Updated: Mar 29, 2020
Thriving in business can be a beautiful, fun and exciting experience, but, in a snap, a crisis can rattle your confidence in staying afloat, and even at times bring on the financial pinch and struggles that each of us has laid awake worrying about. In business, no one is immune to this, and some people are just a little more prepared and or calm in the face of such struggles.
With the current onset of the Corona Virus and potential lockdown possibility upon us, we are getting message after message from clients asking a variety of questions. It’s super interesting to us that the clients who have absorbed our teachings of wealth consciousness and education are the clients who are the calmest and strategic. Despite an uncertain future, they are still very positive, and ready to tackle struggles possibly coming their way, whether that be a nationwide lockdown, or a personal struggle, that can make up general day to day life.
While talking to these clients, we realised three key factors are safeguarding them from having to jump on the stress train as quickly as others.
What are they, you ask? Well, let me share them with you:
They know their ‘what if’ numbers
I know, I know, this sounds super boring.... but, there are a few specific numbers to know that make the world of difference, and are pretty easy to work out as a starting point. The first one is, what does it cost to keep your doors open? I don’t mean with a buzzing staff and happening clientele, I mean just literally, keeping the lights on, the lease up to date and all your agreed payments paid, for example contracts and subscriptions? Once you know that number, you know the minimum you need for your worst-case scenario it’s a lot easier to plan and plan a positive plan.
Obviously, there are wages to be paid and tax to be put away, however, for now, by knowing the survival number, the ‘what if’ number, you can sit in that calm peace of mind for a little while and allow your brain to rest and come up with a plan. Now for some businesses, this number will include wages, and other have to do costs, and that’s ok, but you want your bear minimum number as a starting point. For example, we had a client in a meeting this week who was nearly in tears because she was convinced she needed a certain number monthly or she wasn’t going to survive this month, let alone another, as things calm down and we go back to normal. Once we went back to her survival number, which was about $3k a month less, the stress eased, her face calmed, and she all of a sudden remembered she had put money away for this bill and was prepared for that. Oh, and while I think of it, in my personal account, I have … wait for it … 2 months’ worth of what I need, IF I need it.
They know what makes them money
Now, this is a funny one because everything in business that you charge for makes you money, right? Well, yes and no. We once worked with a big manufacturing company, and they were SO excited to have a client that paid well over $100k per month, BUT...BUT...BUT…of that $100k per month, that client got to keep only about 5% of it! Yep, $100k came in and then BEFORE paying themselves, approx. $95k went out. Generally, in business, we want to earn the most profit possible, BUT, in times of stress, chaos, and possible toilet paper and pasta shortage (sorry, sorry had to be done), we want the most profit in for least amount of effort.
For example, let’s say it’s a slow week, and you have ten clients booked in, paying an average of $150-$200 each. Would it help more at the end of the day to have $1000 in the bank or only $500 of that money left over to play another day, week, or month of this business game? Same effort to earn the original amount, but I think you would agree the more money left over, the better. Every business has a service or two that just makes the most money. Every single client we work with has a high-profit product or service; the problem is very, very few know what it is until they take a good look at it.
They often think it’s the highest costing service, and yes, sometimes it is that, however, not always. Once all costs to deliver that service is accounted for, and I mean ALL, you get a much better picture of how to keep the most cashflow AND profit coming through your business, and that, especially in tricky times, is critical. Cashflow AND money left over for planning, saving, and strategy are the true keys to business ease in all climates.
Last, but not least in this list is, they know what’s coming
My most engaged and wealth conscious clients can right now, at this exact point in time, tell you even IF they don’t make another sales call or booking all month, or even next month, what money will be coming in, and what we have to play with. Now, hopefully, we will keep getting bookings and sales, and we won’t need to resort to this, I’m sure that will be the case for you.
However, it’s a great number to know, because if you know the two numbers up the top of this list, then you know this number, we can, with some fair amount of accuracy, plan out when and if you need to worry, and pivot your plan to keep ongoing. If you have a train wreck of a week coming, and it’s far away from your goal, you can put a plan in place to save the day. Now, you’re going to say to me, “What if I plan it out and people cancel, or what if people stop buying?” Yes, ok, both of those things may happen, and if they do you deal with that then.
But generally speaking, you have your regulars, your pre-bookings, and the sales you’ve already locked in that you know will come through; you know your clients. You know when you look at Sarah and Alex’s names, that Sarah will come to her appointment rain, hail or shine, and Alex... well she is more of an “if it suits” kind of client, and we may not bank on her money. Sarah, however, comes in no matter what, and her monthly spending is approx; this and/or that, and well...you see how it works.
Of course, if you would like help with these numbers or just a chat about how you’re going, and your plan, an Angel, is only a phone call away. We would love to talk over your numbers with you and hear your plan, or even talk over the finer details on how to work out your top 3 numbers for a crisis. So please, pop on over to our booking link and make a time to chat. A 30 min chat with our CEO to work out these numbers is our gift to you.
For more information, visit: https://calendly.com/accountingangels/hbia-vip