciplined in business and life, you’ll go further in the future if you are confident of your money habits.
  • Unforeseen expenses will always crop up. Create a buffer for cash flow timing differences and emergencies, by putting a little away regularly into a separate account. If you take a hit, don’t let it defeat you, keep up the discipline and before too long you’ll have enough in your buffer account for comfort. Then, you can expand your business, add new products or services, add staff to take the pressure off yourself, enjoy occasional time off or treats and tip more over into your investments or savings.
  • Every little bit counts. We have so much access to information these days, so make it a habit to look around for better rates and offers. You could even spend just 15 minutes daily or an hour per week checking in on your finances and looking for deals, that doesn’t seem like a huge impost on your time, does it!
  • Take a closer look at your cash flow, budgeting and spending habits first, instead of rushing into taking on other business/s, ideas, a second job or home industry; whereby you’ll have less time to focus on your core business, the foundation stones of financial wellbeing, those that are important to you like family, friends and fun.
  • Once you’ve got the spending under control, focus on debt elimination (to the extent that it is unproductive), then savings and investing. Unproductive debt is debt that doesn’t increase your wealth, is used to buy depreciating assets, goods or services that are not tax-deductible. When investing look at the return on your investment (ROI) and decide whether reinvesting in the business makes more sense than other savings and investment pursuits.


How much?

How much you need to make is a very personal question, for you to answer. There are a number of ways to come up with the magic number, the reality is there is no right or wrong answer.

Here’s a few ways you could consider:

  • Work out from your actual expenditure (living/business) how much you need to cover costs, then add how much you want income/profit, add taxes, add buffer/emergency savings plus “fun money”; and make that your target.
  • If you are a startup, use your budgeted expenditure and projected profits (from your business plan and cash flow forecasts) into the above formula.
  • If you are in a services business, work out how many clients you’ll need to see at your particular conversion rate and price to generate your desired revenue. Deduct expenses and taxes. Adjust pricing as needed to achieve your goal.
  • If you are leaving corporate life, you may want to use your last salary or your desired salary.
  • Whatever the method above used, divide that out to establish monthly targets and your day rate.

Here’s a worked example:

Step Description Value Notes
1 Desired income  $   100,000
2 Billable hours per year                    1,350
3 Income cover  $              74 Calculation (Desired income divided by billable hours)
4 Overheads  $     50,000 (from Business Plan/Cash flow forecasts)
  Overhead cover  $              37 Calculation (Overheads divided by billable hours)
5 Desired Profit margin 20%
  Charge-out rate (Hrly)  $          133 Calculation (Income cover plus Overheads cover plus profit margin)


Here’s a few tips:

  • You are running a business, it’s not a hobby. Run your household finances like a business too.
  • Dig into the business and understand what makes it tick, the more intel you have the more robust your budget, projections and business plan. It’s important that you take the time to sit down and work out your figures properly. The better these calculations are, the more accurate your charge-out rate will be; and the more reliable bank.
  • Work out your rhythm and routine to discover what’s possible, how you can achieve greater efficiency, and be mindful and make savings where possible and investments where they make sense.
  • Outsource the tasks that it doesn’t make sense for you to do yourself.
  • Set goals and adjust accordingly as you move forward and grow.
  • Get a money coach and any other support, education or coaching you need to learn as much as possible.
  • Hold yourself accountable.


How do you make money?

The short answer is … are you competitive, will you attract enough business, is your offer and value irresistible?

Work out if your pricing/rate compares to others in your industry and/or similar businesses – you should be aware of the range or you might not get much work.

You have some decisions to make, and you may or may not have a problem.

  • If you’re higher, then you may want to emphasise your value adds or work on your marketing to resonate more with your target audience so that your offer is irresistible. You may also want to check your figures to ensure they are realistic.
  • If your pricing is lower, this may be an opportunity to increase your rate and make more money. Or you may decide to stick with the lower price in anticipation of winning more business (away from your competitors). Again, check your figures.

Either way, think about the quality of your offer, delivering superior service and or quality, and bonuses that you might offer to win the hearts and minds of your clients. Once a client comes on board, keep up the communications and build trust to garner repeat business. Retaining a client is less expensive than winning a new one, happy clients are a fantastic source of referrals and a surefire way to build your reputation and business.  Boom, more money!

A final word

It’s vital that you don’t get into your own head on this, remember it doesn’t have to be complicated. You can reset in need.

Hope this helps. Having control of your finances is so important. If you need help speak to a qualified Financial Adviser who focuses on your needs and best interests. Someone like me who will coach you and partner with you on your money journey.

With my best wishes


This represents general information only. Before making any financial or investment decisions, we recommend you consult a financial planner to take into account your personal investment objectives, financial situation and individual needs.

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