Small Business Tip: Monthly Cash Flow Planning

Every single month, I sit down with Matt. Most of you don’t know him, but he is a key reason IWBNIN has continued to grow and expand. You see, Matt is our Financial Administrator. He manages all of the finances for our businesses. He and his team manage the regular financial management dealings of a business: payroll, accounts payable, accounts receivables, bank account reconciliation, credit card reconciliation, and governmental filings. However, Matt helps with a monthly task which we’ve found to be vital to our success – monthly cash flow planning.

For our two businesses with employees, we sit down at the beginning of each and every month to plan our financial decisions.

Here is the process we utilize:

  1. 12 month rolling plan  We have a rolling 12 month plan. This means at the end of each month, we add a new month at the end of the plan to ensure we are always looking forward for an entire year.
  2. Evaluate last month  We review last month’s plan to identify any major deviations – both positive and negative. This intelligence is utilized to continually improve our planning.
  3. Plan next month  We make changes to this month based upon known information.
  4. Review the next 12 months  We make changes to future months based upon known information.
  5. Make business critical decisions  We utilize the cash flow plan to determine when we can spend money for larger initiatives.
  6. Live by the plan throughout the month  Once the plan is finalized, the financial team follows it. If an unusual opportunity presents itself or major expense crops up, it generates a conversation amongst company leadership to determine an appropriate course of action.

Here’s how we’ve found the 12 month cash flow planning process to be helpful:

  1. Prepare for major financial challenges  As with any business, there are cycles. Some months are higher revenue while other months cause business owners to wonder if their business is going to fail. These cycles can create cash flow crunches if not carefully planned for. Viewing 12 months out allows our leadership to make better decisions.
  2. Prepare for known, upcoming non-monthly expenses  This type of planning forces a leader to think longer-term. As a result, known upcoming non-monthly expenses can be accommodated with ease by ensuring appropriate accrual accounts are established. Nothing makes me happier than to know the money is stored up for estimated quarterly tax payments, car repairs & replacement, annual software licenses, etc.
  3. Communication  Monthly reviews create a “trip point” that forces communication to happen regarding the financial and general affairs of the organization.

Want to get rid of a bunch of financial headaches? I highly recommending instituting a monthly cash flow planning meeting!

This post is part of a Small Business Series here at the wildly popular JosephSangl.com. Click HERE to read more of the posts in the series.

Teach Your Kids About Money – Money and Store System

NOTE: This method can work for children beginning at around age 3 – and can work through early teen years.

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There are two key influences in a child’s life when it comes to money:

  1. Their parents
  2. The world around them

Who is more likely to help children have a healthy relationship with money? Ideally, it would be the parents!

Here’s a way to help your child understand how to use money and to make healthy choices with it: Create a Money and Store System

Money and Store System

  1. Create your own money (call it a fun name like Mommy Bucks or Reward Dollars) – Here’s some money I’ve made to help you (DOWNLOAD HERE)
  2. Establish a system where your child can earn this money
  3. Purchase 3 or 4 items you know your child would enjoy and place it in a “store” at your home
  4. Assign a value to each item
  5. Watch the system work – and use the experience to create “teachable moments” where you can have incredible conversations with your child about money.

Consider a parent with a 4 year old boy.

The parents create a currency called “Super Duper Money” (SDM for short). To earn this money, their child must complete special age-appropriate tasks around the house such as:

  • “Pick up pine cones out of the yard”
  • “Feed and water the cat daily”

A value of $1 SDM can be earned each week for each key task.

The store has 4 items in it – with varying prices to create short, medium, and longer term goals:

  • Gummy Worms (Price: $2 SDM)
  • Give food to the Hungry (Price: $4 SDM)
  • Legos (Price: $8 SDM)
  • Big Fire Truck (Price: $16 SDM)

As the child performs the tasks and earns SDMs, they can make a purchase from the store.

It’s that simple, and it allows the parent control the conversation. Imagine the incredible teachable moments that can happen:

  1. Saving  As they save money, they can accomplish more.
  2. Giving  They can learn to sacrifice a gift for themselves to serve those in great need. There’s NOTHING like seeing your child be generous!
  3. Delayed Gratification  The importance of saying “no” right now, so we can say “yes” to something more important later.
  4. It is a good thing to work!  I want my child to learn the value of working.

This post is part of a Kids & Money Series here at the wildly popular JosephSangl.com. Click HERE to read all of the posts in the series.

Monday Money Tip: Be Sure To Include FUN In The Budget

This is one of the greatest things I ever learned about budgeting. And it is THE KEY REASON I’ve been able to live and operate by a budget every single month since July 2003. I’m confident it can help you too!
 

 
You can receive the weekly Monday Money Tip in your email by subscribing HERE.

Signs Your Financial Priorities Are Out Of Order

Sometimes I see situations that just make me shake my head in wonder. Situations where a person obviously has their financial priorities out of order.

Here are a few:

  1. If you know everything about your favorite team or TV show but do not have a financial plan …
  2. If you pay for your child to participate on a traveling sports team, but have nothing saved for their college education …
  3. If you’ve purchased 85 video games and 3 different game consoles for your kids, but have nothing saved for their college education …
  4. If you have worked for 5 years and haven’t saved any money …
  5. If you have worked for 20 years and have nothing saved for retirement …
  6. If you say, “I just need to make more money,” …
  7. If you believe the lottery is the only way you will ever be able to retire …
  8. If you have not given away any money …
  9. If you think 401(k) is a radio station …
  10. If you have purchased a brand new car (that will drop 60% in value in the first 4 years) and have invested nothing …
  11. If you do not take time to plan the use of your paycheck before you spend a dime of it …
  12. If you continually blame others for your financial situation …
  13. If you refuse to talk with your spouse about money …
  14. If you have regular pedicures/manicures, a smartphone, and cable/satellite TV and say, “I can’t afford to invest or save …”

In the past, many of these items were true for me. Are any of them true for you?

Would you add anything to this list?

Leadership Tip: Your Pay Raise Is Effective When You Are

I love listening to Dave Ramsey on the radio. He’s a JosephSangl.com Financial Hero. I remember a specific conversation he held with a caller who felt they “deserved” a pay raise. When asked why they felt they deserved increased compensation, the caller could not effectively answer the question. They felt an answer of “I deserve it” should be sufficient. Dave responded with this great statement:

Your pay raise is effective when you are.

In other words, when you value to your organization and help them generate more revenue or more profit, you will be in position to receive more revenue.

  • If you help your company reduce warranty claims, you reduce their operating costs – which leads to more profit.
  • If you sell more products at excellent margins, you yield more profit.
  • If you are a manufacturing line worker and reduce a specific defect by 50%, you help the company reduce re-work expenses – which leads to more profit.
  • If you are a hair stylist and your work is so good that 95% of your business is repeat/regular customers, you’ve demonstrated the ability to secure profit.
  • If you identify a way for your company to increase its business in another field, you’ve added tremendous value to that company.

It is the individual who shows up to work every single day knowing their work is essential to the company’s success that helps the company become wildly effective. And money tends to flow toward wildly effective and innovate people.

Questions:

  1. How do you add value to your organization? Can you monetize that value? If so, how much value do you bring?
  2. How can you add more value to your organization? What idea(s) would help increase revenue and profitability?

This post is part of a Leadership Series here at the wildly popular JosephSangl.com. Click HERE to read more posts in the series.

Small Business Tip: Sacrificing To Make The Dream Work

Having successfully started a few small businesses and acquiring another, I can confidently say that it takes sacrifice to make the dream of a small business come alive.

I worked the equivalent of two full-time jobs for an entire year while I Was Broke. Now I’m Not. launched. I would work all week and then jump into a car and drive to some distant place to speak about personal finances. Usually, I would end up spending more money on gas, hotel, and food than I would receive in income from the event!

As I share in my book, Oxen, you can’t load up a baby ox as soon as it is born, or it will die. Yet, many people do this very thing when birthing their small business. They finance the entire start-up costs and then quit their job as soon as they launch the business – forcing the business to pay them a salary from day one. They “load up the baby ox” with all of the costs of debt, salaries, and rent – causing even great business ideas to collapse before they really had a chance to succeed.

It takes sacrifice. Here are 3 key sacrifices you can expect to make when launching your small business dream.

3 Key Sacrifices Business Owners Make

  1. Time With Family  Starting a business is not a 9am to 5pm, 5 day a week job. Curb the impact of this by being very intentional in the time you do have to spend with your family. Another tip is to include them in the work and decisions of the business. For example, I bring my daughter along with me to help with speaking events. She manages the resource table. Better yet, we have the chance to talk during all of the plane and car rides.
  2. Money  People who are launching their small business venture will have to invest substantial amounts of money in the hopes of a financial return. There is no guarantee of success. I’ve found that investing my own money into the business helped me be very attentive to business expenses. It seems to be much easier to spend borrowed money.
  3. Other Dreams  Because of the enormous consumption of time that a new small business demands, many other hobbies and passions are placed on hold. Saying “yes” to starting a business will mean one must say “no” to other desires.

For those who have successfully started your own small business, what are some other sacrifices you have had to make? Please share in the comments?

This post is part of a Small Business Series here at the wildly popular JosephSangl.com. Click HERE to read more of the posts in the series.

3 Lessons You Could Teach Your Child This Week

Here are 3 simple lessons you could teach your child this very week:

  1. How to intentionally give money away to help others.
  2. How to set a financial goal and establish a plan to achieve it
  3. The importance of saying “no” right now so later you can say “yes” to something more important

This post is part of a Kids & Money Series here at the wildly popular JosephSangl.com. Click HERE to read all of the posts in the series.

Monday Money Tip: A Great Money App – Mint.com

In this week’s Monday Money Tip, I share about a money app I personally use and have found very helpful with managing my personal and business finances. Learn more about it in the below video:

You can receive the weekly Monday Money Tip in your email by subscribing HERE.

How Well Is The United States Managing Its Budget?

Question: Do you know how much tax revenue the United States collected last month?

Next Question: Do you know how much the United States spent last month?

These are numbers are available to you simply by visiting Congressional Budget Office website HERE.

Just like the equation: INCOME – OUTGO = EXACTLY ZERO ™ applies to you and me, it also applies to governments and businesses.

In January, the CBO estimates that the U.S. spent $10 billion more than was collected. For the first four months of fiscal year 2014, we have spent $184 billion more than was collected.

Here are some reasons you should care about these numbers – especially if you are a citizen of the U.S.

  1. Increased deficits means more national debt. And the taxpaying citizens will have to pay this interest as well as repay the debt (which is in excess of $17 trillion).
  2. No balanced budget requirement for the U.S. means deficits will continue. Just as having no personal budget will tend to lead to overspending. I, for one, would love to see some requirement that my beloved country would have to save money and follow the I Was Broke. Now I’m Not. Ladder!
  3. You are already feeling the impact of the national debt, and it won’t be getting lighter. There is relentless borrowing from the Social Security trust fund. Don’t just take my word for it – read the report issued by the Social Security Administration HERE.

I’m only voting for representatives who demand a balanced budget. I feel that would be most “representative” of me – and will help the U.S. continue to prosper into the future.

Leadership Tip: Making Hard Decisions

When you are called into a leadership role, you will inevitably face a very difficult situation that requires a hard decision.

And the moment will come when you realize you are the leader who must make that hard decision.

I’ve faced them as the leader of I Was Broke. Now I’m Not. and INJOY Stewardship Solutions.

I’ve had to make them as the leader of my family.

Here’s what I know to be true about this difficult decisions:

  • It is no fun at all
  • It exacts a pound of flesh from you
  • Some people won’t understand the decision
  • It never gets easier

I always run these decisions through the following filter:

  1. Glean all information I can via conversation and gathering data from everyone and everything involved
  2. Prayer
  3. Discussion with my bride
  4. Conversation with my leadership team

Here are some questions I ask:

  • What is the real situation?
  • What is the real decision that is needed?
  • What is best for my family?
  • What is best for the business?
  • What is best for all parties involved?

This post is part of a Leadership Series here at the wildly popular JosephSangl.com. Click HERE to read more posts in the series.

Small Business Tip: Separate Business Accounts From Personal Ones

One of the top mistakes small business owners make is to intermingle their business expenses with their personal accounts. This can create many issues including:

  • Difficulty in identifying true business profitability. When personal and business expenses are in the same accounts, it becomes very difficult (impossible?) to readily determine the company profits or losses.
  • Misuse of company money for personal expenses. Whether intentional or unintentional, this can erode financial margin that is critical for the viability of the business.
  • Difficulty in selling the business. Even if the business is profitable, it can cause potential buyers to become wary of the true performance of the company.
  • Drive the tax preparer nuts. I’ve had conversations with tax preparers who find it nearly impossible to prepare a clean tax return because of intermingled business and personal income and expenses. This can lead to issues with the IRS later. That is never a good thing!
  • Frustrates the family bill payer. When the person in the family who is responsible for paying the bills must balance business bills with personal bills, it can cause them to become very frustrated. So frustrated that smoke may start coming out of their ears!

If you are running your business expenses through your personal accounts, invest a few hours to separate them. The bill payer and tax preparer will thank you, and you will be able to more readily assess the performance of your business!

This post is part of a Small Business Series here at the wildly popular JosephSangl.com. Click HERE to read more of the posts in the series.

10 Things Parents Should Teach Their Children About Money

All parents want their children to succeed in life. I’m regularly asked, “How do I teach my children about money?” This is a great question, but we should start with another question: “What should I teach my children about money?” Once we determine the “what,” then we can focus on strategies for “how” to teach them.

Here are some key things every parent should teach their children about money.

10 Things Parents Should Teach Their Children About Money

  1. Your dreams should drive your money decisions.  Every great accomplishment began with a dream. Money will flow to a great idea and plan. Let your dreams influence the way you manage your money.
  2. Money will go farther if you prepare and follow a budget.  A budget ensures you generate maximum impact with all of your money.
  3. Be very cautious with debt.  Debt has led to the destruction of many people. Demonstrate how debt can help achieve dreams or produce income and net worth. Share how it has led to enormous stress and financial disaster.
  4. Investing allows you to capture the power of compound interest.  Compound interest has allowed many people to fund their wildest dreams. It allows the combination of diligence, time, and money to yield a tremendous harvest.
  5. The importance of insurance.  Insurance allows you to transfer risk thereby preventing a catastrophe from destroying everything you’ve worked to build up.
  6. Giving is living. There’s nothing more satisfying than offering a hand up to someone who can benefit greatly from such a gesture.
  7. Financial margin reduces stress.  Living life “on the edge” with zero savings is for the birds. Share how a simple decision to keep some money in an emergency savings account can prevent life events (like car breakdowns, appliance failures, or emergency home repairs) from causing tremendous financial pain.
  8. A financial education is just as important as your school education. You can have more degrees than a thermometer and still be broke. Be certain to gain a financial education while receiving your professional education.
  9. Every decision is not purely a financial decision. There are times you will have to make decisions because it is “the right thing to do” even though it might not make financial sense. Be certain to allow your core values and beliefs to drive your decisions.
  10. You can either pay now and play later or you can play now and pay later. And it usually is much more painful to pay later!

Anything you would add to this list? Join the conversation on the I Was Broke. Now I’m Not. Facebook Page.

Monday Money Tip: What Else Could You Do With That Money?

In my continuing quest to help you have better Mondays, I am pleased to offer this weekly Monday Money Tip. My goal in offering these tips right at the start of each week is to give you all week to take action so you can enjoy the weekend knowing you took your finances to another level this week!

This week’s tip is focused on an important financial concept known as “Opportunity Cost.” Check it out below:

Key Question: What is the next best alternative use of your money?

Valentine’s Day – 5 Reasons I Love My Family

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I love my family. To celebrate Valentine’s Day, I thought I would share 5 reasons I love them so much.

5 Reasons I Love My Family

  1. They are beautiful. My daughters look like their mother. My son has tousled hair and has such a tender heart for others. All three children have dark blue eyes. There is absolutely nothing like the love shared within a family. Amazing.
  2. They are fired up. From early morning to late at night, our house is a rolling circus. My bride prayed for a calm child while each of our children were in the womb. We’re still waiting for the calm child to appear because these three are FIRED UP!!!
  3. They believe in me. A person can’t embark upon a journey to launch businesses and travel the corners of the earth without the support of their family.
  4. We embrace crazy. We have decided to embrace crazy. From track and cross country practice and meets to preschool meetings to newborn doctor visits, life is crazy. It won’t get calmer anytime soon, so we’ve chosen to embrace these moments and enjoy them.
  5. They are each unique and special. My bride is organized. My oldest daughter isn’t organized, but she is amazingly creative – having her drawing selected as the school mascot and another design chosen for a sculpture placed in the school’s front lawn. My son is hard-charging and driven to complete projects – even at four years old. My newest daughter is still figuring out how she is going to melt our wallets, but has mastered smiling – in the cutest ways!

What are 5 reasons you love YOUR family? I invite you to share them on our Facebook Page.

If You CARE, You Will PREPARE!

If you CARE, you will PREPARE.

When you truly care about something, you will prepare for it.

  • If you care about having an incredible marriage, you will put effort into it. You will have purposeful time together. You will prepare moments free of the children so you can focus on each other.
  • If you care about maximizing your money, you will prepare a budget. Obtaining a great financial education will be a top priority for you. There would be people in your life you view as your “money coaches” – persons who are winning with their money and can help you too!
  • If you care about retirement, you will make saving and investing money a top priority.
  • If you want to help your company succeed, you will show up to meetings completely prepared with the appropriate data, facts, and figures. You will have given substantial thinking time to what you want to accomplish with the meeting.

By the way, this applies to moments as well as lifelong pursuits. If you have high expectations of an awesome date with your spouse (or someone you think would make a great spouse) – you will prepare for it. You will be looking and smelling good, have a restaurant picked out (with reservations, if necessary), and the concert tickets in hand. But if a person doesn’t care, he will show up (late, of course) not looking and smelling good and ask his date: “Where do you want to go to eat?”

If you CARE, you will PREPARE. Think on this throughout the next week and observe how the people in your life prepare for things. It will reveal how much they truly care.

This post is part of a Leadership Series here at the wildly popular JosephSangl.com. Click HERE to read all of the posts in the series.

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