5 Tips to Turn Up Your Financial Performance
Do you spend all of your time hustling for your business wondering if and when all of that sweat equity will convert to business growth and financial freedom? As we cruise into fall and start thinking about saying goodbye to this year and hello to next year, it’s a great time to implement a few changes to your routine that will transform your profitability, strengthen your employee culture, and help you get the right funding to finance your growth.
Create a budget every year that shows the revenue, expenses, and net profit you hope to achieve every month of the year. This might seem daunting if finance is not your forte, but don’t let that discourage you! Spend 30 minutes thinking about what you’d like to achieve, and put numbers to those goals. Start this process fresh every year. This is called “bottom-up budgeting” (no, not bottoms up! That’s your reward after you finish your budget!). Bottom-up budgeting means you don’t think in terms of an incremental change from last year. Instead, think of the possibilities and potential of what can be - regardless of what has been - and build your goals from there. This exercise forces you to lead your business with clear intention, and that intention shows up directly in your bottom line.
Look at your financials every month. Make sure you understand them. Ask questions. It’s essential that you know where your money is coming from, and where it’s going, so that you can maximize the things that are working well and change the things that aren’t. Don’t look at your financials once a year as you’re signing your tax returns! Compare your monthly financials to the budget you created. Become obsessed with understanding the variances between your results and your budget, and do so as an unemotional, neutral observer of your business (don’t think of variances as good or bad). Focus on the drivers that are creating those variances, and how to change those drivers to create a different outcome. In doing so, you’ll hold all the tools you need to actively build the future you want, and meet your financial goals next month.
3. Pay your employees with multiple currencies. One of the most common challenges I hear business owners lament over is their inability to compete for top talent if they can’t pay top dollar. I encourage you to think instead about all of the many forms of payment you have at your disposal, other than salary. Your employees are human beings, and they need so much more than money to be happy! What is truly meaningful to them? More vacation time? Flexible schedule? A job title they’ve been aspiring to? Adding new responsibilities that can help them achieve their future career goals? Investing in training? A hand-written note that tells them you appreciate their ideas and contributions? I know it’s hard to believe, but money is at the very bottom of the list. Don’t assume you need to give huge bonuses, or offer complex profit sharing incentives. That is your profit as a business owner, and you don't need to give it all away! You could, and will probably find that employees will gladly take it - and still leave you. Trying to buy employee loyalty is the fastest way to ruin profitability, and it’s ineffective. Focus instead on creating a culture so welcoming and fulfilling that employees don’t reduce your relationship with them to simply a paycheck.
4. Make sure you have the right bank and insurance broker by your side. The world of finance is based on the tradeoff between risk and reward. That means that every bank and insurance carrier puts a price on the perceived risk they have with you and your business. The higher the risk, the more expensive your loan or insurance policy. Take the time to find a bank and insurance broker who understand your business and your industry. Financiers are matchmakers at the end of the day - they are looking for deals that match their risk appetite, and will overcharge you for anything that doesn’t. Ask your bank and broker “What kind of businesses do you like to work with? Have you worked with a business like mine? Do you understand my industry?” Ask for examples of their other clients. The differences between various banks and brokers will become very clear, and you’ll see more clearly where you fit. Finding the right fit will bring down your interest rate and your insurance premiums significantly.
5. Never lose sight of your highest and best purpose. I know what you’re thinking… that has nothing to do with finance! But it’s the single most important thing you can do for your financial success. You are the leader of your business, you are the visionary who will pull your business forward. No one else in your business can fulfill this role. So delegate everything else! Hire if you need help. Find interns if you need free help. Every minute of your time represents an opportunity cost of millions of dollars, because in that minute of time you should be developing and executing a plan to grow your business. Is it more important to take a customer phone call that another employee could handle? Or run that errand? No! You are the most expensive resource in your business. Create space and time for the things that will transform your business - strategic thinking, planning, and seeking impactful connections and opportunities. Every day. If you do this, your business will never the be the same. Goodbye stress and stagnation, hello explosive growth, life balance, and pure entrepreneurship joy.
With these five changes, you are well on your way to becoming a financial powerhouse! I am so excited to continue the conversation on stage at The Collective Conference next month. I will be speaking about combining creativity & community to define your financial vision.
Laura Azzalina Rigali
Founder, ILLUMINATE CEO / CFO
Laura is a strategic advisor, external CFO, and coach to startups, growing companies, and executives, combining her expansive finance career with her love of people to help people and companies achieve their absolute best. She serves in part-time and project-based CFO roles, and coaches entrepreneurs and CEO’s in financial empowerment - helping them step fully into their roles as financial leaders of their organizations, and embrace rather than fear finance. She also hosts finance workshops, CEO roundtables, and is a speaker for events and seminars. Laura’s greatest joy is working with people to help them achieve their goals and live fulfilling, rewarding lives