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Mastering the Financial Side of Business: Budgeting, Pricing, and Profit Strategies for Success
In this episode, Dani shares her journey of mastering the financial aspects of business, focusing on budgeting, pricing strategies, and profit management. She emphasizes the importance of understanding money mindset, separating personal and business finances, and the common mistakes entrepreneurs make. Dani provides actionable insights and encourages listeners to take control of their financial health for sustainable business growth.
Queens Connection Club
www.queenofbusinessorganisation.co.uk/connectionclub
Business Fundamentals Book:
www.queenofbusinessorganisation.co.uk/books
Podcast created by Dani Louise Smith, the Queen of Business Organisation using Riverside and captivate.fm
*some links featured in this episode are affiliate links and I may be paid when you make a purchase via my link.
business finance tips, budgeting strategies, pricing strategies, profit margins, money mindset, financial planning for entrepreneurs, small business budgeting, pricing for services, profit first system, financial success in business, budgeting tools for business, how to increase profits, money management for business owners, financial growth strategies, mastering business finances, cost plus pricing, business expense management, sustainable business practices, overcoming financial struggles, financial literacy for entrepreneurs
Mentioned in this episode:
Joint the Queens Connection Club
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Transcript
Hello and welcome to another episode.
Speaker A:I'm actually loving life right here.
Speaker A:I've literally just taken a picture and put it on my stories on Instagram of me about to record this episode because I'm sat in my office, I'm doing a batch creation because as you know, if you've been listening that I have taken the topics of all 10 chapters of my book Business Fundamentals, and I've turned them into the first 10 episodes of strategy, sales and systems podcast.
Speaker A:And I'm living life.
Speaker A:I'm loving it.
Speaker A:I'm loving life in here.
Speaker A:Sat on my own in my office recording these episodes, talking to myself.
Speaker A:But I'm talking about what I love and I'm just in my element.
Speaker A:And so I've shared that on my social media.
Speaker A:I sharing behind the scenes, which I recommend you do.
Speaker A:If you've been listening to my other episodes, then you will know this.
Speaker A:Especially for connecting with people on social media, sharing what you do, showing that you take your business seriously as well.
Speaker A:There's nothing better than seeing people take what they do seriously.
Speaker A:And when you see they love it as well, you know that it's passion.
Speaker A:There's passion in there.
Speaker A:There's definitely passion in me doing this.
Speaker A:And so, yeah, I'm just loving it.
Speaker A:I'm loving sat happy talking to myself here.
Speaker A:Absolutely bloody love it.
Speaker A:And today I'm gonna love this topic because it's such an important one and it is mastering the financial side of business.
Speaker A:We're going to talk budgeting, pricing and profit strategies for success.
Speaker A:So if you are struggling with making money in your business, or you're struggling with keeping it and growing the money in your business, then this is where you need to be listening in.
Speaker A:So come on, come on this journey with me.
Speaker A:I'm going to be real, going to be raw, gonna be honest, as I were inside my book.
Speaker A:And I'm going to talk you through this topic that is so, so important.
Speaker A:So many business owners focus on making money.
Speaker A:They do.
Speaker A:But keeping it and growing the money that you have, that's where real success happens.
Speaker A:So today we're diving into the financial side of business.
Speaker A:In a business, businessing business.
Speaker A:We're talking budgeting, we're talking pricing, and we're talking profit strategies so that you can run a business that pays you well and grows sustainably.
Speaker A:I am huge on sustainability and this is because I truly believe that too many people in a place where the business is not making enough money, they're not even meeting their baseline which covers the essentials for their business to function and so they're not even breaking even.
Speaker A:And this was me for a long time.
Speaker A:This was me for a long, long time and I hate that.
Speaker A:And in fact, in the last year alone I've seen more profit than in this business than ever and I, I love that.
Speaker A:However, I still have me shoes with my money mindset, with spending, with the issues that come with possibly ADHD and mental health and money management.
Speaker A:I still have those issues, I've got to work on those and work through those.
Speaker A:But I'm improving, I'm growing, I'm working on this.
Speaker A:And we only make change by recognizing it, having that self awareness and doing something about it.
Speaker A:So I do want to actually dive into a little bit of my money mindset journey and my experience with what has worked for me and what I've been through.
Speaker A:And then I will share with you things that you can do to help in all of these areas around budgeting, pricing and profit for strategy, profit strategies for success.
Speaker A:I can't even say my own words right, so the things that I went through, money mindset.
Speaker A:So I, I didn't like selling at first.
Speaker A:Now I bloody love it.
Speaker A:I didn't.
Speaker A:And I was not in a great cycle.
Speaker A:When I first started my first ever business, the Keepsake business, we, I actually had a job and I was working full time at my local co op.
Speaker A:Loved that job by the way.
Speaker A:Absolute team were great, loved it.
Speaker A:I only left because I wanted to make a go of it with my business, but I actually loved that job and basically we, we were struggling actually financially to say my business wasn't making any money but I was earning a good wage from that job and yet we were still, we were in the cycle of getting an overdraft because I didn't really have a clue when it came to money.
Speaker A:We only had one child at the time and we wanted to get married and we did want another baby.
Speaker A:So we needed to kind of get this in order and, and this was actually a pivot pivotal moment for me in figuring out what I needed to do.
Speaker A:And it was actually going and doing a business enterprise course that gave me the skills to sort my personal money situation out as well as the business stuff in terms of management and finances.
Speaker A: the money mindset work until: Speaker A: I did that business class in: Speaker A:In fact, day one of that course, I got pregnant.
Speaker A:I mean, not got pregnant that day I found out I was pregnant and we'd just set our wedding dates.
Speaker A:It was a lot.
Speaker A:It was A lot.
Speaker A:But I still just.
Speaker A:I tackled everything.
Speaker A:I was resilient, I was determined.
Speaker A:I was so determined.
Speaker A:And I got what I needed, the skills that I needed.
Speaker A:Had a lovely baby boy who's now our middle child, actually, and we got married a year later.
Speaker A:And it was amazing, right?
Speaker A:And.
Speaker A:And then fast forward years later.
Speaker A:Obviously, business did really well and all that, but it was interesting.
Speaker A:Like, I learned how to budget, and I applied all of that because I.
Speaker A:I had an end goal that I wanted, and that was to have an amazing wedding.
Speaker A:But we were having a baby.
Speaker A:So between Archie being born and the wedding, there was nine months.
Speaker A:No, eight months.
Speaker A:He was eight months old at our wedding.
Speaker A:And so it was a lot to pay for the baby stuff, to pay for everything he needed to pay for the wedding as well.
Speaker A:So I had to work on my budgeting.
Speaker A:And so I sat down and I literally did a sheet of like, what was coming in, what was going out, and I made a plan of, like, what I could get rid of.
Speaker A:This is so basic.
Speaker A:Anyone can do this at any time to help when you're strolling money, like, the biggest thing is not knowing what's coming in and going out.
Speaker A:Getting clarity on that makes a huge difference because then you can make changes.
Speaker A:So I did that.
Speaker A:We actually cut back a lot.
Speaker A:So we cut back on, like Christmas presents.
Speaker A:We gave it a things, a budget rather than just spending.
Speaker A:We cut down on takeaways massively.
Speaker A:And we didn't really go out.
Speaker A:I mean, we weren't really going out anywhere because we were new parents and.
Speaker A:Well, number three, it was about three years old then was Stephen.
Speaker A:But we weren't really getting out, so we were saving money there as well.
Speaker A:So we did budgeting.
Speaker A:And what happened was I realized that I needed to be doing this for my business.
Speaker A:And.
Speaker A:And so it became a common practice that every single year I planned out what I was going to be selling.
Speaker A:And so I did a cash flow projection and I.
Speaker A:I actually started looking at, like, what my potential investments were, what were they were going to be.
Speaker A:I'd start doing a list of the money that was coming into my business from my clients, the money that was going out and looking at that and.
Speaker A:And planning it and working with that.
Speaker A:And I know there are businesses out there that do not sit and do this.
Speaker A:I know there are, because people see my level of organization and they tell me it makes them feel sick.
Speaker A:They don't like spreadsheets.
Speaker A:And listen, you find your way of doing it.
Speaker A:But I'm a huge advocate for Having that list for having everything logged because if there's ever anything that happens that rockshox business, you need to be able to tackle that shit.
Speaker A:So having that there, it massively helps and it helps you plan and it does so many things right.
Speaker A:So that's what I did and I've done it every year since.
Speaker A:Every year.
Speaker A:So that's the first thing I want to talk to you about, that I did and the second thing I want to talk to you about.
Speaker A:So that happened, that, that all happened.
Speaker A:We were in debt.
Speaker A:Well, we weren't in debt, we were in overdraft.
Speaker A:But fast forward later on when my business was actually doing well, I remember, ah, I remember having my first 2,000pound earning in a week.
Speaker A:I earned two grand in a week, was freaking brilliant.
Speaker A:I cried and everything at the same time.
Speaker A:One of my clients had had like a thousand pound in a week and I just sent me balling because I loved that, I love that I'd succeeded, she'd succeeded.
Speaker A:Motions were high.
Speaker A:However, what I was doing was I was holding on to this money and I was buying things a lot of like crystals, investing in courses, trainings, going to events, all sorts of buying all sorts, thinking that I needed to learn more, I needed to have more, I needed to do mine.
Speaker A:I was spending, spending, spending, spending.
Speaker A:But what I was doing was I was putting them through PayPal credit or on my very account, which I now don't use, or my studio account.
Speaker A:And it was just the odd few pounds here and there, but that.
Speaker A:And I'm sure loads of people who have been through this will relate that you just don't see it as real money and it, it builds and builds and builds and builds and before you know it, there's like thousands there.
Speaker A:And that's what happened.
Speaker A:So I needed to sort that out.
Speaker A:And just over a year ago I remember getting a letter in the post saying, you are this.
Speaker A:And thinking, I need to deal with this.
Speaker A:So I sat down, I wrote down everything that was coming in, everything that was going out, everything was odd.
Speaker A:And I came up with my own plan on my own to tackle it.
Speaker A:The reason I didn't go through an agency or anything is because one, I didn't want to risk a business and two, because, because I didn't like the terms that they, they were asking for a certain amount of money.
Speaker A:That was just unrealistic and I knew that if I was, I needed to be in control.
Speaker A:So for me, anxiety I've really struggled with is, is being in control.
Speaker A:So I Needed to be in control.
Speaker A:So I sat and worked on that and I did my own plan and within a year I have paid off 5,000 pound of debt.
Speaker A:Well, just over a year.
Speaker A:So proud.
Speaker A:I do have a bit on my credit card now, but I just keep meeting the minimum payments so I'm not really fussed about that.
Speaker A:But yeah, I'm so proud of myself for doing that.
Speaker A:And so I'm always budgeting and I do think I'll always budget no matter how much money I'm earning.
Speaker A:It is nice to not have to check how much money is there.
Speaker A:But I truly believe in budgeting.
Speaker A:So I sit and do it for my business.
Speaker A:Every month I look at my budget like I've got a list.
Speaker A:I look at my budgets and see what's there and what I want to add and certain things like that I check in with it and I do it every month personally as well.
Speaker A:So I can align my spending with my income so I line it with my growth so that I'm and I think sometimes even aligning your spending with your growth, sometimes we can earn more.
Speaker A:So we spend more and we don't want to be doing that.
Speaker A:So this leads me into the common mistakes with business owners when it comes to the financial side is not budgeting properly, undervaluing their services.
Speaker A:And then because of both of those things, struggling to make a consistent profit.
Speaker A:And if this is something you're experiencing, I want you to be able to get over that.
Speaker A:And the benefit of this podcast is it's free.
Speaker A:And that I want you to be able to get over it for free.
Speaker A:I want to help you for free.
Speaker A:So keep listening.
Speaker A:Right?
Speaker A:So every business needs a budget.
Speaker A:I truly believe that service based businesses, product businesses, whatever business you're in, create yourself a budget.
Speaker A:You should have your personal and business.
Speaker A:And I just want to say a little disclaimer.
Speaker A:I am not a financial advisor.
Speaker A:However, I am the queen of business organization.
Speaker A:I actually organize a lot in my personal life.
Speaker A:You wouldn't believe it when you see if you saw the state of my house at this moment in time, you would not believe that I am a very, very creative.
Speaker A:But I got messy person, right?
Speaker A:But I call myself creative.
Speaker A:I do.
Speaker A:I have piles of things everywhere.
Speaker A:But I am tackling that because we're hiring a cleaner.
Speaker A:So but I, I am organized.
Speaker A:I'm the queen of organization for a reason because I organize right.
Speaker A:So you need to separate your personal business finances.
Speaker A:I'm not a financial expert, but I have been.
Speaker A:I'm just sharing my experience and sharing what worked for me and sharing what I know to be true.
Speaker A:Okay, so disclaimer.
Speaker A:Do seek advice from a professional financial advisor or accountant should you wish to and get some expert advice.
Speaker A:But this is not, this is not going to impact you any.
Speaker A:It's only going to impact you in a positive way.
Speaker A:So first thing, make sure your personal business finances are separate.
Speaker A:This was the biggest mistake I made when I first started out.
Speaker A:Obviously it was my keepsake business.
Speaker A:So it didn't really affect this business.
Speaker A:By the time this business came around, they were separate, they were separate.
Speaker A:So separate them.
Speaker A:If you can, well, you can, you can just create another account.
Speaker A:So definitely separate them so that each thing becomes its own thing.
Speaker A:So like that's business, that's personal, that's, that's what you have, you want to gain and also gain an understanding of your income, your expenses and any reinvestment.
Speaker A:So obviously income, I'm talking every penny that comes into your household.
Speaker A:So your business income, any benefits that you may have, any jobs that you may have, everything that comes in, you need to gain another understanding and know clearly what it is that's coming in and where it's coming from.
Speaker A:So I know, I don't know my income from a business every month because obviously I'm self employed.
Speaker A:It's not predictable.
Speaker A:However, I do have monthly recurring re revenue which is predictable.
Speaker A:So I know the payment plans that are in place that my clients, clients are paying and I know how many clients I've got.
Speaker A:So I can predict at a minimum what's going to come in each month.
Speaker A:Anything I sell after that is great, that's a bonus.
Speaker A:So I can see that, I know that.
Speaker A:So I understand that.
Speaker A:I've built that relationship with understanding that income.
Speaker A:And then the second thing is what else?
Speaker A:So I know, I know from a business roughly what's coming in.
Speaker A:I, I can see that predict that I know what I get for child benefit for my children.
Speaker A:I know my husband's pip that he gets and we have universal credit and we get the disability thing.
Speaker A:Husband gets something because he doesn't work right.
Speaker A:So we have that.
Speaker A:So I know what's coming in in terms of that.
Speaker A:My son gets dla, I've got to say that.
Speaker A:So I'm not going to sit here and act like I'm this big successful businesswoman that doesn't have some farmers, some form of benefits because unless you are earning, I think it's like around the VAT threshold, you don't have to, you don't get child, child Benefit anymore or whatever.
Speaker A:And I don't know what happens, but unless you were earning that amount of money, which I am not yet you will get, you potentially have something.
Speaker A:A lot of people are on universal credit, so I'm not going to sit here and pretend I'm not, because I am.
Speaker A:So that's what we have.
Speaker A:And I look at that, see what's coming in, understand that, and then I understand my expenses.
Speaker A:So obviously in my business, what needs to be paid out that I need for my business to run or what I'm committed to, so I might be in contracts with, so that I might not need.
Speaker A:I say need with like hyphens because is that hyphens?
Speaker A:I don't know in speech bubbles, speech marks.
Speaker A:Because I don't need a business coach for my business to run, but this is something that I prioritize to have for my business.
Speaker A:So it's at the top of my expenses that I will pay for.
Speaker A:But I look at what I need and make sure that's top of the list and covered.
Speaker A:I actually prioritize savings for my personal expenses.
Speaker A:So I prioritize some money going into savings and then obviously thinking about reinvestment.
Speaker A:So like what am I going to invest in for my business to grow?
Speaker A:And then even in personal life, what am I investing in?
Speaker A:Like what if I.
Speaker A:What I don't know.
Speaker A:I can't think of something I've bought personally.
Speaker A:But the stuff, right, there's always something we might need to invest in a new washing machine or whatever.
Speaker A:So whatever it is at that moment in time.
Speaker A:So it's knowing and understanding those is so, so important.
Speaker A:And then I have like a simple business budget breakdown.
Speaker A:So I have a budget for certain things.
Speaker A:So you might have a budget for your business coach for training.
Speaker A:And I do have that.
Speaker A:I do have like a max that I don't want to go over.
Speaker A:Sometimes I do, sometimes I don't.
Speaker A:It balances out.
Speaker A:But you might have a budget for operating expenses, so things like tools, subscription systems that you need for your business to run.
Speaker A:You might budget for your taxes.
Speaker A:So setting money aside so that you're not caught off guard so you know when tax return time comes, you've got that money there to pay.
Speaker A:And you might have a budget for paying yourself.
Speaker A:So not just instead of what's just left over, like what are you actually going to pay yourself?
Speaker A:And this is something I've always found really, really challenging.
Speaker A:And so I highly recommend looking at Profit First.
Speaker A:It's a book and you can learn it Profit first system.
Speaker A:I have not read the book.
Speaker A:I am going to shout out to Claire Sweet who I actually mentioned in my business fundamentals book.
Speaker A:I asked for a permission and everything to feature in there because she did a class on profit first.
Speaker A:I bought that master class, loved the system.
Speaker A:She simplified profit first.
Speaker A:And that is a system that allows you to allocate percentages to expenses, taxes and profit.
Speaker A:So it shows that you pay yourself first, cover your expenses, have the money set aside for tax and keep the business in profit.
Speaker A:And I love it and I've been working on that.
Speaker A:I do need to build up more capital to make it full fully work, but I've been working on that and I'm getting closer to the profit first system because currently I still pay myself whatever's left over.
Speaker A:But I'm aiming to change that this year.
Speaker A:I've been working on it for months.
Speaker A:So profit first system, have a look at that because it will make a difference to your life and business.
Speaker A:And the biggest pricing mistakes I see of that business owners make is that they pay price based based on fear instead of strategy.
Speaker A:So I can't change.
Speaker A:You can't charge that.
Speaker A:Nobody's gonna buy.
Speaker A:So we lower prices.
Speaker A:No, no, no, no, no.
Speaker A:We don't want to be doing that.
Speaker A:Some people also compete on price instead of value.
Speaker A:So you're not actually valuing the service that you offer and you might be looking at competitors and you want to compete.
Speaker A:No, no, no, no, no.
Speaker A:Yes, that is strategic to look at competitors.
Speaker A:But don't price solely based on that.
Speaker A:So you want to set your prices that reflect what your, what your services are worth.
Speaker A:So there's many, many, many, many different formulas for setting your prices.
Speaker A:But my simple one is cost plus time plus value, like whatever that needs to include equals price.
Speaker A:Okay?
Speaker A:So whatever it takes, whatever it costs to produce, provide the service is included.
Speaker A:Add that in the time, the, the labor element that it's going to take.
Speaker A:Set a price for that, set a, you know, give that a number and then add them together and I actually would say add a percent of profit on and then that's the, that's the value of your services.
Speaker A:So cost, time, profit, there you go, that's what you're going to charge.
Speaker A:Keep it simple as possible.
Speaker A:If you are struggling with prices and obviously you need to know what your costs are going to be in delivering something.
Speaker A:And if you worry that people are not going to pay it, start low and raise your prices strategically over time as you grow and build your business.
Speaker A:And you may feel more comfortable with that, but actually premium price will change the client's perception.
Speaker A:Sometimes if something is cheap, people often think that it's not a great service, so just be mindful of that.
Speaker A:But I highly recommend that you review your expenses and cut at least one.
Speaker A:In fact, I'm going to challenge you to do this Review your expenses and cut at least one unnecessary cost this week.
Speaker A:Do it right now and let me know how it goes because I would love to hear how you find that.
Speaker A:So come away from this episode.
Speaker A:Cut at least one unnecessary cost and and let me know how you found it.
Speaker A:Let me know if you planned and budgeted and how it's gone because I'd love to hear more about how you've gone got with it.
Speaker A:And as always, please do come and share.
Speaker A:Tell me how you get on with anything that I've shared in any of these episodes and rate like review, subscribe, do all of the things and shout out about this podcast so that I can keep on creating more valuable podcasts for you to listen to that can help you grow your business.
Speaker A:I will see you again in the next episode.
Speaker A:Bye for now.
