Financial Accountability and the 21 Day Accountability Challenge

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What could you accomplish in 21 days if you knew someone was watching you, checking in on you, facebooking and tweeting about you? Would the goals that you daydream about become clearer, more tangible? Would you be inspired to turn them into SMART goals (specific, measurable, attainable, realistic and timely)? Would you triumph under the magnifying glass of accountability?

21 days ago, my company, Creating Answers, launched the 21 Day Accountability Challenge. We asked people to send in their goals and we chose one lucky person to support, watch, Facebook and Tweet about his or her progress towards his goals. And the lucky winner was:

Kevin Knauss of Insure Me Kevin. Hands down he was the winner. He sent us nine goals and he was clearly excited and ready to hit the ground running. We were concerned that his nine goals were a bit lofty, so we did what we do. We sat down with him and helped him translate his goals into numbers.

3

“Make my website a wealth of information and the hub of my marketing efforts” became “Blog at least 3 times per week,”

100

“Expand my small group health insurance clients” became “Complete 100 direct mailings each week for the next 3 weeks,” and

1,500

“Expand and fine tune my social media marketing plan” became “Have 1,500 Twitter followers by March 14^th.” As of March 13^th, he’s at 1,300; go follow him @InsureMeKevin!

Being an entrepreneur requires a unique kind of willpower. There’s no one, in the short run, watching you every day and holding you accountable. You have to really want to do what you’re doing, and you have to follow through. In the long run, your customers will hold you accountable. If you don’t provide value, they won’t return and you’ll run out of money. That’s long term accountability. But in the short run, no one is paying attention to how you show up in your business. Kevin has made amazing progress in the past three weeks because he was willing to expose himself while propelling himself forward.

When it comes to managing our money, many of us have willpower issues. For those of us that are single, there is no one else giving us feedback about our financial decisions or asking us if we did what we said we were going to do.  We have no one to be accountable to, no one to answer to when we spent twice what we said we would on eating out. Rarely does anyone ask us the question: “are you funding your retirement?” or “do you have 3 months of reserves in the bank?” Even for those of us in a relationship, the money is often handled by one person, and the other person doesn’t really want to know what’s happening. I’ve had many a client lament that his or her partner won’t even talk about financial decisions. They just want it handled.

How can you use accountability to propel yourself forward with your finances?

• Write your financial goals down and share them with a trusted friend. Check in once every few months and tell them how you’re doing.


• Work with a Certified Financial Planner that will ask the hard questions and be honest with you about your financial health.


• Join the online community at Get Rich Slowly’s Fiscal Fitness Journals.


• Become transparent and start a blog like Save Karyn’s Grand Debt Tally.


• Join a mastermind group that focuses on your money like Financial Boot Camp.

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Stacey Powell builds financial muscles at TheFinanceGym.com and shows off Financial Art at Facebook.

Growing Your Business Through Practicing Gratitude

It’s the time of year we all give thanks for our many blessings. It’s a good practice in our personal lives, and an equally good practice in our business lives.

On the Wednesday of Thanksgiving week it is my tradition to spend the day calling clients, past clients, colleagues who refer business to me and anyone else who has impacted my business over the past year. The calls aren’t sales calls, they’re gratitude calls. My intention is to thank those that have positively impacted my business’ growth as well my own personal happiness.

I’d like to say that I started this practice because I’m such a good person. But the truth is that I started it some years ago when I was scared to death to make sales and marketing calls. Picking up the phone and asking someone to become a client or refer business to me was terrifying. This gratitude concept that I began was a kinder, gentler (or perhaps spineless) approach.

The first year of the tradition I landed a big client. It was someone who I knew desperately needed my help. I hadn’t heard from him in months, and he was thrilled to hear from me. He was finally ready to face his financial issue and I called on just the right day. What I realized for the first time that day was that he needed my service more than I needed his money. The calls I was making weren’t about generating business, they were about serving others. After that experience, sales and marketing calls became much easier.

That was just the beginning of understanding of the role of gratitude and service in business. The more I began to weave it into my business, the more I recognized how gratitude was impacting other successful businesses I worked with.

• One very successful colleague writes her thank you notes every morning at the breakfast table with her husband. It’s a sweet practice, and I believe a cornerstone of her success.


• Another successful entrepreneur I know keeps a gratitude journal, writing in it each day that which she is grateful for.


• Sandra Yancey, the phenomenally successful entrepreneur who began eWomen Network says that behind her company’s motto “Give first, share always” is a sense of gratitude. She ensures from the top down in her company that gratitude is practiced amongst the members and with not-for-profit causes.

One of the business coaches that has most influenced my happiness as a business owner had me start our work together with a gratitude practice. I’m an accountant. Not a curmudgeonly one, but definitely not the first person to be open to the kind of advice that goes like this:

“Stacey, I want you to write down 25 things you’re grateful for every day.”

“25????”

“Yes, 25.”

I thought to myself….”that’s stupid.”

But I was unhappy at the time, and thus willing to try new things. 25 was a lot. After the obvious:

• my daughter,


• my cat,


• sunshine,


• my health

I had no idea what the other 21 should be. But kept thinking and eventually I’d get the 25 down, and every day it got easier, and eventually I realized that the gratitude practice was helping me on a daily basis assess what it was I LOVED about my business, and what it was I dreaded.

Focusing on gratitude brought to the surface that I had been burning myself out spending time doing tasks and taking care of clients that I didn’t have a passion to serve. Focusing on gratitude, and really noticing on a daily basis which clients I was grateful for helped me become very clear about the mission of my business, and it was then I renamed the business Creating Answers and made a bold decision: I was only going to do work I loved, and I was only going to work with clients that I loved; ones that I felt grateful for.

I’m not always successful; I suppose no one is. But what I am is happy. Almost every day when I go to work, I am happy. And I attribute my business’ growth to that happiness, which grew from the gratitude practice.

What are you grateful for?

-Stacey Powell
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Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

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The Power of Tracking Your Numbers: Step #3

This is the 3rd in a series on creating a financially healthy life. If you jumped in and did the first two steps, Just Do It and Reality, Get a Dose, this one might be the one you might need extra support in accomplishing. Lots of us like to do projects. We like to plan. The first two steps were projects.

This 3rd step requires consistency. Yes, consistency. This is where many of us jump off the financial band wagon.

I liken it to the health band wagon. Most people can stick to a diet for awhile. It might be challenging, you may not like it, but if we knew that we only had to change our eating habits for 3 months to impact our physical health for the rest of our lives, would we do it? Most of us would.

If I told you that getting into financial action for 3 months, really making a consistent commitment, would change your financial life for the years to come, would you do it? You’d have better results if you agreed to do it for a year, for 5 years, or for the rest of your life. But tracking your numbers for just 3 months will make an impact as well. It will reset your clock, equilibrate the way you look at your spending, and serve you in truly seeing your income versus your spending.

The Human Experience of Christmas

I’m not a writer. I’m an accountant. (Except now I’m a writer and a financial coach, but that’s another story.) When I feel stuck, that I have nothing useful to say, I read Susannah Breslin. She reminds me how to be a writer.

In her latest series on journalism (and strip clubs, but that’s another story) she reminded me that what a writer does “…for a living is attempt to chronicle the human experience.” Oh, I get it. I’m supposed to be teaching my readers how to have a healthier financial life through telling stories and providing corresponding helpful financial advice.

I realized that in my last blog, I tiptoed. I was cautious. Sure I told stories. And I gave creative and useful ideas. But all over the web are advice blogs about a frugal Christmas, making your own gifts and starting a Santa Saver account.

What is unique about me, what I do that few other financial writers do, is to tell the real human experience of what our financial decisions, or indecisions, do to our self-esteem, our relationships, our happiness and our lives. What was missing in my last blog were these naked emotional truths that clients and friends have shared with me over the years. More people have talked to me about the anguish and pain and simple embarrassment that Christmas can bring than have talked to me about the joy that it brings. Here are some threads of those conversations.

Reality, Get a Dose: Step 2

In the first of this series on financial well being and health, Just Do It, we walked through the steps of a Fully Fit Plan. I encourage people to take a look at where they want to be before they look at where they are.

It’s the same philosophy as Jim Rohn’s excellent quote “You are the average of the five people you spend the most time with.” If you’re hanging out only with your current spending plan, only looking at your current reality, energetically you’re creating the same plan for yourself, repeatedly.

If every month you first look at your Fully Fit Plan, it will remind you where you’re headed, where your intentions and dreams are. Simply writing the Plan out declares to the universe, and to your subconscious, that you are on a path.

It also prepares you for a dose of reality: your current spending plan. Now it's time to look, see and tell the truth.

It’s true that not everyone reading this sees their current spending plan as dismal, tight, something to move beyond. But I’m thinking many of you do. If you’re current spending plan had an extra $1,000 a month in it, you probably wouldn’t be reading my blog, you’d be at Intelligent Investing reading Chris Barth.

Just Do It ~ Nike: Step 1

The secret to financial well being and health is: be in consistent action. Or as Nike so powerfully declares: Just Do It!

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That’s the key that separates the successful from the unsuccessful in improving financial health. Those that spend consistent time every month working on their finances build their financial muscle and create a financially healthier life. Those that consistently put a little bit of money away every month, even just a few dollars, create a financially healthier life. Those that learn a little something new, consistently, create a financially healthier life. There is no better, faster, more effective approach to financial health than simply being in action.

One frequent mistake I see, and I’ve made it myself, is that we only take action when money is tight, when something’s wrong.  It’s kind of like only going to the gym when you’re overweight and out of shape. You’re spending time just trying to get back to some baseline of health. You never get the opportunity to fine tune your health and strength.

Entrepreneurship and Making ‘Adult’ Financial Decisions

When I launched on Forbes.com I promised myself that I was going to start Telling the Truth. It’s easy to be a financial guru, talk at people, and tell them, “This Is How You Should Handle Your Money.”

Adult Financial Decision?

It takes more courage to be transparent and share stories not just from our clients, but from ourselves, and even more courage to share not just from our past, but from our present. So here I am, being courageous.

Every summer I head to Dallas for the annual eWomen Network Conference. I look forward to it all year long. It’s the largest business women’s conference in North America, and an amazing place to learn, connect and be inspired. Sandra Yancey, CEO of eWomen Network, provides the incredible opportunity to learn from a long list of business rock stars: Michael Gerber, Tony Hsieh (Zappos), Robert Stephens (Geek Squad), Lisa Nichols, Zig Ziglar and the list goes on. This summer, I’m not going.

What’s an ‘Adult Financial Decision’?

3 Words to Small Business Success: Easy, Fun and Popular

What’s the attitude you show up to in your business each day?

Are you having fun?

Does it lift your spirit to connect with those you need to connect with to be successful in your business?

In my blog Community Service, Leadership and Small Businesses, I told the story of how my best friend Tina Reynolds, long-time small business owner of Uptown Studios, uses her love of community service to drive the marketing for her business. I met Tina 15 years ago, when she was doing volunteer work for a local HIV/AIDS service organization, and through the years I cannot begin to recall how many organizations, actions and activities she has led or been part of. Her dedication and stamina for community service are unparalleled, and as a result she frequently receives awards, honors and nominations.

At this week’s California Small Business Day, she was honored by California’s Senate President pro Tem Darrell Steinberg as the Capital Region’s Small Business of the Year. Senator Steinberg made an excellent choice. From the vantage point of a best friend I’ve watched Tina’s business grow, and then sputter, and then grow again. I’ve watched her maneuver through the economic challenges of the past few years, always with a positive attitude.

So how exactly do you get to be a Small Business of the Year?

Date Night With Your Finances

Date night with your finances? What’s that supposed to mean?

Just what it says. The phrase “Date Night” evokes thoughts of fun, special, coveted. For many, the phrase “Bill Paying” conjures ugh, drudgery, lack. What would it look like if we felt differently about our finances?

Most of us have it backwards. Its no wonder we think of our finances as drudgery. This is how the majority of us “do our money.”

• We squeeze the chore between the laundry and washing the dog.


• We collect our bills; we log in to get our bank balance (and hope that everything has cleared the bank); we pay our bills.


• We look to see how much is left, and hope there is some.


• Then, when we’re tired, over it, a little grumpy, and the dog still smells, we make the important decisions. This goes to savings, that goes to debt, and this gets set aside for car repairs.


• But the dog smells, and company is coming for dinner, so I’ll make those decisions next month.

Would you like to do it differently? Would it be all right if life got easier?

That’s a phrase I learned from Maria Nemeth, a pioneer and visionary in the field of our psychological and emotional attitudes about money. She published “The Energy of Money” in 1997, when few were addressing the important issue of how financial decisions are made.

When it came time for “Telling the Truth” and dealing with my own financial problems, one action I took was Date Night with my finances at my favorite café. Me, my portable financial binder, and my dreams. I coveted those luxurious Saturday nights, not squeezed between laundry and dog-washing (okay, I don’t really have a dog.) I used the time to dream, to look at the truth and to plan. Bill paying happened elsewhere. Each consecutive month, I got a little more clarity, planning became a little easier, and my dreams felt more attainable.

Our money and our financial decisions should not be a chore. Bill paying is a chore. Financial decisions impact our future, our dreams, our peace of mind. They intertwine with who we want to be and who we are. We should have a little fun. We should make it a date night!

-Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

Reach your financial goals. Get motivated. Get support. Get results. Are you ready?

Entrepreneurial Passion vs. Sales

I was listening to a new client tell a story that I’ve heard many times.  She is in a creative field and passionate about her work. She really wants to work, but contracts aren’t coming and she is struggling financially. I asked the obvious question: “How are you marketing and selling yourself?” She looked a little blank; and then she scrunched her face; and then she launched into an explanation of the ways in which she was kind-of sort-of maybe marketing herself. Which really was to say: she wasn’t.

Through years of working with small business owners, many have come seeking answers to their financial issues. As an accountant, I would like to think that good accounting would provide the answers. But the truth is that it’s usually not about the numbers. The truth is that the most important component of impacting one’s financial issues is sales and marketing.

If you’re tempted to stop reading because you don’t own a business, please keep reading.

How Crayons Create Financial Peace

Chloe's Crayon Drawings: "How I spend my money now" and "How I want to spend my money"

My biggest revelation about how to help others with their financial issues came when I began working on my own financial issues. In Telling the Truth, I point out the rather obvious fact why so many American’s with money problems can’t seem to get beyond them: we don’t talk about money so we have no opportunity to tell the truth about it.

We are a financially illiterate society. There are few places that you can go to work on your money, talk about your money, make your money better. I lay awake at night sometimes dreaming up solutions to this societal problem. And bit by bit, I create answers. That’s how we came to start Financial Boot Camps, and that’s how I tripped upon creating this exercise for a Boot Camp: draw your financial life with crayons.

The accountant in me questioned the exercise that the right side of my brain had created. “Um, that’s silly.” But the right side of my brain, the creative side that has been fed and nurtured by studying a lot of research into the psychological and emotional aspects of our relationship with our money said: “Forge on!”

My Dad: Lessons In How NOT to Own A Small Business

Today is the anniversary of my dad’s passing. I learned a lot from him, many lessons to share with all of you about small business ownership. In summary: do not do it the way my Dad did!

First, to alleviate any perception that I am speaking ill of him, I want to share what a fine man he was. My love of community service comes from him. His dedication to making this world a better place is clear in this tribute:

http://www.fedflyfishers.org/Default.aspx?tabid=4520

Even his business ownership was, in a way, community service. He was ‘saving the family business.’ http://www.davidlnelson.md/FFF_FlyTyingGroup/Buszeks/BuszekHistory.htm

Now, on to telling the truth. As a child I watched my father work, work, work, and then work some more. He came home late for dinner, went back to work at night, and worked most weekends. Even our few vacations were often spent at work-related fly fishing conclaves or networking conferences. Both of my parents worked, hard, yet we never seemed to have any money. We weren’t destitute; dinner was always on the table. But money was always an uncomfortable issue. Always having a keen sense of numbers and business, even at a young age it was apparent to me that something wasn’t right. I often wondered, weren't business owners supposed to be rich?

As a teenager, I became the bookkeeper for my dad's business, and my childhood observations were clarified. The business was barely profitable. My dad either trusted me enough to let me see his truth, or he thought I was so inexperienced I wouldn’t get it. It wasn’t my place to ask.

But the questions I kept to myself then are the exact kinds of questions I ask clients now. And they are questions I want you to ask yourself if you own a business, no matter how large or small. Yes, even a side Tupperware business, or a little consulting gig, or do a bit of wedding photography. These are all businesses, and they do impact your family!

Here are 12 questions to ask yourself.

• Do you spend less time with your children, spouse, or friends as a result of your business?


• Have you ever paid an employee late?


• Are there months that your business doesn’t pay you?


• Do you ever put off buying basic things your family needs because your business needs the money more?


• Have you ever lied (or avoided the truth) about your business’ finances to your spouse?


• When was the last time you took a real vacation?


• Do you avoid asking for professional advice about your business’ health?


• Do you truly know how profitable your business is?


• Is your business contributing to a retirement fund?


• Do you have partnership agreements that aren’t in writing?


• How much have you borrowed against your family’s home, retirement, savings, children's college fund or inheritance?


• Does your spouse’s income support your business?

If you don’t like your answer to more than a couple of these questions, it’s time to find a trusted advisor, a business coach, an external CFO, or a mastermind group and tell the truth. Print this blog out and put it in the front of a binder titled “Making My Business Better.” Make an action plan. Make it better. In six months, ask yourself the questions again. Then repeat.

What would my dad’s answers to these questions have been? 100% not good. In the 32 years I watched him run his business, I only saw his business run him. I’ve taken these lessons and have been committed to reverse engineer his mistakes into a balanced plan for running my business. I haven’t always been successful, but one of my life’s quests is to be just like my dad when it comes to community service, and exactly opposite my dad when it comes to small business ownership.

10 Decisions Not to Make Alone

We all make financial decisions every single day, some small, some large. Do I cook at home or go out to eat? Do I change banks? Do I clean my own home or hire a housecleaner? Do I buy a used car, a new car or lease a car? Do I start my own business or buy a franchise?

The original title for this blog was “10 things you might want to talk with your CFO about,” but most people don’t have a Chief Financial Officer (though I’m trying to change that.) Many people do, however, have a financial planner, a tax accountant, a business coach, or some trusted advisor. Rising in popularity is the type of financial and money coaching that I believe is so valuable.

Over the years I’ve had many a client announce, during their scheduled monthly appointment, “I leased a building last week,” or “my attorney submitted all the paperwork to change my business to an S corporation,” or “I took out a home equity loan.” I always wonder why they wouldn’t have waited just one more week to discuss the decision with me. I suspect it’s often our subconscious telling us to move forward before someone tells us "no."

Accountants get accused of being naysayers, and there’s a bit of truth to that. We’re conservative by nature. I’ll be the first to tell you: don’t always take your accountant's advice. But: do always ask for it. Discussing the facts of major decisions, as well as the feelings and the what-if’s, is invaluable.

What are the 10 things you should discuss before you jump in?

Motivation ~ Creative Approaches

Last February I promised myself that I would implement a creative motivating approach to ensure this January would not suck. In an accountant’s world, no matter how planned and prepared you are, the multiple January 31st bureaucratic deadlines wreak a bit of havoc on your business. This year was going to be different!

The first workday of January I handed 21 crisp $5 bills and 21 crisp $1 bills to my staff and had them hang three ‘clotheslines,’ $6 for each day

and one clothesline for each team member. The instructions for distributing the ‘prize money’ was as follows: I got the $6 any day I had to deal with January bureaucratic deadlines, and they got the money on days they handled it all. $5 went to rockstar team member #1, and $1 to the supporting team player.

Is $126 enough money to motivate your staff? Is it enough to motivate ourselves? No.

But the truth about motivation is that money is rarely the most effective method. (Unless you're Goldman Sachs handing out high six-figure bonuses. That's motivating.) For most micro businesses  that’s not an option. In a micro business, serving your clients and providing value is often the highest motivation.

How can we use money to motivate ourselves and our team? Here are some creative approaches we’ve used with clients:

Pay yourself first. This works for the business owner who always pays everyone and everything else first, and then doesn’t have enough left over to pay herself. She’s extremely motivated to pay her vendors, but not so much herself. We implement a bill-paying structure that puts her first, and by the end of the month, she's jamming to bring in enough money to pay her vendors, because she won’t let them down.

Put yourself on a commission structure. This works for the business owner whose monthly income fluctuates between high and low. He has a good month, he takes all of the profit and suffers during his next low month. For a commission structure to work, you need to learn how to set your base ‘salary,' which you can read here: The Power of a Salary Structure. Then create a motivating commission structure for yourself, document it, take no more, and take no less from your business.

Bonus your team based on your goals for the year. Small businesses rarely commission their employees, but if you want your team to be extremely clear about your goals, putting a commission structure in place for them, no matter what size, signals that you need their help in reaching your goals. It’s not just about the money, it’s about the motivation.

How do you implement creative motivation in your business?

• Choose one thing that consistently nags at you about your business and look at solutions from a creative vantage point.


• Choose a dollar amount you’re willing to invest in the problem.


• Use a creative way to come up with your implementation plan (mind mapping, journaling, drawing with crayons are a few great approaches).


• Then jump in and earn the results you want!

Creative Brain vs. Business Brain

I love working with creatives: artists, actors, healing professionals, writers, photographers, all of them. Our society has created a “right brain vs. left brain” mentality. If you’re creative, you aren’t a strong business person. If you’re a strong business person, you aren’t creative. But we know black and white statements aren’t true. Creatives can make great business people, especially when they provide themselves with structure. Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business.

One of my inspiring clients decided, as a strategic business decision, that 2010 was going to be her year of “living as an artist." She had long worked hard on her business; she had tethered herself to do the work, bring in the clients and earn a living. She had been successful enough, but by the time she got to me she wasn’t enjoying it much. Something needed to change.

"Creatives have the ideas, the willingness and the passion to throw themselves full force into their work. And that is what it takes to be successful in business."

So 2010 was her year of living as an artist. Her mission was to fully embrace her creativity and joy of being an artist. Her goals, strategies and actions all supported that mission. There was still some structure: billable work, marketing, financial coaching and professional development. But the focus was on enjoying her creative talents, not on meeting her monthly revenue goals.

And what were the results? November and December were two of the most profitable months she’s ever had. And, she’s happy. It was a year of transformation and expansion for her. She’s well positioned to focus on revenue growth in 2011. Most important of all, she was well cared for, and she is, after all, the most valuable asset in her business.

Why would I, an accountant, support that kind of strategy? Because I’ve seen its effectiveness and profitability, over and over and over. If it’s done with intention and structure, it can be a very effective business decision for both creatives and for any other kind of business owner.

What’s your mission for 2011? Does it include creativity? Art? Health? If not, weave it in, and then write down what kind of return on investment you expect from giving yourself that gift.

Telling The Truth

Many experiences in my career explain my evolution to becoming a “Money Wise Woman." My tenure at Coopers & Lybrand (now PwC), my time at the financial helm of CARES, an agency that I helped grow from $500,000 to $3 million in three years, and the past 13 years I’ve advised, coached and counseled hundreds on their business and personal finances at Creating Answers.

But those experiences aren’t why I’m a Money Wise Woman. There was a point in my life that I awoke to the fact that I had placed myself in serious financial trouble, and that’s when I started telling the truth about it.

Even with all I knew, and no matter how hard I tried to get myself out of it, for whatever reason, I couldn’t. That’s when I started seeking more answers. And not just from fellow financial professionals, but from coaches, mentors and counselors. And that’s when I had my big “ah ha” moment, when I realized what keeps so many people stuck in their financial lives.

We don’t tell the truth. We don’t talk about money, so we have no opportunity to tell the truth about it. There are few places to go when you feel stuck with your money and don’t know what to do. When you’re a financial professional, it's even scarier. I was stuck in denial, fear, shame and blame. Having the courage to start telling the truth made all the difference in the world.

For years, I had many clients who didn’t want to take the time to talk to me about their money. I was their accountant, and it just wasn’t a priority for them. Now it’s a cornerstone of my practice that every client talks to us about their finances every month. It makes a marked difference in their financial clarity, and their financial peace.

My advice to those of you who feel stuck in some area of your financial life: Talk to someone consistently and productively. Your bookkeeper, your accountant, a coach, a trusted mentor, a trusted colleague. Draw a circle of support around you, tell the truth, and create some accountability in your financial life. It will make all the difference.

-Stacey Powell

click here for Stacey's blogs on Forbes.com

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15 Days til New Year's Eve...The Time is Now

While everyone else is busy counting days until Christmas, accountants are busy counting days until New Year's Eve. And here’s why:

Do you itemize your deductions? If yes, look at your spending plan for charitable contributions. You have 15 days to maximize your gifts. Plus your favorite nonprofits are busily trying to meet their year-end goals, so gifts that come in during December are hugely appreciated! Have you spent out your Health/Flexible Spending Accounts? Now is the time.

Are you a business owner? If yes (and you file cash basis) then every dollar you spend in the next 15 days saves you in the neighborhood of 25 to 40 cents. Our advice to clients at year end: Any equipment you plan to buy in the next six months, buy it now. Any bills scheduled to pay at the beginning of January? Pay them now. And on the income side, for every dollar you put in the bank, you’ll be sending 25 to 40 cents to the IRS on April 15th. This is the one time of year you ease up on your receivables calls, slow down your invoicing process, walk to the bank very slowly.

And for my nonprofit clients? You have 15 days to maximize contributions for the year. Call one key donor every day until the 31st. You can ask for support, or just wish them a happy holiday and thank them for their support. Craft one last personal email solicitation. People want to give this time of year, and it’s your job to remind them.

Happy New Year!

(The accountant’s disclaimer: this is clearly generalized advice. It's something to be discussed with your trusted advisor. If you don’t have a trusted advisor, we know some great ones!)

2011: Is your plan in place?

Winter is a time of reflection, both personally and for our businesses. How did this past year go? Did I meet my goals? Um, did I have goals? What do I want next year to look like? What do I have to do to get there?

At Creating Answers, it is the time of year we are busy working with all of our clients on 2011 goals and budgets. It is one of my favorite times of the year because you get to do two really fun things: analyze how last year went, and draw the financial road map to follow next year. It's financial art at its most fun.

If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers. I invite you to think of it as a game, or a puzzle. Make it a date with yourself. Go to your favorite coffee house, or pour yourself a bottle of fine wine. And then...start asking yourself questions.

What percentage of your total income goal did you reach this year? 120%? Great! 85%? Not so great. What do you need to do differently in 2011? What amount of marketing dollars would have closed that 15% gap? Do you need to increase your networking time? Upsell existing clients? Raise your prices?

“If you think of this work as a chore, I invite you to reframe your beliefs about planning and numbers.”

Take a look at your discretionary areas of spending? How much did you spend on marketing and advertising? What were the financial results? Professional development? Results? Equipment? Results?

How much did you spend on staffing and/or outside consultants? Did they work at capacity? Did you generate revenue from your staff? How much? A great rule of thumb to start with is three times their cost.

While it is difficult to assign numbers to each of those questions, the exercise of trying will create answers. What if you spent nothing in each of those areas? What if you spent three times as much?

Most importantly, don’t overdo the process. It’s more effective to do a really thorough look at your 15 most critical spending areas consistently than it is to look at all 60 of the expense accounts you have in Quickbooks. (And if you have 60 expense accounts in Quickbooks, you should give us a call!)

Find out more about what we do at http://CreatingAnswers.com.

Here's to a prosperous new year full of financial clarity!

Holiday Financial Clarity

Want financial clarity for the holidays?

Entertaining, stocking stuffers, extra travel expenses, cookies for the neighbors, decorations, office holiday party gifts, holiday grocery shopping and of course, presents… these are just a smattering of expenses that are about to edge their way into your spending plan over the next several weeks.

Whether you’ve been saving all year, plan to squeeze it into your regular monthly spending, plan to not partake in any of it, or have a credit card you use for the holidays, now is a good time to make a plan. Even if you don’t stick to your plan completely, just spending the time to fill out this handy holiday plan will provide you a road map for the trip you are about to take.

What are your priorities? What are your limits? What are your expectations?  How do you feel about the money you’ve spent during past holidays?  What could you do differently? And a favorite question from our Financial Boot Camps, what would your hero do?

 Print the “Manage Your Holiday Spending” guide from the AFSA Education Foundation. Take a walk, think it over, journal the above questions if you’d like, then get a pencil and a calculator and make your plan!

And… enjoy the season.

Stories Are Gifts... Share!

Starbucks has a new tagline on their holiday cups: Stories are gifts…..share. What a great reminder that sometimes the most meaningful gifts don’t cost money. As we near the season of gift giving, I hope that this sentiment is taken to heart.

What if we all gave the gift of a story this year?

I heard that stores are opening not just at 5am on Black Friday, but on Thanksgiving Day itself. One more step toward the commercialization of what is meant to be a time of family, friendship, and for many, faith.

When people talk to me about the holidays, they often talk about the season with a sense of financial dread, or disappointment in themselves that they didn’t set aside a holiday fund…again, or about the credit card bill they know will be coming in January. They talk about not wanting to disappoint their children, about the expectations placed on them in their workplace, or about “this is how my family has always done it.”

If you hear yourself in any of the above, make a commitment to do it differently this year. Completely different, or just a little different. Here are some ideas:

• Give the gift of a story: the day your child was born; a fun experience with a good friend; how a coworker has inspired you.


• Give the gift of an experience, rather than a thing: a walk along the river; a Sunday morning brunch; a drive to the mountains.


• Give the gift of memories: old family pictures; old family movies; old family recipes. (One of my most treasured gifts is a recipe book from my mother of favorite recipes and notes with each one about which family friend first introduced us to the recipe.)


• Get your family to draw names. Or better yet, my unique neighbors instituted a family tradition of CrapMas. They each scour their homes for items that they no longer use, but know that someone else might find of value, and then do a sort of live auction based on who declares they need it or want it the most. They have great, great fun with it.


• Give the gift of service: spend the holiday serving others at a homeless shelter.


• Give the gift of self-esteem. I asked some important people in my daughter’s life to share a word or a sentence about how people see her, and then I compiled them in a book. $8 at ritz.com and….priceless.

What ideas do you have?

 -Stacey Powell

Finance Gym offers personal finance coaching in professionally facilitated peer-advisory groups. 

Are you ready to reach your financial goals? Get motivated. Get support. Get results!

Financial Art @ Chalk It Up

We'll be out drawing some Financial Art at Chalk It Up this weekend. Come by and see all the cool artwork!

ChalkItUp.org

Time is Money: 5 Steps Toward Balanced Business Ownership

I didn’t feel like working the other day; It was a Monday morning and I actually didn’t feel like working. That bothers me. In a big way!. Partly because I come from a family of workaholics, and thus our self-esteem is all nicely packaged with our work. But mostly it bothers me because 1) I had a fabulously free and fun weekend and 2) Monday is the day that I get to work ON my business, not IN my business. So, shouldn’t I be excited about going to work on a Monday!

I called my coach. He said “Stacey, don’t you think that there’s about 25 million Americans at this very moment who don’t feel like going to work today? Doesn’t that just make you normal?” Good point; I’m normal. I was really hoping I wasn’t, but I am.

How does this relate to the small business owner and their money? Well, time is money. In my experience, business owners fall to one side or the other of the scale; few fall in the middle.

There are the “I have all of these other things I need to get done, and I am the keeper of my own destiny, so I can work whenever I feel like it” business owners. Fine; great; IF they are independently wealthy, or have a wildly profitable business, or don’t have clients or customers that are relying on them. Then they can work whenever they want.

But for all of us who are normal, time is money, and not feeling like working can become an issue with our bottom line. My recommendation to clients who struggle in this area is to develop a schedule for themselves; an ‘employee contract’. If it is within your integrity to work 20, 30, 40 or even 50 hours per week, then provide yourself some clarity about it and stick to your schedule. If you’ve provided yourself this flexibility, and still consistently miss your 30 hours, well, you might consider an employee counseling session with yourself.

Would YOU hire someone that expected to earn a full time salary, agree that they only had to work 30, and then be happy when they were constantly on the phone with friends, running personal errands, coming in late and leaving early? I’m guessing no. I’m guessing you’d be counseling that employee, or firing them.

It is helpful to look at our performance as business owners from time to time from a different angle. Are we too soft on ourselves, or are we too harsh?

Some practical suggestions:

1. Create a vacation, sick and mental health day policy for yourself. Track your time taken just like you would an employee.


2. On days you don’t feel like working, rearrange your schedule for the day and fill it lightly with work activities you truly enjoy.


3. When taking personal calls during the day, set an egg timer; or let your friends know that you can’t take personal calls during the day.


4. Schedule quarterly or semiannual retreat days for yourself. You are your business’ most valuable asset.


5. From Bryan Dodge: create a geographical line between the office and your work, and when you cross the line, you’ve crossed into work life, or home life. Never the two shall mix.

Financial Art~An Interactive Art Experience...

...Revealed.

Thanks to everyone who came by and participated! By the end of the show, we had about 300 wishes/prayers/hopes fluttering in the wind. So, what does it all mean? Why the crayons? Why the overly simplified pie charts? Here’s the story:

Last year we launched our Financial Boot Camps. The results we’re seeing are phenomenal. In the Boot Camps we do brief, hopefully powerful, Money 101 trainings, teaching, or exercises. This January the crayon pie chart was the Money 101 topic.

The accountant in me questioned the exercise that the right side of my brain had created.

But the right side of my brain, the creative side that has been fed and nurtured by a lot of research into the psychological and emotional aspects of our relationship with our money said: Forge on!

The boot campers drew their pictures, first "How I spend my money," and then "How I want to spend my money."  As they were sharing their pictures and explaining what they’d drawn, one boot camper, "Chloe", had a rather large part of her "How I spend my money" going to her past. This surprised me. I know a lot about her financial situation, and I know that she has little, if any debt. So what was going to her past?

[caption id="attachment_167" align="alignleft" width="175" caption="Chloe's "How I Spend My Money""][/caption]

[caption id="attachment_166" align="alignright" width="175" caption="Chloe's "How I Want to Spend My Money ""][/caption]

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She said was spending all this money (and time, and physical energy) on her rental properties every time one of them changed renters. She hated it. It was dragging on her. Most of her rental properties she had once lived in, and thus, she saw it as her past. The accountant in me wanted to tell her she’d done the drawing wrong. Rental properties are assets, investments, spending on your future. That portion should have gone into her "Future" section. But the creative in me sat on my hands and listened.

Then, rather amazingly, over the course of the next 4 months she:

• discussed the drawing with the Boot Camp,


• then her spouse, and


• then their financial planner.


• She made a decision to put one of the rental properties on the market.


• They slowed the home improvements they were spending time and money on.


• They got an offer; the buyer said stop ALL work immediately.


• They went into escrow.


• The house sold.


• The money now sits in an investment that does not require time, or physical energy, or monthly reinvestment.

Most importantly, Chloe has peace of mind. She feels much happier and much more aligned with how she wants to be spending her money, her time, and her physical energy. She has her weekends back, and she has her money solidly invested.

All from a crayon drawing.

So why do I think that a crayon drawing so inspired Chloe? Sometimes we work so hard to make the perfect spending plan, and have the perfect financial plan, and we balance our checkbooks to the penny. Yet something still isn’t quite right. Sometimes, the calculations, and the financial advice, and the reports aren’t the answer. Sometimes, using a crayon, evoking the 5 year old within, creatively looking at how we “are” living our life, and how we say we “want” to live our life, provides the greatest inspiration to find financial clarity.

Stay tuned as we continue to tell the story of Financial Art ~ An Interactive Art Experience.

An Extraordinary Connection with Your Business’ Finances

I love financial tools! Excel, Quickbooks and Microsoft Money are just fun. Today’s software lets me fly creatively when I’m trying to help a client understand how their business is doing, what’s working, and what’s not.

But as with most things there is a flip side to the amazing software we have at our fingertips. Quickbooks, meant to bring simplicity to accounting, easily becomes a behemoth, spitting out 3 page reports that no one could understand or connect with. And that is the point, the goal, of accounting: to connect with your finances. It’s not all about filing your tax return at the end of the year. It’s about understanding your business and the financial impact of your decisions and activities. Your numbers should tell you a story, a story that you feel connected to.

My first experience with accounting was at 19, bookkeeping for my family’s business, the The Buz Buszek Fly Shop. I used ledger paper. I don’t feel old enough to be saying that, but I guess I am. Today, one of my tenets for those who are having a difficult time connecting with their finances  is to pull out the old ledger paper.

[caption id="attachment_135" align="alignleft" width="157" caption="The Old Fashioned Way"][/caption]

I’m not suggesting you literally do your accounting on ledger paper. What I do mean, though, is to get a pencil out, and a calculator, and a piece of paper. Write down, every single month, the 8 to 12 numbers that are really important to you. Not the 50 or 100 numbers that Quickbooks is telling you. Just the 8 to 12 numbers that help you feel connected to your business.

If you’d like to learn more about having an extraordinary connections with your finances, I’m being interviewed by Marcia Brixey on July 6^th at 11:30am as a part of her Money Wise Women Get Smart Teleseminar Series. You can participate by signing up at:

www.moneywisewomengetsmart.com/upcoming.html

You’ll also find a lot of great past teleseminars you can listen to. A personal favorite of mine is Mikelann Valterra’s interview  “Earn at Your Potential: Embracing the Seven Challenges.”

Happy learning!

Late charge, latte charge, at least you’ll know.

[caption id="attachment_119" align="alignleft" width="158" caption="$3.35 a day"][/caption]

Microsoft Money has this cool new tagline: “Late charge, latte charge, at least you’ll know.” I love it.

When you’re an accountant, people talk to you about their money. Not just your clients, but your friends, relatives, acquaintances, and even people you stand next to waiting in line. It’s kind of fun, because its this secret little window into peoples’ worlds that most don’t ever get to see.

So why do I like Microsoft’s tagline? Because the overwhelming first step to tackling one’s money issues is know how much money is coming in, how much is going out, and where it’s going. Most people have no idea. Even those that use software like Quicken or Money often still have very little idea. They can look it up, but they don’t know. I must admit that there was a point in my life that I realized I was tracking all the data, but not often enough to really use the information in a constructive way. More on that later.

[caption id="attachment_122" align="alignright" width="130" caption="$39 a month"][/caption]

There is an axiom that goes: “What we measure, we accomplish.”

If you have financial discomfort in your life, start measuring. If you’re measuring and still have discomfort, take a step back and look at how you’re doing it. Shake it up; try it a different way. If it’s still not working, check out our Financial Boot Camps. You’ll make movement there; we guarantee it.

Changing the World

[caption id="attachment_110" align="alignleft" width="198" caption="Cape: yes | Tiara: looking"][/caption]

"I'm fairly certain that, given a Cape and a nice tiara, I could save the world." ~www.curlygirldesign.com

I have a cape, and I’m trying to find a tiara. Some of you know that I have this crazy wonderful inspiration, and with this inspiration, and a tiara, I could change the world. Not save it, but change it.

I heard some great advice last night, as I do on the 3^rd Friday of every month. “Read about people who have changed the world.” So I’m wondering, who would you read about? Who is one of your heroes or heroines?

And if you want to experience some of my crazy wonderful inspiration, save the date: July 10^th, 6-9pm.

Community Service, Leadership and Small Business

[caption id="attachment_105" align="alignright" width="131" caption="Tina Reynolds, Phyllis Lyon and Armistead Maupin"][/caption]

My best friend Tina Reynolds, owner of Uptown Studios, was honored today by the California Legislative LGBT Caucus for her extraordinary inability to stand by and watch even one person be treated as less than equal. I’ve know Tina for 15 years. We met when she was doing volunteer work for CARES, and through the years I can not begin to recall how many organizations, actions and activities she has led or been a part of. And not just LGBT issues; she’s an equal opportunity activist. I’m proud to be her friend, and I’m proud that she’s a role model for my daughter.

What does this have to do with small business? For those of us that own small business, we all know that we have less time, not more, to spend on our passions. How in the world does Tina have time to do all that she does? Well, there are 50 different ways to market your business in the ActionCOACH model. By doing what she loves, she has become a successful business owner. She could have spent all of her time going to endless networking events, but instead she has used the less direct path of following her passions and making a difference. You don’t get clients as quickly, but over time you get them just the same because we all want to do business with good people.

I’ve learned a lot from Tina about what it takes to be a business owner. She taught me that if you are going to own a business, you must connect with others. We  joke when one of us gets a new client, “did they come from the Yellow Pages?” Well the Yellow Pages hardly even exists now. She has inspired me, a bit of an introvert, to become a connector, and to even enjoy it.

[caption id="attachment_106" align="alignleft" width="106" caption="A Cherished Friendship"][/caption]

I’ve also learned from Tina about how to be a better human being. We go walking in the early mornings around our fabulous midtown neighborhood. She says hi to everyone, and I mean everyone. Not just the people that are going to say hi back, and not just the people who look like they might. No matter who it is we pass, there is a cheery hello. It’s reminded me that that simple act of kindness can lift someone else’s spirit, even if just for 5 minutes.

Almost all of us that own a business began because we wanted to lift someone else’s spirit. And that’s what makes Tina Reynolds not simply a tireless activist for equal rights for all, but an amazing business owner as well.

p.s. She was honored amongst some amazing people. Today, I got to shake Phyllis Lyon's hand and thank her for all she has done for us, for me. I also got to tell Armistead Maupin how incredibly funny his books are. If you don't know who those two are, look them up on Wikipedia!

Bobbleheads and Small Business Seriousness

I’ve had a particularly successful week on a number of fronts. Every day had a triumph, some large, some small. That’s a week well worked.

I was out celebrating with my friend Anne last night, and she gave me a gift in honor of my week: a Guy Noir, Private Eye bobblehead.

[caption id="attachment_90" align="aligncenter" width="162" caption=""A dark night in a city that knows how to keep its secrets. But high above the empty streets, on the 12th Floor of the ACME Building, one man is still trying to find the answers to life's persistent questions...Guy Noir, Private Eye.""][/caption]

I love Prairie Home Companion, but that wasn’t the purpose of the gift. The purpose was to remind me to not take myself too seriously, to not dive into workaholism just because I’ve got all these fun new projects and clients that are going to need my focus in the next couple of months. She said every time I see the head bobble, I’m supposed to ask myself, “have I done anything fun today?”

It’s the myth of business ownership. We get in to it thinking “oooh, flexibility!” My daughter Dakota was 4 when I started my business; it was a great idea. But after a couple of years I realized I was consumed. Dakota had less of me, not more. I’m very grateful I had that realization, and then did something about it.

I rarely work on the weekends anymore. But, this weekend, I have some special stuff to accomplish. One woman trying to find the answers to life’s persistent questions. And Guy is sitting here bobbing his head, reminding me that if I work smarter, I get to go have some fun tonight. And that makes me a better, and more successful, business owner.

Have you done anything fun today?

The Perfect Recordkeeping System

“We never do anything well until we cease to think about the manner of doing it.” – William Hazlitt

The allegory of the centipede makes the point nicely: asked how it knew which of its hundred feet to use when, the creature found itself unable to move. I am frequently asked what I think is the best way to do recordkeeping, file your financial information, which is the best software to use, should I do it by hand or use Quicken or Microsoft Money or Excel, do I have to use Quickbooks, etc, etc. My answer is the same as Nike’s: Just do it!

It’s not that I don’t have opinions about the best way to do it. (Anyone that knows me knows I have opinions!) It’s just that when someone asks me that question, its not usually because they’re trying to refine and make better a system they are already using. The people that ask me that question aren’t using a system at all, and they’re waiting until they have a perfect system to start using it.

If you recognize yourself in this post, my suggestion is to pick the easiest system you can think of, do it consistently and with reverence for 3 months, and then evaluate how it worked.

Don’t know where to start? Here are some ideas. Pick one:

1. If you’re starting from scratch, get a little notebook and write down everything you spend. Everything. Then, twice a month, total your spending in some broad categories. No more than 12.


2. If you’re using financial software (Quicken, etc.) but you still feel you aren’t doing it right, or you don’t KNOW your numbers, make a commitment to update it once/week. Once updated, write by hand, on a piece of paper,your monthly spending in each of your major categories.


3. Try the old fashioned coffee can approach. Dole out at the beginning of the month into separate envelopes your monthly spending plan for groceries, eating out, entertainment and any other area of discretionary spending. If a month is too long, use a paperclip and post-it note to identify the 1^st – 15^th and 16^th-31^st spending.
   
   [caption id="attachment_74" align="aligncenter" width="227" caption="Perfect Envelopes (top); Done is Better than Perfect Envelopes (bottom)"][/caption]

Ok, now that you’ve picked one, just do it, don’t think about how you could do it better, just do it for 3 months. At the end of 3 month, let me know what you picked, how it worked, and how you’re going to make it a little better for your next 3 months.

Consistently, and with reverence!

Where’s your 50 year old?

I was talking to a friend of mine the other day. He’s 50ish now, happily no longer a business owner, and was telling me this story from when he was 30ish. He had started his own firm, set out on his own, was happy, was proud. A new, big client came in one day, looked around his office and asked him and his partner, “where’s your 50 year old?”

The breed of business owners is a fiercely independent one. We’re smart, risk-taking and capable. We aren’t the kind of people who pause to think that it might be a good idea to hire someone who has the experience, good and bad, of a 50 year old. A lot of us don’t want to take anyone’s advice at all.

What’s the value of having someone on your team who is the 50 year old? They have been through year after year after year of watching decisions and outcomes. They have seen what works. More importantly, they have seen what doesn’t work. It is hard to get to 50 without making a whole bunch of mistakes in your business life. What a blessing it would be to have someone on your team who could say, “oh, I saw a guy do “x” once, and two years later, he realized that it caused “y”, and “y” cost him a lot of money, or heartache, or legal battles.

Does your business have a 50 year old? If your answer is no, you might want to think about finding one. My "happily no longer a business owner" friend wishes he had; he figures it could have saved him tens of thousands of dollars.

How I Do Money Is How I Do My Life

I have a friend who is both a yoga instructor and a therapist. We were talking about a sibling of hers who has constantly had both money problems and all kinds of other problems in his life. In yoga, she tells me, there is a saying that “how you do yoga is how you do your life.” We mused over how that saying could just as easily relate to how you do your money. It was easily seen in the life of her sibling. I’ve turned it into a  question that I’ve often asked people that seem to be “stuck” or “baffled” by there behavior around money.

If how you do yoga is how you do your life, then how does this statement relate to you: How I do money is how I do my life?

Having gotten many interesting responses, I was inspired to ask the question in the Financial Boot Camp. I got a unanimous response: “that’s a stupid question.” I smiled and suggested that they write about it anyway. After a number of weeks we came back to the question and unanimously, everyone had had an ‘ah ha’ moment when thinking through the question.

I’ve put it up on the wall in the office as the question of the month and clients, boot camp members, friends, really anyone that walks in is asked to write a response on the windows in the office. It’s fabulous! There’s graffiti all over the office. So…..how does the question relate to you?

Here are some answers created:

“When I avoid responsibility, I avoid being empowered.”

“When I relax and do what is next consistently with clarity, focus, ease and grace, it is there.”

“When my life teeters out of balance, so does my money.”

“When I allow someone else to become my priority, I become the option.”

“Be it, let it, it will be.”

“When I don’t pay attention to it, it bites me in the @#%.”

“Inconsistently, but with reverence.”

“When I have enough, I pay attention, when I don’t, I run away.”

“If I pay attention to that which I run from I will lose fear, gain experience and live more fully.

How much DO other people spend on food?

I get to talk to a lot of people about their spending plans. It’s kind of fun. Most people know what they spend, or what they think they need to spend. But not many know what is average or “normal”. Amongst all of my clients, the outliers are $100/month and $1,400/month, both two person families. I was stunned at the $100/month family. While they don’t buy pre-packed foods and do grow a lot of their own fruits and vegetables, it’s still remarkable. The national average for a family of two is $564, and yes, this includes eating out. Some other interesting food averages are:

• 43% of our food budget is spent eating away from home;


• we spend12% of our total income on food;


• the average for a single person is $373; a family with children is $821; and


• no, this doesn’t include alcohol; that’s another $34/month.

In my own spending plan, I keep my categories broad and only track about 15 different areas. One is the ratio of groceries to eating out, and when I’m spending more than 35% of my food budget on eating out, I’ve got some realigning to do.

If you want to see where your spending plan lies, the Bureau of Labor Statistics’ Consumer Expenditure Survey publishes annual data of more categories than you’d ever want to see: http://www.bls.gov/cex/2008/Standard/cucomp.pdf .

Emotionally Investing in Your Business

I recently had the privilege of working with a client who is opening her own business. It’s rare that entrepreneurs seek financial advice before they leap. Most people, if they looked too hard at the realities of business ownership, wouldn’t do it.

One of the goals in our pre-launch work is to find some financial clarity about what her investment is, and what an acceptable rate of return is. If you buy $10,000 of mutual funds, it’s fairly simple to determine if your investment is earning 10%, 5% or losing 25%. But investing in a business has so many other components to it.

• The lifestyle component: how much you would be willing to ‘pay’ to do what you absolutely love and be your own boss.


• The opportunity cost: the difference between the salary and benefits you are leaving behind and the salary and benefits your new business will be paying you.


• Building a sellable asset: are you creating an asset that can eventually be sold and sold for how much?

If you’re considering opening a business, here are some great questions to ask yourself before you leap. What if things don’t turn out the way you planned? What if your business ends up costing you money? Would you be willing to give up a $70,000 job if you could own your own business and still earn $50,000 with the potential of building a sellable asset? Probably. Would you be willing to do the same if you were only able to earn $20,000, or $10,000?

What if your business actually started costing you money?

In accountant-speak, that’s called “Owners Investment” and it’s hidden in the balance sheet in the equity section. I hate that. What it really means is that your business didn’t earn enough to pay all of its commitments so you’ve drawn from your savings, your spouse’s income, your home equity line or even a retirement fund. When a business owner takes $1,000 from their personal account and puts it in their business account, they aren’t thinking “oh, I’m buying a $1,000 investment that will pay me a good rate of return.” They’re thinking “oh, I have to cover the payroll shortfall today.” Technically it’s an investment, but emotionally, it’s not.

How many of us would run down to the bank to transfer $1,000 of our money to buy more of a mutual fund that wasn’t performing? None. What if the fund manager promised us that it would perform better? There’s a continuum on the scale of emotional investing. It starts with mutual funds, and then specific stocks (and you crazed Apple fans know who you are), then real estate, and then business ownership. The closer we are to the asset, the more emotionally tied we become to the investment, and the less able to make analytical decisions.

Should your investment decisions be purely analytical? Nope. But they shouldn’t be purely emotional either.

Cost of Manufacturing in China

I love Planet Money, NPR's economics podcasting team. They can make you actually understand what a credit default swap is. And, they make it entertaining. Fun!

This podcast explained exactly how China manipulates their currency, and what that means to everyday Americans, and everyday Chinese. It was fascinating. If you like that kind of stuff, here it is:

http://www.npr.org/blogs/money/2010/03/podcast_why_chinas_central_ban.html

But if you just want the cliff note, the part I found so stunning, it is this. They were talking to a small business owner that manufactures his his product in China. No surprise. We all know much of what we buy is manufactured in China. You don't have to be an economist to know it must be way cheaper to manufacture in China. What I didn't know was how much cheaper.

90%. That is stunning. If you were a mattress manufacturer, and could sell a mattress for $1,000, would you pay an American company $500 to produce it, or a Chinese company $50. Duh. I had no idea that it was that much cheaper.

How do we reduce the carbon footprint of global manufacturing when individual business owners are faced with such temptation?

Our collective moment of financial clarity

Some people think of April 15^th as an icky day. I see it as our collective moment of financial clarity. Tax day is the one day that we all know exactly how much our businesses earned, or didn’t earn, last year. Want even more clarity? Take a quiet moment and do this exercise:

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Some people think of April 15^th as an icky day. I see it as our collective moment of financial clarity. Tax day is the one day that we all know exactly how much our businesses earned, or didn’t earn, last year. Would you like even more clarity? Take a quiet moment and do this exercise:

The Power of a Salary Structure

I often begin my speaking engagements to business owners with the following:

“Hey, I have a really great job for you! You are going to be doing exactly what you love to do. You won’t have a boss. You’ll get to set your own hours. Some months I’m going to pay you a whole bunch of money! But, then there’s probably going to be some months that I won’t be able to pay you. Well, maybe a little, but not a lot. But I’m sure I’ll be able to catch up eventually. ---- Will you come work for me?”

Did I just describe the salary structure you have in your business? If you laughed,  I’m guessing: yes, it is. If so, read on.

I was working with a client of mine who has a goal of a $200,000 annual salary. She works in a field where it’s possible; it will take some hard work, but it’s possible. What kind of salary would that be? $16,666 per month. Her business will need to generate well over that to produce a net profit of $16,666 on a monthly basis.

So why would I advise her, for now, to pay herself a $1,000/month salary, no more, no less? Because it is an amount that she can successfully practice doing. She’d been paying herself big chunks of money when money came in, and then barely any at all for weeks, sometimes months. You don’t get into shape by exercising a whole bunch in one week and then not at all for another several weeks. When our businesses pay us large amounts during one good month, and then don’t pay us enough to meet our monthly needs in other months, we get out of shape, out of sorts, out of hope. Knowing what your monthly salary is, and sticking to it, no matter what, gets you and your business into shape.

She kind of thought I was crazy, or stupid, when I gave her the assignment. She did it imperfectly at first, and then she started doing it perfectly, and then, all of the sudden, she got it. It all became clear to her. It is the simple and mindful acts, taken consistently, that propel us forward in our lives, and in our businesses.

On the Honesty Muscle and Financial Boot Camp

Lisa Nichols, in No Matter What, refers to the honesty muscle as a critical component of moving forward in our lives. To get to where we really want to be, we have to know where we are; we have to be honest with ourselves. When it comes to our finances, this can be extremely challenging on many levels. To know where we truly are means that we have to discuss money, a very private, personal, and sometimes painful subject. Where exactly do we do that?

A success of Financial Boot Camp is that it gives people a forum where they get to - and have to - talk about their own money. In the first few sessions, it’s a challenge to convince the group that its not only ok to talk about their own money, but also to ask each other direct questions. We’re raised in a society that frowns on open discussions about money, yet we’re expected to know how to manage it. In the Boot Camp group we’re working with now, honesty has appeared in a number of ways:
 

• Some have been honest with themselves and the group that they really don’t like how they are earning money;
   
• Some have been honest with themselves and the group that how they have invested money makes them unhappy and discontent; and
   
• Some have been honest about their lack of clarity with their monthly spending.

Some of the group, if they had listened to their own little voices, knew these things before Boot Camp. With some, you could see the light bulb of honesty and realization come on right before our very eyes. To get to where we really want to be, we have to know where we are; we have to be honest with ourselves, and sometimes others. Each one of the Boot Camp group has used that honesty to make movement in their lives, movement toward where they really want to be.

-Stacey Powell