It’s that time of year again. The season for planning your 2020 goals is here.
You thought I was going to say shopping, didn’t you?
I find lots of entrepreneurs, especially new entrepreneurs, make the mistake of planning their goals based on what they want to do in their business. They’ll talk about the fun things like a branded photography shoot, building a new website, focusing on growing a YouTube channel, and the list goes on.
Instead of focusing on those creative things, we need to talk about dollars, ladies. If you are not making money, you are not in business. Period.
Want to become rich in 2020? Do these five things.
Sure, you can raise your rates or land more clients, but let’s go a little deeper and think more strategically in the new year.
So, what do you need to do to ensure your goals are complete with a financial focus?
You need to face your numbers.
I know sometimes this can be scary and you’d rather not know how much you’re spending in relation to what you’re making, but this is something you must do. If you don’t know your numbers, you certainly don’t know what’s working and what’s not working which means you’re probably wasting precious time not growing your business.
Look at your numbers and get them organized. I love the book Profit First by Mike Michalowitz for this. In it, he tells you exactly what to do with the money you make and based on your revenue how much you should be paying yourself, saving as profit, and putting towards operating expenses.
You need to review your sales.
Esha Herbert Davis, founder of Events by Ashe, reviews the amount of revenue she earned in 2019 and how she earned it. Based on that information, she will double down on what worked in 2020.
If sales is something you’re not good at or just have no desire doing, then you need to hire someone. You can’t make money without selling so having someone actively going after new clients and customers is vital.
You need to count your profit.
Lots of revenue doesn’t mean much if you’re not seeing profit in your business.
My business coach once said judging your financial success on revenue alone is like standing on a ladder to see how tall you are.
You need to be keeping some of that revenue to pay yourself and invest back in your business.
Laura Pennington Briggs, author of Start Your Own Freelance Writing Business, suggests meeting with an accountant or CPA to break down your income and expenses.
“I also recommend looking at deductions you can make before the year is over,” Briggs said.
Cutting down on things that are nice, but not necessary can increase your profit.
“Think about the categories that all of your expenses fall into, write them down, and enter your expenses into these custom categories that are relevant for you,” said Alexis Cartagena, Founder of Advance Accounting. “Creating custom categories like this will help you make more sense of your numbers, and using these for both 2019 and 2020 will allow you to compare your year over year growth.”
You need to plan your financial goal based on your lifestyle, not a number.
I’m guilty of not doing this when I started my business.
I’ve always wanted built-in bookshelves with a sliding ladder. A couple of years ago I told myself that when I earned $400,000 in a year, I would get them. They cost me about $4,000. There is no reason I needed to bring in $400,000 to pay for something that costs 1% of that.
The $400,000 was a made-up number. This is something a lot of entrepreneurs do. They say they want to earn six figures, multiple six figures, even a million dollars when really they need a lot less to happily live the lifestyle they want.
So, do the math. How much do you need to pay your bills and live the life that you want?
You need to change your money mindset.
After all of that, if you’re still not on board with doing a deep dive into your revenue, expenses, and profit, or jumping on a sales call, or even digging into a spreadsheet, then I have another book recommendation for you.
Secrets of the Millionaire Mind by T. Harv Eker will fix your negative money mindset, even if you don’t think you have one. After reading this book, you will be so excited to spend money by investing in yourself and your business because you will have the knowledge that money is not scarce and the confidence to make more of it.