We all need money in business to survive. Unless you're running a charity, there's no point in doing it any other way, but a lot of people have a weird mindset when it comes to money.
In this episode of Business Built Freedom, Aimee LaLiberte from My Virtual CFO talks about what money mindset is, how to change your money mindset, and making sure that you are healthy with the way that you're thinking about earning money.
• What is a bad mindset when it comes to money? It’s not having awareness of your thoughts about money
• How to track your money? Understanding how much money you need to have the lifestyle that you need to get started is Step 1. And Step 2 is having a proper bookkeeping system or a money management system that can show you what's coming in and what's going out.
• Is it sensible to manage your numbers yourself? You should always have a relationship with your business financials. To what extent depends on where you're at.
• Should you share your financials with your staff? Have transparency with the numbers. You can have all the teams' compensation in the "Employee Compensation" category so it doesn't say how much Employee A made, how much Employee B made, etc.
What is a bad mindset when it comes to money?
What is a bad mindset when it comes to money?
Aimee: A bad money mindset is not having awareness of your thoughts about money, for example, you don’t even take the time to just ask yourself "what do I think about money?" Some people avoid having conversations about money or they avoid looking at the numbers if they're a business owner because they feel that it's a reflection of them in some way, shape or form. The truth is it's not.
Another is not having a relationship and thinking that there is a right and wrong way to have a money relationship and to manage money. There are so many ways that you can manage money, and not doing anything is disempowering.
Being aware is a big thing. Don't just put your head in the sand.
How to track your money?
When I first started my business, it was my side hustle and then I was earning money somewhere else. I had a separate bank account: one for my income from the company I was working for and another for any of the expenses and the money that was coming in from the business. I thought that as long as that balances out, we should be sweet. Obviously, that's a very basic way of looking at it.
How should you be monitoring where your money is? How do you make sure that you are charging the right amount or that you're not creating a false economy by charging not enough and actually just pulling money from a different account?
Aimee: With you working somewhere and then you had the business on the side, I think it's such a smart way to approach it. I know that some people love the idea of being under pressure and the feeling that they have to create the result as if their life depends on it. I actually don't subscribe to that mindset. I think there's super intentionality behind it: "I am going to create all of my needs from this one way of creating money, and I'm going to then leverage this new project or business to do that."
Understanding how much money you need to have the lifestyle that you need to get started is Step 1. And Step 2 is having a proper bookkeeping system or a money management system that can show you what's coming in and what's going out. Once you have that data, that's when you can start answering some of the questions that you posed, like "Am I charging enough?" and "Do I like my profit margins?"
Are you undercharging?
Aimee: I'm not a believer in just charging what anybody would pay. Going back to your mindset, if you don't have the belief and the self-confidence in what you're charging, they're going to be able to pick that up on sales calls.
What you want to be able to do with sales is to create value and demonstrate that what you're offering has tremendous value. When it comes to pricing, if you don't believe that what you're charging creates value, then it's going to be a lot harder.
I'm not saying that you undercharge, but you should find out where you can show up and say that this is the best service that you're possibly going to get.
Aimee: When you're able to speak from that level of confidence, people say "Yes!" At some point, you're going to have more demand than supply, and that's where you start to introduce the whole understanding of your pricing. Is my pricing off? How can I make this adjustment? Do I need to bring somebody in to help me do the service delivery? How can I start doing that? But we have to get past the beginning stages of business, which is just creating sales.
Value is in the eye of the beholder, and you need to know and understand your clients to be able to do that. I'm going to pick the pie industry today. If people value fast service, they might go to you even if your pies aren't the highest of quality. But someone else might value a higher quality pie even if it takes them a little bit longer to get it. Once you understand that, you can then promote around that and then do your pricing around. I'd definitely say don't price yourself against your competitors.
Aimee: There's time, there's convenience and then there's the price. If you value your time, then you're going to pay more. If you want time and convenience, you're going to pay more. Again, this comes back to that awareness of what it is that you want. What do you want to create? It also comes back to understanding your clients.
The business owners who identify the bookkeeping aspect as just a means to an end that they have to get done are not my ideal clients because my goal with my clients is to create and show them how to have a relationship with money. That is not a transactional service. That is a transformative service. It's a high ticket, and people pay for it because of the value that I've created: when they're able to pay down their debt, have a very positive mindset and can create any money goal that they set in their business, they are thrilled to work with me. It's beyond bookkeeping.
Understanding what it is that they want out of their business. Having an accountability cadence as to how they're going to get there comes down to rubbish in, rubbish out. If you're just ticking the box to say that you've got a bookkeeper, the results are going to be hard to get from any of the reporting that you're doing.
The FIRE Movement
I've been doing a lot of research on the FIRE movement lately, working out exactly how you go about achieving Financial Independence, Retire Early and putting the right eggs in the basket. When I'm not on podcasts or managing my business, I'm investing in real estate.
It depends on how you look at what retirement is. I'm retired now. I'm able to do what I like. How good is that? I can spend time with my family. I can do what I want when I want to. I don't have to just pick up the C-grade client because the C-grade client calls up. We're able to work with the people that we want to work with.
Again, that comes down to finding out what it is that you do and why you're doing it, as well as making sure that you're creating value for those people that you're working with so that you can then have more people like that to work with to make sure that you've got that financial freedom and hopefully freedom to spend time with your family or whatever the things are that you enjoy doing.
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Aimee: I have worked very hard to build the business that I have, but I love it. I'm always thinking about what I can do to create more value for my clients and future clients. When you have that love, it doesn't come from a place of hustle and obligation. It comes from this deep passion, like a vocation.
It's not work anymore. It's something you enjoy doing. It's something you'd do even if you found out that your life is going in a different direction.
I went through a breakup after 15 years and I sort of reassessed all aspects of my life. I wrote down a big list of what makes me happy and what doesn't. I thought working makes me happy. I enjoy doing what I'm doing for people. I enjoy the results.
I made a huge shift in the type of clients we are working with. We were working with a lot of corporates, councils and businesses that had over 200 employees, and we decided to steer away from that. They weren't the people that we enjoyed seeing the results with. The business owners were hardly involved in their businesses and didn't really care as much. I guess the adage "you can't turn a ship on a dime" applies here.
We changed it around and refocused on who we want to work with. I've never been happier. Now, I can say that I work because I want to, not because I have to.
Money and Self-Worth
One of my core beliefs is that if you have a family, spend time with your family. Mum and dad had a family—four siblings. The problem is you need to have a certain amount of money coming in to support a large family like that, so I didn't get to see as much of dad as I would have liked until he retired. And now I want to change that for our kids. That comes down to making sure that you're doing the right things in your business, so how do money and self-worth line up?
Aimee: Money is neutral. You and I could have a conversation about a million dollars—I can say that is so much money but you can say that is not enough money—and we know that it's not the number. It's our thoughts about the number.
When we talk about self-worth, universally, as humans we're worthy. We're whole, we were brought onto this planet full of worth. We're enough, we are always enough and love is always available to us at the core.
We know that because when babies are born, they're not saying "Oh my God, I'm not worthy, I'm not loved." They're just doing their thing, and they just want their basic needs filled. And then life starts to happen, and their brain starts to pick up these different signals and messages.
We understand that self-worth is inherent. You're always worthy. There's a divide between your observation and your self-awareness of your worth. If you don't identify yourself as worthy, that's the work that you need to do with your mind.
What is creating those blocks for you? What circumstances have created those thoughts and you just start poking holes into those thoughts so you can step into your worth?
Your money and your worth are not mutually exclusive. They are completely separate entities. They have nothing to do with one another. You're always worthy. It doesn't matter what it says in your bank account, your balance sheet, and your income statement. It doesn't matter whether you're making your first dollar in business or you've made your latest billion dollars in business.
You hit the nail on the head. A lot of people are keeping up with the Joneses, getting the latest iPhone because it's got rounded edges instead of flat edges or got a slightly different colour—that blows my mind. If it's not broken, don't fix it. There's a lot of things that are broken that people should be fixing, like mindset in the way they frame their life.
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Is it sensible to manage your numbers yourself?
How involved should you be?
It's sensible to come down to our core beliefs. Why do we exist? What is important to us? Money has to play a part. It's not linked, but to have some of those basic needs with the way that we trade in our society, there has to be some money available. If you're a business owner and you've got somebody doing the transactions and the bookkeeping, is it sensible for you to jump in as a business owner and start managing the numbers yourself? How involved should you be with the day-to-day? What are the reports that you should be looking at? Should you be bringing in professionals as a once-off or as an ongoing thing?
Aimee: You should always have a relationship with your business financials. It's just to what extent. For me, I find that there is a journey.
When you're just starting out, to have the relationship with numbers, to know the ins and outs because you're building all the things, and to DIY your business financials and your bookkeeping make sense when you do so with someone who can set it up properly.
I work with clients who are not in a position to outsource on an ongoing basis. They’re the "just set me up and teach me what I need to know in order to achieve my goal" clients, so I create that for them.
As time goes on, as they start making multiple six figures, things start to change and they are at a position where they need to outsource bookkeeping and need someone in a CFO capacity who can help them be future-focused.
The other thing is we go back. I'm a certified Profit First professional, and one of the things that I advocate for is implementing Profit First at the very beginning. That is the best time because you haven't created any habits that are going to be part of the focus when you are further along in business and you're trying to do the profit—maximise numbers for the real revenue numbers. It's good that you have that practice.
As you go further along, it might be a hybrid thing. Maybe you're still doing your bookkeeping, maybe not, but you're still working with someone like me who can do the bookkeeping, the profit first, the mindset coaching, and the CFO stuff.
At some point, you're going to get to where you want to completely outsource it, but you still want to have those ongoing conversations with your outsourced CFO in order to understand how the business is going? What do we think is going to happen? What do we project is going to happen and then what actually did happen?
Constantly managing your mindset through that journey is important because every single time your business grows and every single time you make more money, that is another version of yourself that you're stepping into. The business owner who will create his or her first six figures is not the same business owner who is going to create multiple six figures, and that is not going to be the person who will create the seven-figure business. It all requires the management of the money but with the active practice of your mindset.
It's important to understand your numbers. It's important to see what you're doing. What I spent money on and what I thought was valuable when I first started 14 years ago is very different from what it is now. When I was starting, I was money poor and time rich. So should I mow the lawn? Of course, I'm going to mow my lawn because I got heaps of time. Now I'm money-rich and time-poor, and mowing my lawn doesn't make any sense because it's going to take me 2 hours.
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Your mindset changes where you spend money and your mindset for growth. How often should you be looking at your numbers or your financials? I know this is probably business dependent. In retail, they might look at them daily, but it might be very different in the professional services industry like My Virtual CFO or Dorks Delivered.
Aimee: From the Profit First standpoint, at minimum, you're doing Profit First transfers twice a month. That rhythm would just organically have you check on a semi-monthly basis, but I love the idea of going at it weekly because when you see your revenue results and you have your expenses, then you see your bottom line, and let's say that you have a loss for the week, you can check in with your mind. Is there any sort of resistance? Are you thinking anything of it? If you see those numbers and you have thoughts that aren't going to serve you, that's where you really have to do the mindset check-in.
In terms of how you manage it, from a CEO standpoint, it really depends on the rhythm of the business. At a minimum, it should be monthly. If you have a business wherein there are daily sales and there are implications with that, then you can definitely set yourself up to do it daily.
If you have the right software in place, you can create daily reports. But again, when you require the type of service where there's daily work with the bookkeeping and all of that, it's going to cost you more money because you need someone leveraging the technology in order to make sure that everything lines up properly.
Should you share your financials with your staff?
Now we've got a good understanding of our numbers. We understand where we're at and hopefully where we're going, we've got a bit of an accountability cadence to work out whether our goals are realistic and if we’ve been able to achieve those. If you're in a business that has a number of employees, do you share your financials with them so they're all on the same page? Is it sensible to block out certain aspects of it? Could it create any sort of problems?
Aimee: I totally believe in transparency with the numbers. What we do is we always provide monthly overhead numbers from a very high level. We have all of the different categories in an overarching larger category. For example, all the teams' compensation is in "Employee Compensation" so it doesn't say how much Employee A made, how much Employee B made, and so on.
If you have occupancy cost, that's another category. You should have a category for marketing and advertising, too. From there, we can go all the way down from administrative to finance. It goes case by case based on the business, but you should totally share the overhead numbers because it helps the employees take ownership of their financials, especially if there's profit-sharing or bonuses involved. They can help you own the numbers so that you can have the maximum profit. Everybody wins.
Money Management System for Business
How do you go about creating a system to support this? It sounds like all good stuff, but it's all a bit fluffy if we have no actionable items. How do you do this? My understanding is that you're starting to offer a masterclass each month. Can you tell me a bit about how that works?
Aimee: I'm offering a master class on how to create a money management system that works for your business. It is a system or a recipe that lets you walk away from this masterclass with an understanding of how to create that money system. We will also talk about some of the mindset practises that you can do. There's a lot of action with money management, but the mindset stuff does go very closely intertwined with that.
I'm pretty excited to see how it all comes together because the mindset can get you down. I've recently over-invested, and I'm just getting through. I've taken nearly all of our liquid assets and put them into investment properties around Australia, scaring the hell out of me because I've got more money than I've ever had, just no more available money. I'm thinking It'll come back. It's just a short term pain for long term gain.
Recommended Book: Profit First by Mike Michalowicz
For anyone out there that's wondering, what is a resource that could give them more information about profit first. Is there a favourite book that you refer people to?
Aimee: Profit First, the actual book that's written by Mike Michalowicz, is the book that you can get if you really want to know exactly what that is.
Josh: It's going to be like cocaine. It's addictive.
What is Business Freedom to you?
The podcast is called Business Built Freedom. What is business built freedom to you?
Aimee: We all have free will, we have a choice. I think sometimes we forget that because we believe the story that our minds tell us— that we have to do all the things, but in fact, all of it is optional. Our society might frown upon us if we chose not to do something, but again, it's always optional.
I think freedom is consciously choosing and loving all my reasons for that, whether it comes to business, relationships, or whatever I want to do. That's not something I've always had carried with me; it's something that I really stepped into over the last five years. I keep it close to me because I'm always exactly where I need to be, I'm always enough, and I'm always free.
That's really insightful. That's powerful. A lot of the time, people are very good at saying let's do it tomorrow, too busy today. Just knowing that you're free to do exactly what you do and the decision you make is exactly the right decision is good. We're all going to be here tomorrow. Even if you're not having the best day today, there's a whole new day to start tomorrow.
Aimee: Anytime I start to feel afraid, what I always think of is that I don't want to go a week, a month, a year, 10 years down and wonder why didn't I do that? If you're looking at where you are, just take a look ahead—don't fast forward yourself there—instead, just say, am I going to be bummed out if I didn't do this down the road? If the answer is yes, then you just go through it. Discomfort is the currency of your dreams.
We're always really quick to forget the things that we've done and how far we've come. We continue to look forward and we don't turn around. I've got this terrible book that is 14 years old, and it's got all of my business plans in it. And at the end of the year, I ask what did I do? How did I change? What did I do out of this business plan? And what's my new plan now? Being able to reflect on that gives you this warm, fuzzy feeling like I've done this, I've achieved this.
It comes down to mindset. Don't delete things off of a list. Tick them off of a list or put a line through them so you can see how much you've done, not just how much you've got left to do. It completely changes your mindset and where you're at.
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