Worrying About Money vs. Planning for Profit

Money or the lack of it can be a major stress point – especially when thinking about transitioning from employee to entrepreneur. At some point it becomes a mind game, you have all the things in place to have a profitable business but the worry about finances is still there: How will I be able to pay if my car breaks down? Will I really be able to cope without a full-time income coming in? It’s especially hard when you’ve got a “good job”, to let go of more stability for less stability.

In this article, I share the money management pep-talk I’ve been using to help de-stress about money as I prepare to step away from the pay-check.

The truth is self-employed people think about money all the time. There’s a difference between thinking about money and worrying about it. Worrying is the position we find ourselves in when we don’t have a plan, when we don’t have a way  to forecast what’s coming in and when we don’t have a clue as to how to generate leads to bring in future income.

Almost all businesses (especially when new businesses) go through peaks and potholes. But it is during those lean moments that people start to stress, worrying about what might happen if business stays slow. Even though the next big deal or customer is possibly just around the corner it can become hard to stay positive. And negative energy is the last thing you need in your business and life.

One of the great things about launching while working is that it allows you to build up a financial safety net. This money can be saved above and beyond your regular savings plan. You can even add to it when you are having a good stream of clients coming though. Then you have an answer for how you will handle things when business isn’t going so well. How will I pay for the mortgage if business is slow? Answer, using the money you have saved up.

There’s also a positive side to business being slow too: these periods can be used to re-charge your batteries and come up with new ideas for marketing or products, or revising your business plan.

When there’s a steady paycheck, you know what’s coming in every month. As an entrepreneur you won’t always have that luxury. The same can be true for what’s going out. It’s easy to plan a budget for household expenses but business expenses may fluctuate. In both cases there’s always the chance of unexpected expenses.

If the amount that is seemingly going out is more than what is likely to be coming in, the first thing to do is look at spending. Keep a record during one month of everything you spend to gain insight on how much money you might be wasting and possible areas where you can save.

For example, are you a member of a gym you never go to? How much money do you spend on take-out and junk food per month? Do you always need to use the car, or is it possible to walk more often or car pool for events? How much money do you spend on coffee, cigarettes, lottery tickets? Do you really need that new flat screen or laptop?

During the good times we can afford to invest money in things that are a lesser priority. However if you are worrying about money, it is time to prioritize and put a plan in place so you can stop stressing about it and thinking about money from a strategic, revenue generating perspective.

It is always worth planning for your financial future, not just to cover you if your car breaks down. You may want to build up your savings to:

• pay for your wedding
• buy the car of your dreams
• have the vacation of a lifetime
• buy a house
• re-locate abroad
• buy a business
• fund your retirement
• contribute to your children’s college tuition

Developing healthy budgeting and saving habits is key to stressing less about money. It’s also important to develop a positive mindset about money. No amount of planning and budgeting will help you if you haven’t addressed limiting beliefs around money and generating income. By addressing money from the outside through budgeting and planning, and from the inside by changing your mindset, you now have a way to stop worrying and be less stressed about money.

What systems and tips do you have do you have for managing money so you can plan for business profits rather than worrying about money?

Tags: advice, featured, money, planning, saving, tag1

Category: Before You Quit, Makeover Your Mindset, Money Matters