February 19, 2025 • 32 mins
Elevate your financial health with actionable insights on how to pay yourself effectively as a business owner while managing personal stresses. Learn the importance of integrating your personal and business finances, along with practical steps to achieve financial wellness.
• Sharing a personal story about financial struggles due to a family health crisis
• Emphasizing the connection between personal and business finances
• Outlining the Profit First cash flow system and its importance
• Detailing five essential bank accounts for effective cash management
• Exploring the framework for a personal finance snapshot to define financial needs
• Stressing the need for a consistent paycheck rhythm
• Discussing optional accounts for enhanced financial security
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
A few weeks ago, I hosted a webinar called how to
Pay Yourself More WithoutHurting your Business.
This is by far one of my morepopular workshops that we lead
and I thought what a perfectopportunity to share it with
this audience.
I highly, highly recommend youlisten to this.
You take notes, you get into aplace where you can actively
listen to it and really put intoplace what we talk about.
(00:21):
This is an actionable workshopwhere I guide you through
tangible steps.
There's four steps that weguide people through in order to
increase their paycheck, makesure that they are paid
consistently and that theirbusiness is paying them what
they deserve.
I hope you enjoy it.
(00:59):
I want to take you guys back andtell you a personal story to me
.
Take you back to 2019.
I was attending a conference inSeptember up in Newark, new
Jersey.
I was in the Newark airport themost magical place on earth if
you've ever been there and I'msitting at a bar.
It was packed.
They were doing renovationsthere, so there was just a lot
of people in our terminal, andso I finally made my way to the
(01:21):
bar and, right when they broughtme my drink, my phone rings and
I look at my phone and it's,it's my wife and I'm going.
Okay, if she's calling me, it'sprobably important.
So I pick up the phone andshe's just sobbing.
She's in tears.
I'm freaking out because I'mgoing, okay, something's wrong
with the kids, what's going on?
And through her her tears,she's finally able to tell me
that she just found out she hada brain tumor.
(01:42):
So for months before that she'dbeen complaining about feeling
like she had cotton in her ear,feeling like maybe her face was
going numb, and me I'm like, oh,you're just being a
hypochondriac, it's probablyfine.
But she did start going intodoctor's appointments and
getting it checked out and whileI was gone she got an MRI done
and that's when they discoveredthat she had a brain tumor.
(02:03):
The next few weeks were just awhirlwind.
I mean, we're schedulingsurgeries, she's writing letters
to our kids just in case shedoesn't make it through.
We found this out, I believe,on September 26th.
November 5th is when she wentin for surgery to have the tumor
removed.
She found out she was going tolose all of her hearing in one
ear, all of these things, andI'm so happy to say that it was
(02:28):
a success in that sense of that,really, outside of losing her
hearing, which is a huge deal.
We're back to normal life andshe's able to live her life like
normal.
But those times were scary, andthe time even after the surgery.
For months I became full-timecaretaker, part-time dad and
even less part-time businessowner.
My business got pushed way down.
(02:48):
I wasn't able to market.
I wasn't able to do much.
My clients received emailssaying, hey, I'm going to be out
of pocket for probably 30 to 60days, and it was a scary time.
It was an overwhelming andterrifying time.
Now, how this happened yearsbefore, a couple of years before
, I probably wouldn't be heretoday with my business.
I probably wouldn't havesurvived it.
(03:08):
I probably would have had to goback into education kicking and
screaming because I taughtelementary school, and so please
don't make me go back.
But I wouldn't be here.
And the reason is I had a moneysystem.
I had something in place.
Somebody showed me a couple ofyears before how to manage my
finances in a way that makessense, in a way that is
(03:30):
reasonable, way that has cashreserves, so that I can take
time away when life calls.
Now I share the story for acouple of reasons.
One business and our personallives are deeply intertwined.
They're connected.
Your business and your personallife are so connected.
It's not just business, it'severything.
And then the other piece ofthat is money bridges that
(03:53):
connection.
If we are struggling on oneside, we're going to be
struggling on the other side.
So how can we overcome that?
If you're stressed about money,if you are in this place where
you are feeling underpaid, ifyou are overworked, overwhelmed,
you're burnt out or maybe onthe brink of burnout, feeling
(04:14):
like if I can't make this worksoon, then I need to just go
back to a nine to five or justone emergency, one phone call in
Newark airport, away fromeverything falling apart and the
money going away and thebusiness going away.
If you're feeling anywhere onthat spectrum, you're definitely
not alone.
In fact, that is one of themost common struggles we see
(04:35):
when somebody comes in to meetwith us on a consultation.
It's that they are not payingthemselves enough, that their
finances are a mess on bothsides, and it's because the
business is not supplying enoughcash to them as the business
owner.
And here's the funny thing isthat no one quits their nine to
five to work longer hours forless money, right?
(04:57):
So at some point you likely hada nine to five job, whether in
corporate America, in education.
I didn't leave that world sothat I can make less money, be
more stressed out, be working alot more hours, truthfully,
being a worse boss to myselfthan I ever would have had in
that world.
That's what I'm going to guideyou through today.
I'm going to guide you throughthis exact thing.
(05:19):
How do we break free from this?
How do we create a business?
How do we become a boss toourselves that we love, that
takes care of us financially,that takes care of us, doesn't
make us work way more than wewant to be?
That's burning us out.
How can we get to that point?
Step one is in your business,we need a simple cash flow
system.
We are certified profit firstprofessionals.
(05:41):
We believe in this system soheavily.
This is the system I discoveredin 2017 that I implemented in
my own business and then becamea Profit First person, profit
First professional where wecould teach our clients how to
do this.
Now we guide people throughthis and again, it's something
that resonates with us, and thereason is because it is all
(06:02):
about our behavior.
It's not this accounting jargon.
I came from the world of being afourth grade teacher.
Yes, I've always been a serialentrepreneur.
I was a musician, did that fulltime.
I've always had side hustles,side businesses, but this was
the first time I'd reallylaunched something on my own and
I didn't know what a cash flowstatement was or how to read it.
(06:23):
I didn't know what a balancesheet was or how to read it.
Now I do, but when I wasstarting the business, that was
all completely foreign to me andevery time I had somebody talk
to me about how to manage thefinances of my business, they
were using words that wereflying right over my head and it
wasn't helpful and it wasn'tsomething that I could really do
.
It wasn't until I found thissystem that it resonated to the
point of.
This makes complete sense.
(06:44):
Anybody with any kind ofbusiness savvy could do this,
and the reason is is because itleverages bank accounts.
It's not pulling reports andtrying to make a decision on
what does my P&L or my balancesheet say.
It is using bank accounts.
It is so that at any given time, all you have to do is pull out
your phone and look at yourbank account to see how am I
doing in operating expenses?
(07:04):
How am I doing in taxes.
How am I doing in profitability?
So we recommend at least fivebank accounts.
Now you can do more and at theend I'm going to share a few
other ones that you couldpossibly add in.
That might be helpful, butthese core five are essential to
the success Now.
The first one is the incomeaccount.
An income account we call theserving tray, so this is where
(07:24):
all deposits go.
So, however you receive moneywhether it's cash, check, stripe
, anything they just getdeposited into that income
account.
The reason we call it theserving tray is because you're
not supposed to eat off theserving tray, unless you're like
me.
On Thanksgiving, then you'regoing to pick at it, but in your
business we're not going to doan eat off it, meaning we're not
going to spend anything out ofit.
It is literally an accountwhere cash just comes in and
(07:45):
sits and accumulates.
Then we disperse that moneyfrom the income account to these
other accounts, basicallyserving it out onto these other
plates.
We're going to have money gointo profit, money go into an
account nicknamed owner's pay.
That's you.
That's what we are reallyhoning in on today.
Is that owner's pay accountMoney going into operating
expenses, so that when you againlook at your account can I
(08:09):
afford to pay this invoice or torun payroll?
It's no longer trying to dofinancial gymnastics in your
head.
Looking at one account, you canlook at operating expenses and
immediately know I'm going tooverdraft or nope, we've got the
cash to supply it.
And then taxes making sure youhave the funds to cover your
taxes, your personal incometaxes, any taxes for the
business.
(08:30):
Now, this is all done based onpercentages.
We have a free quiz on ourwebsite.
Again, I'll share this at thevery end so that you can take
that quiz.
That's gonna tell you exactlywhat percentages your business
should be aiming for.
So every business, every sizebusiness, is a little bit
different, but it's based onpercentages.
So let's just say, for example,you have money and I say maybe
(08:51):
once a week, on Friday, you loginto your bank and you look and
you have money sitting in thatincome account.
We're going to take maybe 5% ofit and move it to the profit
account.
That way you're instantly,permanently profitable.
We're going to move 50% intothe owner's pay account.
We're going to move maybe 15%to the taxes and make 30% into
operating expenses.
Again, it's very differentdepending on your business, what
(09:12):
size your business is, but ingeneral, those are some an idea
of how it works.
And then the next Friday we'regoing to do the same thing.
Whatever money is accumulatedthat week in income, we're going
to start filtering throughthese accounts.
The other reason I love thissystem is if something's going
wrong, if you go to paysomething and there's not enough
money in the operating expensesaccount, that is the business
(09:33):
raising a red flag saying hereis where the problem is.
If you go to pay your taxes andthere's not enough in the tax
account, red flag.
So instead of this issue wherewe have one checking account
with all of our money and we getto tax time and all of a sudden
we don't have any money fortaxes, we have no idea what went
wrong.
We don't know.
Did I overspend?
Did I pull too much money out?
What happened?
(09:54):
This is going to flag it sayingoperating expenses.
We are spending more than thepercentage that we're putting
into that account, so somethingneeds to be fixed.
This is where the problem is.
This is where we need toaddress it.
Now, a system in your business.
Again, I'm just going to coverthis briefly.
We teach this in depth with allof our clients.
So if you want to know moreabout Profit First for those of
(10:16):
you I know there was a goodchunk of you who said what is it
?
You or maybe you had just heardof it.
At the end, we'll talk about away that you can get in touch
with us, and also we have moreresources that we'll share with
you that you can dig into onyour own to get a better
understanding of how this systemworks.
But this is the key.
The key is getting organizedwith our business, because if
our business finances are a mess, our personal finances suffer,
(10:37):
and if our personal finances area mess, our business finances
suffer.
Going back to that, ourbusiness is deeply connected and
money is the bridge toeverything.
So while having a system foryour business is crucial it is
so important you have to have itso is having a system for your
personal finances.
Business is personal.
(10:58):
Whatever people say, it's notif they're saying, don't take it
personally, it's just business,not true.
Business is personal.
Our business is our baby.
Our business is everything weput into it.
We took a huge risk to launchthis thing, to grow it.
It is us, and so we take thingspersonally.
We make business decisionsbased on emotion or personal
(11:19):
feelings or fears orinsecurities, or excitement or
ambition.
There's so many things thatcome into play with our business
that is directly tied to you asthe business owner, so we need
to have a system for ourpersonal finances as well.
So that's step two.
How do we figure that out?
Well, we need to have apersonal finance snapshot.
So taking a personal financesnapshot this is critical.
(11:42):
You have to get clear on yourpersonal finances.
There's a few things we justneed to know.
How can your business pay youwhat you need if you don't know
what you need?
If you don't even know what youneed on the personal side, how
can we make sure the business ispaying you that?
So there's three questions weneed to ask ourselves to dig
into this in order to pinpointwhat is that number that I need
to be taking home to make surethat my personal finances are
(12:04):
covered, that me, as thebusiness owner, I'm taking care
of and I'm not bringing thatpersonal stress into my business
.
The first one is what do youneed to cover your expenses?
This is what we would call justyour basic needs.
What do I need to pay themortgage or the rent to keep the
lights on, keep food on thetable, gas in the car.
What does that bare essentialneed be?
(12:25):
And that means we're not goingout to eat, we're not doing the
extra stuff.
What is that core number goingto look like?
Now, that's not what I want foryou.
So just know that we're notstriving, or, as a first
milestone, depending on whereyou are in your business, that
we at least need to take homeenough to make sure you're not
getting evicted or foreclosed on.
(12:46):
Then we can focus on.
The second one is what do I needto cover my ideal lifestyle?
This is with travel.
This is with kids and theiractivities.
This is the subscriptions toNetflix or Hulu or whatever else
.
It is.
So, adding all of those thingsin, what does that number look
like?
What does the business need topay me in order to live that
ideal lifestyle, the lifestylewe want to be living?
(13:07):
You can add in things thatmaybe you're not currently doing
.
You're like man I wish.
I wish we could do X, y or Z.
Let's add that in and figureout what does the business need
to do, because that's our target, that's what we're aiming for
is how can we get the businessto pay you that on a consistent
(13:28):
basis, and then, what is yourbusiness currently paying you?
So those are the threequestions we need to get clear
on.
I'm going to show you exactlyhow to do that.
So what is it currently payingyou?
What do you need to cover yourcore expenses?
And then, what do you need tocover that ideal lifestyle?
Now we do have a spreadsheet,like I said at the end.
I'll share this with you.
It's just called a personalfinance spreadsheet, or a
snapshot, and it just is aspreadsheet where you plug in
(13:48):
your income Maybe if you have aspouse who earns an income, all
those things and then it justhas a non-comprehensive list of
commonly seen expenses, and thenthere's space for you to add in
your own things, because I knoweverybody's personal budget is
a little bit different.
What I would say to do is yougo first with your core expenses
, so plug in all your core ones,get that first budget and then
(14:10):
come back and do that second one, because we need to create two,
essentially two personalbudgets.
We just need to get a pictureof those two things.
One is our survive budget.
Like I said, we just need toget a picture of those two
things.
One is our survive budget, likeI said, and then the other one
is a thrive budget.
What does life look like if weare thriving financially?
What is our spending look like?
Now, once we know those numbers,we have to have a system in
(14:31):
place for the personal side,right?
So, just like we were talkingabout bank accounts on the
business side, we believe inusing bank accounts on the
personal side.
Now, our clients who come to uswe teach them about having at
least three core accounts.
One of them is the billsaccount.
This is all your bills, likeyour mortgage, your electric
(14:51):
bill, the things where I alwayssay you're not going to impulse
spend on it.
That's a good way to thinkabout it is those bills.
And yes, michelle, thank youGreat point Different banks.
So, wherever you're banking,it's a great idea to have your
personal accounts at a separatebank and your business accounts
at a different bank.
It is, as we talk about all ofthis, that, business being
(15:12):
personal, we need to do our bestto separate ourselves from the
business and the personal, totreat ourselves like the owner
of the business and not reallymeshing those two worlds.
We're going to talk about thatbecause I know a lot of people
are dipping into their businessto cover bills here and there or
to pull money out if somethingcomes up and they need some cash
.
So we're going to try our bestto separate that out and we'll
(15:33):
talk more about that too.
So that's a great point.
Thank you for sharing that.
And all that to say too, we dohave the chat open, so feel free
to drop comments, questions.
At the end We'll do some Q anda uh, so drop those in.
We also have a question section.
So if you have somethingspecific that you really want to
make sure we see and that weanswer, you're welcome to do
that.
Uh, if it's something you don'twant to share with the whole
group, uh, we do have a privatemessage tab where you can care
(15:54):
of.
All right, so we need three coreaccounts.
So the bills is just your basicneeds, again, your bills, the
things we're not gonna impulsebuy.
Then we have a spending account.
This is for your groceries,your food, anything, clothing,
whatever.
You're gonna be spending moneyon a separate account for those
things.
And then a savings.
So this would be your emergencyfund money to set aside for the
(16:18):
future.
Now, again, this is just aminimum, so if you want to add
more.
You can always add more Ifyou're saving up for Disney
World, if you're saving up for anew car, if you want to have a
separate groceries account and aseparate restaurant account.
The more the merrier.
It's just really up to you.
What makes more sense?
I always say does more accountsmake you feel more at ease?
Does it give you more clarityor does it stress you out more?
(16:40):
And that's a question you justask yourself.
If it makes you feel better,then open more accounts.
If you're like, nah, the moreaccounts there are, the more
stressed out, I am, you'realready thinking Craig is an
insane person for mentioninghaving three accounts as it is,
then maybe just stick with thethree.
All right, that is the systemwe need.
Once we know that survive budgetand that thrive budget, the
(17:01):
next step, step three, is towork backwards.
What percentage of your revenueshould be going to your
paycheck?
Remember when we were talkingabout the profit for system in
our business?
We are putting a percentageinto that owner's pay account.
Well, what does that percentageneed to be?
So a real, simple math equationfor this.
(17:22):
I don't want to get too mathyon you.
I promise this is the only timewe do is to take that income
and divide it by your revenue.
So if you need $50,000 a yearto cover your expenses and your
business is making $100,000 ayear, well, we're going to
divide 50 by 100 and we're goingto multiply it yeah, 50,000 by
(17:43):
100,000.
And we're going to multiply itby 100 to get a percentage which
is 50%.
We know that we need to take.
50% of what we bring in isgoing to be coming home to you
as the business owner to makesure your needs are met.
Now what we do for our clientswhen they come into us is we
look at all your numbers andyour spreadsheets and we tell
you here's what the business hasbeen paying you and we can kind
(18:05):
of see that that gap I told youthat's important to know is
what has it been paying youcurrently?
So what did it pay you lastyear?
Was it paying you 50%?
Was it only paying you 40%?
Maybe that's why there's allthat stress and anxiety on the
personal side and why you'reoverdrafting or you're running
into those issues.
Then we need to start allocatingthat percentage to your owner's
pay account moving forward.
So starting now is if that'swhat you need to cover your
(18:28):
personal expenses, we got to put50% into that account.
Now, a common question when Isay this is Greg, what if my
business can't afford me?
What if I can't put 50% inthere?
What if I ran the numbers and Ineed a hundred percent of what
I'm bringing in to be cominghome to me, and that's just not
feasible.
Well, that just means somethingneeds to change.
(18:50):
That's the story that's beenwritten for your business and we
need to fix that.
So the first thing I would sayis let's go back to that survive
budget.
What was that needed income tocover your core expenses?
What percentage would that be?
Maybe it's 30% instead of 50%.
So it's a little bit easier foryou to to implement that
starting out, and we just haveto go into the personal side and
(19:11):
start making some cuts.
Maybe we need to cut some fatin our operating expenses.
If we're looking and we justdon't have the wiggle room,
let's just say again for example, all you can do is allocate 40%
to you right now and you'relike I need to make up 10% so I
can be taking home that 50 thatI need.
Well, then let's dig into ouroperating expenses and start
(19:32):
seeing where can we maybe trimsome fat.
Where's some unnecessaryexpenses that we might need?
We recommend a great, greatexercise.
It's called keep cut trim.
This is something where youjust you could do it on a piece
of paper.
You just make three columnsOne's keep, one is cut, one is
trim and you go through all ofyour expenses.
You can download a vendor liston QuickBooks.
But what?
(19:52):
All of your expenses, thethings you're paying for
regularly, things that you haveto keep, like a license or
something that if you got rid ofit, your business could not
function we're going to putthose in the keep column.
We can't do anything about them.
They have to stay.
Then we have a cut column.
This is the expenses that it'slike.
You know I could probably dowithout this, whether even if
(20:12):
it's just temporarily you know Iwas just recently.
I use a subscription to help meget guests for my podcast and
for me to be guests on otherpodcasts, and I had about 60
days where I was just pushingpause on doing that.
It was during the holidays.
I was like I'm not going to bemeeting with people or doing
interviews or trying to get onother shows.
So I paused that subscriptionfor 60 days.
(20:33):
It was a cut for just a monthor two, while I didn't need it.
It was an unnecessary expensethat was probably just going to
keep charging even though Iwasn't going to be utilizing it.
So, going through and findingthose things, what can I cut,
even if it's just temporary andthen trim is where are there
opportunities for me to find acheaper price, whether it's with
a different provider, whetherit's the same provider, maybe
(20:54):
they have a different optionthat I could downgrade to.
Maybe it's just picking up thephone and calling and saying is
there any way you could workwith me and get me a lower rate
on this, whatever thissubscription, whatever you're
doing.
So going through that andfinding those opportunities to
see where can I maybe try topull out more percentage points
that I could start paying tomyself to take home.
And then, on the flip side, wecould do the exact same exercise
(21:16):
in your personal budget.
Go into your personal budget,see if you can cut back on a lot
of different things to bringyour needed percentage number
down and then see if you canhelp them kind of meet in the
middle.
You're cutting on the business,you're cutting on the personal.
Can we bridge that gap so thatyou can find a percentage that
might work and then otherwisestart where you can.
(21:38):
So if you are trying to takehome 50,000 a year and it's just
not a reality right now, startwhere you can.
If it's 40%, start there andthen, every month, or every
month or two, just increase thatpercentage by one to 3% until
you finally get there.
It's just this gradual thingwhere that's what we guide our
clients through too.
It's here's where you are today, here's where you need to be.
(22:00):
We're going to just graduallyget you there, because it's not
healthy to lose 30 poundsovernight.
We don't want to just, tomorrow, jump in and say, okay, we're
going to raise your, your pay by20% and cross our fingers that
the business survives it.
We want to be reallyintentional, really purposeful,
and that means going slow andjust increasing percentage
points as you go.
(22:20):
All right.
Step four, the final step ingetting this all together, is
setting up a consistent paycheckrhythm.
If you are like most businessowners, you're not paying
yourself regularly, you're notpaying yourself the same amount
on a consistent basis.
And if you're like and youdon't have to admit it you're
(22:41):
welcome to, if you want to, inthe chat.
But just as a self-reflection,if you've been, have you ever
been guilty of dipping into thebusiness to cover those personal
expenses?
I was kind of alluded to thatearlier.
If you have that, that is socommon.
I would say almost everybodywho comes to us has struggled
with, is either currentlystruggling with it or has.
(23:01):
They're not paying themselvesthe same amount every month or
every week or every other weekand they're dipping in as they
need stuff If their personalbudget gets low.
The number of people who say Idon't even have a paycheck, it's
just when I need money I pullit out of the business to cover
my expenses Again, if that'sresonating with you, again, it
(23:22):
doesn't mean it's okay.
It just means that you're notalone and we need to fix that.
And that's because we want youto treat yourself with the same
respect you would demand fromsomeone else.
What I mean by this is imagineyou went and interviewed to be
the CEO of a company and theyloved you.
They said we want to hire you.
You're perfect fit for ourcompany.
You're like awesome, you'regreat.
(23:43):
Can I ask you what's the salary?
What's awesome, you're great.
I can ask you what's the salary, what's, what's my pay going to
be?
And they just laugh at you andthey go oh, there's no, there's
no salary, it's just when youneed money.
Uh, just let us know.
Like so, if your rent is due,just let us know We'll, we'll
give you enough money to coverthat bill, just as needed.
So just let us know.
When you money, we'll give itto you.
Uh, I wouldn't accept that job.
(24:03):
Who would want that?
That doesn't make any sense.
And yet that's how we treatourselves as the business owner.
And the inverse is true too.
If you were to go hire a CEOfor your business and they said
hey, I'm just going to dip myhand in the business account
anytime I need money, so don'tworry about it.
If I need money for myself, I'mjust going to pull it out,
you'd fire them pretty quickly.
Right?
(24:24):
We have to separate ourselves.
We have to treat ourselves withthat same respect.
I, in my personal life, I'mCraig, and then in my business,
I'm the owner and CEO of DaisyFinancial Coaching.
Daisy Financial Coaching hasentrusted me to run the business
, and it's going to treat mewith the same level of respect
that if I was the CEO of Applethat they would.
(24:47):
So that's how we want to reallyenvision it.
Treat yourself with the samelevel of respect that if I was
the CEO of Apple, that theywould.
So that's how we want to reallyenvision it.
Treat yourself with that samerespect that you would demand
from someone else.
We need to respect ourselves,and it's so easy for those lines
to get blurred, but the morethat we can separate it, the
better.
Then, once we know that we needto create a pay schedule so you
(25:07):
choose the frequency that's thebeauty of being a business owner
is what is my pay schedulegoing to be?
Is it going to be weekly?
Is it going to be monthly?
It's going to be biweekly.
We need to get on a regularfrequency.
Then, once we've decided, whatis that pay schedule going to
look like?
It's okay to start small.
It's okay to kind of mesh bothworlds.
If you've been just dipping inas you need money, there's going
(25:29):
to be growing pains.
So maybe start paying yourselfa few hundred dollars a week or
a few, or, however, if you'redoing weekly, a few hundred
dollars a week, and then, if youneed money, you can still dip
in and we're just going to, astime goes by, increase how much
you're taking home every week,and that means less and less
you're needing to dip into thebusiness and give yourself 30 to
60 days a cutoff date and maybe60 days out.
(25:49):
This is from that point on I amnot dipping my hand into the
business.
If it's, if the business isn'tpaying it to me on my paycheck,
then either I need to increasemy paycheck or I need to figure
it out on the personal side.
So choose your frequency.
I pay myself monthly becausethat's how I was paid when I was
teaching and it's just how mybrain works now.
But again, you can choosebiweekly, weekly, however you
(26:12):
like.
And then we are big believers inquarterly profit bonuses.
So you remember that profitaccount that we were talking
about.
That's not just for show,that's not just your vanity
account to say, look at me, I'vegot some profit over here.
It's there to pay you.
It's there to pay you a bonusfor being the business owner.
Your owner's pay account, wealways say, is your paycheck,
(26:32):
your salary for doing theday-to-day work, for wearing all
the hats, for putting in thehours in the business.
The profit account, that's yourreward for owning a business.
That's your reward for takingthe risk, putting it all on the
line to own this thing and torun this thing.
So the profit account at theend of every corner.
So I told you, we'reaccumulating money in there,
(26:53):
you're putting a percentage intothat profit account, we're not
touching it, and then at the endof the quarter we take
whatever's in there and half ofit can come to you as a bonus
and half can stay in thebusiness as a cash reserve, an
emergency fund, a way to buildsome cash nest egg for the
business side.
It's also a great way to.
If you're trying to pay offdebt, you can use those funds to
(27:14):
really hone in on that, whetheron the business or the personal
side, taking the money out ofthat profit account to just mail
down those credit cards or thebusiness loan or the line of
credit, whatever it is.
You can use those funds forthat.
Otherwise, we say that the halfthat you take home, don't
reinvest it in the business.
(27:34):
Spend it on yourself, whetherit's a vacation, whether it's
just, depending on the size ofyour business, even if it's just
a taco from the taco truck downthe street, celebrate it, enjoy
it, because that is the sign ofa profitable business, no
matter the number.
Your business is profitablebecause you intentionally set
that money aside.
All right.
And then what we want to do isget organized.
Like I said, we want to unblurthose lines.
So we need to move anyautomated personal finances out
(27:56):
of the business.
So if you're paying forpersonal expenses inside the
business, let's move them out.
Now there's a lot of nuance tothis, because I do know that
things like cell phones, you'reusing it for the business
purposes, right.
So gas bills, all these things,your car, maybe you're driving
around with your car for thebusiness.
So where does that fall?
(28:17):
I typically say if you wouldn'thave it this is the rule of
thumb I go by is if you wouldn'thave it without the business,
so meaning I wouldn't have thisphone if I didn't have the
business well then that's abusiness expense.
If, yeah, I would still have aphone If the business closed
down tomorrow, I'd still have aphone then I'm going to move
that to the personal expenses.
(28:38):
I can still write it off at theend of the year.
It's still a write-off.
It's just that I'm not going tobe running it, cashflow wise,
out of the business.
And if you decide if you do, orhowever it's structured, at
least using those funds from theowner's pay account, because
it's not an operating expense.
It's really your owner'sbenefit.
Same with the car payment, samewith gas, whatever you're
lumping in there.
(28:58):
So try and separate those out.
If you have any other expensescoming out of your personal
account that are businessexpenses, let's move those to
the business.
And again, any personalexpenses coming out of the
business, let's move that to thepersonal accounts.
Now I told you there's someoptional extra accounts that you
can add into your business thatwe often see.
An emergency fund I feel likeis essential.
I know I said five coreaccounts.
(29:18):
That's what Profit Firstsuggests.
I usually have our clients openup six because we want an
emergency fund, or a vault iswhat we call it.
So just somewhere to put thatcash at the end of the quarter,
when you take half to you fromprofit, half going into that
cash nest egg, this is theaccount it would go in so that
we can build up those funds.
I recommend about three monthsof overhead in that account.
(29:43):
That means three months ofexpenses and three months of
your paycheck would be ideal,just depending on the size of
your business.
But enough cash there to makesure that if everything
collapses you can at least runthe business and pay yourself
over that time and maybe thatnumber is your survive budget.
(30:03):
Maybe you go on to that for afew months, but just having some
cash there just in case, aretirement account.
So if you gave up your 401kwhen you left the corporate
world, then it's okay to set upan account for yourself that
would go into your retirement.
So investment accounts whetherit's a Roth or a SEP or whatever
it is an account, so you'reintentionally setting it aside.
So take a little couplepercentage points off of owner's
(30:26):
pay and every week put someinto that retirement account
Giving.
If you want to be charitablewith the business intentionally,
you can do that.
If you want to give back toyour team, you can have a profit
account for your team membersso that at the end of the
quarter you can pay out bonusesto your employees.
You could have a healthbenefits account.
So if you're a small businessand maybe you don't have a
(30:47):
health plan for your team butyou have to go pay for health
insurance in the open market,well, you can open up an account
to make sure that that'scovered.
Or even vice versa, if you'resupplying health benefits for
the whole team, you can have anaccount earmarked just for that,
and then one more that's notlisted on here is a payroll
account.
So a lot of clients like totake operating expenses and
(31:08):
payroll and separate them, sothey have money going into
payroll and then they have moneygoing into operating expenses
just to make sure they alwayshave enough to cover payroll.
Thank you.
A few weeks ago, I hosted a webinar called how to
Pay Yourself More WithoutHurting your Business.
This is by far one of my morepopular workshops that we lead
and I thought what a perfectopportunity to share it with
this audience.
I highly, highly recommend youlisten to this.
You take notes, you get into aplace where you can actively
listen to it and really put intoplace what we talk about.
(00:21):
This is an actionable workshopwhere I guide you through
tangible steps.
There's four steps that weguide people through in order to
increase their paycheck, makesure that they are paid
consistently and that theirbusiness is paying them what
they deserve.
I hope you enjoy it.
(00:59):
I want to take you guys back andtell you a personal story to me
.
Take you back to 2019.
I was attending a conference inSeptember up in Newark, new
Jersey.
I was in the Newark airport themost magical place on earth if
you've ever been there and I'msitting at a bar.
It was packed.
They were doing renovationsthere, so there was just a lot
of people in our terminal, andso I finally made my way to the
(01:21):
bar and, right when they broughtme my drink, my phone rings and
I look at my phone and it's,it's my wife and I'm going.
Okay, if she's calling me, it'sprobably important.
So I pick up the phone andshe's just sobbing.
She's in tears.
I'm freaking out because I'mgoing, okay, something's wrong
with the kids, what's going on?
And through her her tears,she's finally able to tell me
that she just found out she hada brain tumor.
(01:42):
So for months before that she'dbeen complaining about feeling
like she had cotton in her ear,feeling like maybe her face was
going numb, and me I'm like, oh,you're just being a
hypochondriac, it's probablyfine.
But she did start going intodoctor's appointments and
getting it checked out and whileI was gone she got an MRI done
and that's when they discoveredthat she had a brain tumor.
(02:03):
The next few weeks were just awhirlwind.
I mean, we're schedulingsurgeries, she's writing letters
to our kids just in case shedoesn't make it through.
We found this out, I believe,on September 26th.
November 5th is when she wentin for surgery to have the tumor
removed.
She found out she was going tolose all of her hearing in one
ear, all of these things, andI'm so happy to say that it was
(02:28):
a success in that sense of that,really, outside of losing her
hearing, which is a huge deal.
We're back to normal life andshe's able to live her life like
normal.
But those times were scary, andthe time even after the surgery.
For months I became full-timecaretaker, part-time dad and
even less part-time businessowner.
My business got pushed way down.
(02:48):
I wasn't able to market.
I wasn't able to do much.
My clients received emailssaying, hey, I'm going to be out
of pocket for probably 30 to 60days, and it was a scary time.
It was an overwhelming andterrifying time.
Now, how this happened yearsbefore, a couple of years before
, I probably wouldn't be heretoday with my business.
I probably wouldn't havesurvived it.
(03:08):
I probably would have had to goback into education kicking and
screaming because I taughtelementary school, and so please
don't make me go back.
But I wouldn't be here.
And the reason is I had a moneysystem.
I had something in place.
Somebody showed me a couple ofyears before how to manage my
finances in a way that makessense, in a way that is
(03:30):
reasonable, way that has cashreserves, so that I can take
time away when life calls.
Now I share the story for acouple of reasons.
One business and our personallives are deeply intertwined.
They're connected.
Your business and your personallife are so connected.
It's not just business, it'severything.
And then the other piece ofthat is money bridges that
(03:53):
connection.
If we are struggling on oneside, we're going to be
struggling on the other side.
So how can we overcome that?
If you're stressed about money,if you are in this place where
you are feeling underpaid, ifyou are overworked, overwhelmed,
you're burnt out or maybe onthe brink of burnout, feeling
(04:14):
like if I can't make this worksoon, then I need to just go
back to a nine to five or justone emergency, one phone call in
Newark airport, away fromeverything falling apart and the
money going away and thebusiness going away.
If you're feeling anywhere onthat spectrum, you're definitely
not alone.
In fact, that is one of themost common struggles we see
(04:35):
when somebody comes in to meetwith us on a consultation.
It's that they are not payingthemselves enough, that their
finances are a mess on bothsides, and it's because the
business is not supplying enoughcash to them as the business
owner.
And here's the funny thing isthat no one quits their nine to
five to work longer hours forless money, right?
(04:57):
So at some point you likely hada nine to five job, whether in
corporate America, in education.
I didn't leave that world sothat I can make less money, be
more stressed out, be working alot more hours, truthfully,
being a worse boss to myselfthan I ever would have had in
that world.
That's what I'm going to guideyou through today.
I'm going to guide you throughthis exact thing.
(05:19):
How do we break free from this?
How do we create a business?
How do we become a boss toourselves that we love, that
takes care of us financially,that takes care of us, doesn't
make us work way more than wewant to be?
That's burning us out.
How can we get to that point?
Step one is in your business,we need a simple cash flow
system.
We are certified profit firstprofessionals.
(05:41):
We believe in this system soheavily.
This is the system I discoveredin 2017 that I implemented in
my own business and then becamea Profit First person, profit
First professional where wecould teach our clients how to
do this.
Now we guide people throughthis and again, it's something
that resonates with us, and thereason is because it is all
(06:02):
about our behavior.
It's not this accounting jargon.
I came from the world of being afourth grade teacher.
Yes, I've always been a serialentrepreneur.
I was a musician, did that fulltime.
I've always had side hustles,side businesses, but this was
the first time I'd reallylaunched something on my own and
I didn't know what a cash flowstatement was or how to read it.
(06:23):
I didn't know what a balancesheet was or how to read it.
Now I do, but when I wasstarting the business, that was
all completely foreign to me andevery time I had somebody talk
to me about how to manage thefinances of my business, they
were using words that wereflying right over my head and it
wasn't helpful and it wasn'tsomething that I could really do
.
It wasn't until I found thissystem that it resonated to the
point of.
This makes complete sense.
(06:44):
Anybody with any kind ofbusiness savvy could do this,
and the reason is is because itleverages bank accounts.
It's not pulling reports andtrying to make a decision on
what does my P&L or my balancesheet say.
It is using bank accounts.
It is so that at any given time, all you have to do is pull out
your phone and look at yourbank account to see how am I
doing in operating expenses?
(07:04):
How am I doing in taxes.
How am I doing in profitability?
So we recommend at least fivebank accounts.
Now you can do more and at theend I'm going to share a few
other ones that you couldpossibly add in.
That might be helpful, butthese core five are essential to
the success Now.
The first one is the incomeaccount.
An income account we call theserving tray, so this is where
(07:24):
all deposits go.
So, however you receive moneywhether it's cash, check, stripe
, anything they just getdeposited into that income
account.
The reason we call it theserving tray is because you're
not supposed to eat off theserving tray, unless you're like
me.
On Thanksgiving, then you'regoing to pick at it, but in your
business we're not going to doan eat off it, meaning we're not
going to spend anything out ofit.
It is literally an accountwhere cash just comes in and
(07:45):
sits and accumulates.
Then we disperse that moneyfrom the income account to these
other accounts, basicallyserving it out onto these other
plates.
We're going to have money gointo profit, money go into an
account nicknamed owner's pay.
That's you.
That's what we are reallyhoning in on today.
Is that owner's pay accountMoney going into operating
expenses, so that when you againlook at your account can I
(08:09):
afford to pay this invoice or torun payroll?
It's no longer trying to dofinancial gymnastics in your
head.
Looking at one account, you canlook at operating expenses and
immediately know I'm going tooverdraft or nope, we've got the
cash to supply it.
And then taxes making sure youhave the funds to cover your
taxes, your personal incometaxes, any taxes for the
business.
(08:30):
Now, this is all done based onpercentages.
We have a free quiz on ourwebsite.
Again, I'll share this at thevery end so that you can take
that quiz.
That's gonna tell you exactlywhat percentages your business
should be aiming for.
So every business, every sizebusiness, is a little bit
different, but it's based onpercentages.
So let's just say, for example,you have money and I say maybe
(08:51):
once a week, on Friday, you loginto your bank and you look and
you have money sitting in thatincome account.
We're going to take maybe 5% ofit and move it to the profit
account.
That way you're instantly,permanently profitable.
We're going to move 50% intothe owner's pay account.
We're going to move maybe 15%to the taxes and make 30% into
operating expenses.
Again, it's very differentdepending on your business, what
(09:12):
size your business is, but ingeneral, those are some an idea
of how it works.
And then the next Friday we'regoing to do the same thing.
Whatever money is accumulatedthat week in income, we're going
to start filtering throughthese accounts.
The other reason I love thissystem is if something's going
wrong, if you go to paysomething and there's not enough
money in the operating expensesaccount, that is the business
(09:33):
raising a red flag saying hereis where the problem is.
If you go to pay your taxes andthere's not enough in the tax
account, red flag.
So instead of this issue wherewe have one checking account
with all of our money and we getto tax time and all of a sudden
we don't have any money fortaxes, we have no idea what went
wrong.
We don't know.
Did I overspend?
Did I pull too much money out?
What happened?
(09:54):
This is going to flag it sayingoperating expenses.
We are spending more than thepercentage that we're putting
into that account, so somethingneeds to be fixed.
This is where the problem is.
This is where we need toaddress it.
Now, a system in your business.
Again, I'm just going to coverthis briefly.
We teach this in depth with allof our clients.
So if you want to know moreabout Profit First for those of
(10:16):
you I know there was a goodchunk of you who said what is it
?
You or maybe you had just heardof it.
At the end, we'll talk about away that you can get in touch
with us, and also we have moreresources that we'll share with
you that you can dig into onyour own to get a better
understanding of how this systemworks.
But this is the key.
The key is getting organizedwith our business, because if
our business finances are a mess, our personal finances suffer,
(10:37):
and if our personal finances area mess, our business finances
suffer.
Going back to that, ourbusiness is deeply connected and
money is the bridge toeverything.
So while having a system foryour business is crucial it is
so important you have to have itso is having a system for your
personal finances.
Business is personal.
(10:58):
Whatever people say, it's notif they're saying, don't take it
personally, it's just business,not true.
Business is personal.
Our business is our baby.
Our business is everything weput into it.
We took a huge risk to launchthis thing, to grow it.
It is us, and so we take thingspersonally.
We make business decisionsbased on emotion or personal
(11:19):
feelings or fears orinsecurities, or excitement or
ambition.
There's so many things thatcome into play with our business
that is directly tied to you asthe business owner, so we need
to have a system for ourpersonal finances as well.
So that's step two.
How do we figure that out?
Well, we need to have apersonal finance snapshot.
So taking a personal financesnapshot this is critical.
(11:42):
You have to get clear on yourpersonal finances.
There's a few things we justneed to know.
How can your business pay youwhat you need if you don't know
what you need?
If you don't even know what youneed on the personal side, how
can we make sure the business ispaying you that?
So there's three questions weneed to ask ourselves to dig
into this in order to pinpointwhat is that number that I need
to be taking home to make surethat my personal finances are
(12:04):
covered, that me, as thebusiness owner, I'm taking care
of and I'm not bringing thatpersonal stress into my business
.
The first one is what do youneed to cover your expenses?
This is what we would call justyour basic needs.
What do I need to pay themortgage or the rent to keep the
lights on, keep food on thetable, gas in the car.
What does that bare essentialneed be?
(12:25):
And that means we're not goingout to eat, we're not doing the
extra stuff.
What is that core number goingto look like?
Now, that's not what I want foryou.
So just know that we're notstriving, or, as a first
milestone, depending on whereyou are in your business, that
we at least need to take homeenough to make sure you're not
getting evicted or foreclosed on.
(12:46):
Then we can focus on.
The second one is what do I needto cover my ideal lifestyle?
This is with travel.
This is with kids and theiractivities.
This is the subscriptions toNetflix or Hulu or whatever else
.
It is.
So, adding all of those thingsin, what does that number look
like?
What does the business need topay me in order to live that
ideal lifestyle, the lifestylewe want to be living?
(13:07):
You can add in things thatmaybe you're not currently doing
.
You're like man I wish.
I wish we could do X, y or Z.
Let's add that in and figureout what does the business need
to do, because that's our target, that's what we're aiming for
is how can we get the businessto pay you that on a consistent
(13:28):
basis, and then, what is yourbusiness currently paying you?
So those are the threequestions we need to get clear
on.
I'm going to show you exactlyhow to do that.
So what is it currently payingyou?
What do you need to cover yourcore expenses?
And then, what do you need tocover that ideal lifestyle?
Now we do have a spreadsheet,like I said at the end.
I'll share this with you.
It's just called a personalfinance spreadsheet, or a
snapshot, and it just is aspreadsheet where you plug in
(13:48):
your income Maybe if you have aspouse who earns an income, all
those things and then it justhas a non-comprehensive list of
commonly seen expenses, and thenthere's space for you to add in
your own things, because I knoweverybody's personal budget is
a little bit different.
What I would say to do is yougo first with your core expenses
, so plug in all your core ones,get that first budget and then
(14:10):
come back and do that second one, because we need to create two,
essentially two personalbudgets.
We just need to get a pictureof those two things.
One is our survive budget.
Like I said, we just need toget a picture of those two
things.
One is our survive budget, likeI said, and then the other one
is a thrive budget.
What does life look like if weare thriving financially?
What is our spending look like?
Now, once we know those numbers,we have to have a system in
(14:31):
place for the personal side,right?
So, just like we were talkingabout bank accounts on the
business side, we believe inusing bank accounts on the
personal side.
Now, our clients who come to uswe teach them about having at
least three core accounts.
One of them is the billsaccount.
This is all your bills, likeyour mortgage, your electric
(14:51):
bill, the things where I alwayssay you're not going to impulse
spend on it.
That's a good way to thinkabout it is those bills.
And yes, michelle, thank youGreat point Different banks.
So, wherever you're banking,it's a great idea to have your
personal accounts at a separatebank and your business accounts
at a different bank.
It is, as we talk about all ofthis, that, business being
(15:12):
personal, we need to do our bestto separate ourselves from the
business and the personal, totreat ourselves like the owner
of the business and not reallymeshing those two worlds.
We're going to talk about thatbecause I know a lot of people
are dipping into their businessto cover bills here and there or
to pull money out if somethingcomes up and they need some cash
.
So we're going to try our bestto separate that out and we'll
(15:33):
talk more about that too.
So that's a great point.
Thank you for sharing that.
And all that to say too, we dohave the chat open, so feel free
to drop comments, questions.
At the end We'll do some Q anda uh, so drop those in.
We also have a question section.
So if you have somethingspecific that you really want to
make sure we see and that weanswer, you're welcome to do
that.
Uh, if it's something you don'twant to share with the whole
group, uh, we do have a privatemessage tab where you can care
(15:54):
of.
All right, so we need three coreaccounts.
So the bills is just your basicneeds, again, your bills, the
things we're not gonna impulsebuy.
Then we have a spending account.
This is for your groceries,your food, anything, clothing,
whatever.
You're gonna be spending moneyon a separate account for those
things.
And then a savings.
So this would be your emergencyfund money to set aside for the
(16:18):
future.
Now, again, this is just aminimum, so if you want to add
more.
You can always add more Ifyou're saving up for Disney
World, if you're saving up for anew car, if you want to have a
separate groceries account and aseparate restaurant account.
The more the merrier.
It's just really up to you.
What makes more sense?
I always say does more accountsmake you feel more at ease?
Does it give you more clarityor does it stress you out more?
(16:40):
And that's a question you justask yourself.
If it makes you feel better,then open more accounts.
If you're like, nah, the moreaccounts there are, the more
stressed out, I am, you'realready thinking Craig is an
insane person for mentioninghaving three accounts as it is,
then maybe just stick with thethree.
All right, that is the systemwe need.
Once we know that survive budgetand that thrive budget, the
(17:01):
next step, step three, is towork backwards.
What percentage of your revenueshould be going to your
paycheck?
Remember when we were talkingabout the profit for system in
our business?
We are putting a percentageinto that owner's pay account.
Well, what does that percentageneed to be?
So a real, simple math equationfor this.
(17:22):
I don't want to get too mathyon you.
I promise this is the only timewe do is to take that income
and divide it by your revenue.
So if you need $50,000 a yearto cover your expenses and your
business is making $100,000 ayear, well, we're going to
divide 50 by 100 and we're goingto multiply it yeah, 50,000 by
(17:43):
100,000.
And we're going to multiply itby 100 to get a percentage which
is 50%.
We know that we need to take.
50% of what we bring in isgoing to be coming home to you
as the business owner to makesure your needs are met.
Now what we do for our clientswhen they come into us is we
look at all your numbers andyour spreadsheets and we tell
you here's what the business hasbeen paying you and we can kind
(18:05):
of see that that gap I told youthat's important to know is
what has it been paying youcurrently?
So what did it pay you lastyear?
Was it paying you 50%?
Was it only paying you 40%?
Maybe that's why there's allthat stress and anxiety on the
personal side and why you'reoverdrafting or you're running
into those issues.
Then we need to start allocatingthat percentage to your owner's
pay account moving forward.
So starting now is if that'swhat you need to cover your
(18:28):
personal expenses, we got to put50% into that account.
Now, a common question when Isay this is Greg, what if my
business can't afford me?
What if I can't put 50% inthere?
What if I ran the numbers and Ineed a hundred percent of what
I'm bringing in to be cominghome to me, and that's just not
feasible.
Well, that just means somethingneeds to change.
(18:50):
That's the story that's beenwritten for your business and we
need to fix that.
So the first thing I would sayis let's go back to that survive
budget.
What was that needed income tocover your core expenses?
What percentage would that be?
Maybe it's 30% instead of 50%.
So it's a little bit easier foryou to to implement that
starting out, and we just haveto go into the personal side and
(19:11):
start making some cuts.
Maybe we need to cut some fatin our operating expenses.
If we're looking and we justdon't have the wiggle room,
let's just say again for example, all you can do is allocate 40%
to you right now and you'relike I need to make up 10% so I
can be taking home that 50 thatI need.
Well, then let's dig into ouroperating expenses and start
(19:32):
seeing where can we maybe trimsome fat.
Where's some unnecessaryexpenses that we might need?
We recommend a great, greatexercise.
It's called keep cut trim.
This is something where youjust you could do it on a piece
of paper.
You just make three columnsOne's keep, one is cut, one is
trim and you go through all ofyour expenses.
You can download a vendor liston QuickBooks.
But what?
(19:52):
All of your expenses, thethings you're paying for
regularly, things that you haveto keep, like a license or
something that if you got rid ofit, your business could not
function we're going to putthose in the keep column.
We can't do anything about them.
They have to stay.
Then we have a cut column.
This is the expenses that it'slike.
You know I could probably dowithout this, whether even if
(20:12):
it's just temporarily you know Iwas just recently.
I use a subscription to help meget guests for my podcast and
for me to be guests on otherpodcasts, and I had about 60
days where I was just pushingpause on doing that.
It was during the holidays.
I was like I'm not going to bemeeting with people or doing
interviews or trying to get onother shows.
So I paused that subscriptionfor 60 days.
(20:33):
It was a cut for just a monthor two, while I didn't need it.
It was an unnecessary expensethat was probably just going to
keep charging even though Iwasn't going to be utilizing it.
So, going through and findingthose things, what can I cut,
even if it's just temporary andthen trim is where are there
opportunities for me to find acheaper price, whether it's with
a different provider, whetherit's the same provider, maybe
(20:54):
they have a different optionthat I could downgrade to.
Maybe it's just picking up thephone and calling and saying is
there any way you could workwith me and get me a lower rate
on this, whatever thissubscription, whatever you're
doing.
So going through that andfinding those opportunities to
see where can I maybe try topull out more percentage points
that I could start paying tomyself to take home.
And then, on the flip side, wecould do the exact same exercise
(21:16):
in your personal budget.
Go into your personal budget,see if you can cut back on a lot
of different things to bringyour needed percentage number
down and then see if you canhelp them kind of meet in the
middle.
You're cutting on the business,you're cutting on the personal.
Can we bridge that gap so thatyou can find a percentage that
might work and then otherwisestart where you can.
(21:38):
So if you are trying to takehome 50,000 a year and it's just
not a reality right now, startwhere you can.
If it's 40%, start there andthen, every month, or every
month or two, just increase thatpercentage by one to 3% until
you finally get there.
It's just this gradual thingwhere that's what we guide our
clients through too.
It's here's where you are today, here's where you need to be.
(22:00):
We're going to just graduallyget you there, because it's not
healthy to lose 30 poundsovernight.
We don't want to just, tomorrow, jump in and say, okay, we're
going to raise your, your pay by20% and cross our fingers that
the business survives it.
We want to be reallyintentional, really purposeful,
and that means going slow andjust increasing percentage
points as you go.
(22:20):
All right.
Step four, the final step ingetting this all together, is
setting up a consistent paycheckrhythm.
If you are like most businessowners, you're not paying
yourself regularly, you're notpaying yourself the same amount
on a consistent basis.
And if you're like and youdon't have to admit it you're
(22:41):
welcome to, if you want to, inthe chat.
But just as a self-reflection,if you've been, have you ever
been guilty of dipping into thebusiness to cover those personal
expenses?
I was kind of alluded to thatearlier.
If you have that, that is socommon.
I would say almost everybodywho comes to us has struggled
with, is either currentlystruggling with it or has.
(23:01):
They're not paying themselvesthe same amount every month or
every week or every other weekand they're dipping in as they
need stuff If their personalbudget gets low.
The number of people who say Idon't even have a paycheck, it's
just when I need money I pullit out of the business to cover
my expenses Again, if that'sresonating with you, again, it
(23:22):
doesn't mean it's okay.
It just means that you're notalone and we need to fix that.
And that's because we want youto treat yourself with the same
respect you would demand fromsomeone else.
What I mean by this is imagineyou went and interviewed to be
the CEO of a company and theyloved you.
They said we want to hire you.
You're perfect fit for ourcompany.
You're like awesome, you'regreat.
(23:43):
Can I ask you what's the salary?
What's awesome, you're great.
I can ask you what's the salary, what's, what's my pay going to
be?
And they just laugh at you andthey go oh, there's no, there's
no salary, it's just when youneed money.
Uh, just let us know.
Like so, if your rent is due,just let us know We'll, we'll
give you enough money to coverthat bill, just as needed.
So just let us know.
When you money, we'll give itto you.
Uh, I wouldn't accept that job.
(24:03):
Who would want that?
That doesn't make any sense.
And yet that's how we treatourselves as the business owner.
And the inverse is true too.
If you were to go hire a CEOfor your business and they said
hey, I'm just going to dip myhand in the business account
anytime I need money, so don'tworry about it.
If I need money for myself, I'mjust going to pull it out,
you'd fire them pretty quickly.
Right?
(24:24):
We have to separate ourselves.
We have to treat ourselves withthat same respect.
I, in my personal life, I'mCraig, and then in my business,
I'm the owner and CEO of DaisyFinancial Coaching.
Daisy Financial Coaching hasentrusted me to run the business
, and it's going to treat mewith the same level of respect
that if I was the CEO of Applethat they would.
(24:47):
So that's how we want to reallyenvision it.
Treat yourself with the samelevel of respect that if I was
the CEO of Apple, that theywould.
So that's how we want to reallyenvision it.
Treat yourself with that samerespect that you would demand
from someone else.
We need to respect ourselves,and it's so easy for those lines
to get blurred, but the morethat we can separate it, the
better.
Then, once we know that we needto create a pay schedule so you
(25:07):
choose the frequency that's thebeauty of being a business owner
is what is my pay schedulegoing to be?
Is it going to be weekly?
Is it going to be monthly?
It's going to be biweekly.
We need to get on a regularfrequency.
Then, once we've decided, whatis that pay schedule going to
look like?
It's okay to start small.
It's okay to kind of mesh bothworlds.
If you've been just dipping inas you need money, there's going
(25:29):
to be growing pains.
So maybe start paying yourselfa few hundred dollars a week or
a few, or, however, if you'redoing weekly, a few hundred
dollars a week, and then, if youneed money, you can still dip
in and we're just going to, astime goes by, increase how much
you're taking home every week,and that means less and less
you're needing to dip into thebusiness and give yourself 30 to
60 days a cutoff date and maybe60 days out.
(25:49):
This is from that point on I amnot dipping my hand into the
business.
If it's, if the business isn'tpaying it to me on my paycheck,
then either I need to increasemy paycheck or I need to figure
it out on the personal side.
So choose your frequency.
I pay myself monthly becausethat's how I was paid when I was
teaching and it's just how mybrain works now.
But again, you can choosebiweekly, weekly, however you
(26:12):
like.
And then we are big believers inquarterly profit bonuses.
So you remember that profitaccount that we were talking
about.
That's not just for show,that's not just your vanity
account to say, look at me, I'vegot some profit over here.
It's there to pay you.
It's there to pay you a bonusfor being the business owner.
Your owner's pay account, wealways say, is your paycheck,
(26:32):
your salary for doing theday-to-day work, for wearing all
the hats, for putting in thehours in the business.
The profit account, that's yourreward for owning a business.
That's your reward for takingthe risk, putting it all on the
line to own this thing and torun this thing.
So the profit account at theend of every corner.
So I told you, we'reaccumulating money in there,
(26:53):
you're putting a percentage intothat profit account, we're not
touching it, and then at the endof the quarter we take
whatever's in there and half ofit can come to you as a bonus
and half can stay in thebusiness as a cash reserve, an
emergency fund, a way to buildsome cash nest egg for the
business side.
It's also a great way to.
If you're trying to pay offdebt, you can use those funds to
(27:14):
really hone in on that, whetheron the business or the personal
side, taking the money out ofthat profit account to just mail
down those credit cards or thebusiness loan or the line of
credit, whatever it is.
You can use those funds forthat.
Otherwise, we say that the halfthat you take home, don't
reinvest it in the business.
(27:34):
Spend it on yourself, whetherit's a vacation, whether it's
just, depending on the size ofyour business, even if it's just
a taco from the taco truck downthe street, celebrate it, enjoy
it, because that is the sign ofa profitable business, no
matter the number.
Your business is profitablebecause you intentionally set
that money aside.
All right.
And then what we want to do isget organized.
Like I said, we want to unblurthose lines.
So we need to move anyautomated personal finances out
(27:56):
of the business.
So if you're paying forpersonal expenses inside the
business, let's move them out.
Now there's a lot of nuance tothis, because I do know that
things like cell phones, you'reusing it for the business
purposes, right.
So gas bills, all these things,your car, maybe you're driving
around with your car for thebusiness.
So where does that fall?
(28:17):
I typically say if you wouldn'thave it this is the rule of
thumb I go by is if you wouldn'thave it without the business,
so meaning I wouldn't have thisphone if I didn't have the
business well then that's abusiness expense.
If, yeah, I would still have aphone If the business closed
down tomorrow, I'd still have aphone then I'm going to move
that to the personal expenses.
(28:38):
I can still write it off at theend of the year.
It's still a write-off.
It's just that I'm not going tobe running it, cashflow wise,
out of the business.
And if you decide if you do, orhowever it's structured, at
least using those funds from theowner's pay account, because
it's not an operating expense.
It's really your owner'sbenefit.
Same with the car payment, samewith gas, whatever you're
lumping in there.
(28:58):
So try and separate those out.
If you have any other expensescoming out of your personal
account that are businessexpenses, let's move those to
the business.
And again, any personalexpenses coming out of the
business, let's move that to thepersonal accounts.
Now I told you there's someoptional extra accounts that you
can add into your business thatwe often see.
An emergency fund I feel likeis essential.
I know I said five coreaccounts.
(29:18):
That's what Profit Firstsuggests.
I usually have our clients openup six because we want an
emergency fund, or a vault iswhat we call it.
So just somewhere to put thatcash at the end of the quarter,
when you take half to you fromprofit, half going into that
cash nest egg, this is theaccount it would go in so that
we can build up those funds.
I recommend about three monthsof overhead in that account.
(29:43):
That means three months ofexpenses and three months of
your paycheck would be ideal,just depending on the size of
your business.
But enough cash there to makesure that if everything
collapses you can at least runthe business and pay yourself
over that time and maybe thatnumber is your survive budget.
(30:03):
Maybe you go on to that for afew months, but just having some
cash there just in case, aretirement account.
So if you gave up your 401kwhen you left the corporate
world, then it's okay to set upan account for yourself that
would go into your retirement.
So investment accounts whetherit's a Roth or a SEP or whatever
it is an account, so you'reintentionally setting it aside.
So take a little couplepercentage points off of owner's
(30:26):
pay and every week put someinto that retirement account
Giving.
If you want to be charitablewith the business intentionally,
you can do that.
If you want to give back toyour team, you can have a profit
account for your team membersso that at the end of the
quarter you can pay out bonusesto your employees.
You could have a healthbenefits account.
So if you're a small businessand maybe you don't have a
(30:47):
health plan for your team butyou have to go pay for health
insurance in the open market,well, you can open up an account
to make sure that that'scovered.
Or even vice versa, if you'resupplying health benefits for
the whole team, you can have anaccount earmarked just for that,
and then one more that's notlisted on here is a payroll
account.
So a lot of clients like totake operating expenses and
(31:08):
payroll and separate them, sothey have money going into
payroll and then they have moneygoing into operating expenses
just to make sure they alwayshave enough to cover payroll.
Thank you.
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