Raise your hand if you’re familiar with the April sweats. You know, the kind that happen when you realize Tax Day is just weeks away but you haven’t started sorting through any of your numbers from the past year, let alone gotten them to your accountant or started your return.
Now imagine the opposite of that. You enter into April completely at peace with time to actually enjoy the changing season. In fact, you’re so relaxed that when the tax deadline approaches and passes, you barely blink because, oh right, you took care of your numbers months ago.
Imagine no more. Although it might sound like a dream, it can become your reality simply by starting to pay attention to your books for five minutes a day. Don’t believe me? Here are three reasons that might convince you otherwise.
1. Your Money Won’t Grow by Being Ignored
Now, this may seem elementary but I can’t tell you how many clients I’ve worked with or who have purchased my 5 Minute Bookkeeper and don’t know their numbers.
Your first step? Start actually looking at your business bank account every single day. Get comfortable with seeing how much money is coming into your business and how much is going out. I find that entrepreneurs often have so much fear in sitting down and looking at their numbers that it leads to extreme procrastination. Sometimes that procrastination snowballs into debilitating stress, requiring the need to file for extensions. I know you don’t want that.
I recommend spending five minutes every day checking your business bank account. And if you haven’t already separated your business finances from your personal finances, stop and do that now. Create a separate business banking or checking account where all your business-related income and expenses can easily flow in and out. Even just this step alone will alleviate stress and make it easier for you to dip your toe in the money management water.
Spending ongoing daily time with your money won’t just help you face tax season without so much stress or last-minute cramming, it will also help you make more sound financial decisions in both the short and long term. Simply put, your money won’t grow by being ignored. You have to know how much money is coming in and going out of your business to determine the financial health of your business. Being able to identify where you’re making a profit or incurring a loss can help you quickly decide which areas of your business to invest in more or pivot.
2. Money Flows Where Your Energy Goes
I believe money is energy and that paying attention to your money will help you make more money. Why? I’ve experienced it firsthand. Seven years ago, I was making more money than ever, traveling the world and celebrating the boom of my first online business when everything suddenly and drastically slowed. After I finally took my head out of the sand and looked at my finances, my business was six figures in debt. I had to file for bankruptcy and start all over again, literally from scratch. Despite my strong background in accounting and experience working for financial powerhouses like American Express, this still happened to me.
I wasn’t going to let this be the end of my money story though. Although it was a rude and costly awakening, I quickly learned the importance of putting my energy into my money. From that day forward, I became intimately familiar with my finances. Not only was I in the numbers every single day, but I was determined to give my money new energy. I started treating my money like a person instead of an abstract necessity and invested in a treasured relationship with it instead of fearing it. The results have been life-changing for me; this energy enabled me to build a multiple six-figure per year business and turn my financial mess into a message to help other entrepreneurs.
So consider the energy you’re giving to your money. Is it positive energy? Are you nurturing your relationship with it or are you mistreating it and ghosting it, only to be surprised when it doesn’t “love” you back? Approach your business books with this new money energy and I guarantee you’ll be more ready to sit down and dig into your numbers for tax time than ever before. (And you just might see a business boom as I did!)
3. Money Needs and Craves Structure
Implementing an effective financial management system is the ultimate peace of mind. It’s also what helped me climb out of my six-figure debt. When you’re not guessing your income and expenses and can provide this information to lenders and investors—and most importantly, yourself—it makes both your life and business so much more peaceful and easier to manage.
During the pandemic when many entrepreneurs had to provide lenders with their P&L or past tax returns, several of them reached out to me for help organizing a few years of finances in order to take advantage of those loans. Given that most of them had a short window of time to turn those documents back into lenders, it not only created a high level of stress for them but was also a costly process for them to engage help doing so. Had they set up their business with a financial management system, that stress and extra cost could have been avoided. As a busy entrepreneur, it’s almost impossible to be proactive about how to grow and scale your business when you’re overburdened with the stress of just keeping up with and reacting to your numbers.
So get your financial system in place right now. Whether it’s creating a simple document with a listing of your income and expenses, purchasing a system similar to the one I developed, or contracting an assistant to help organize your receipts, carve out five minutes a day (or an hour every week) to get your financial system in place and start filling in those numbers. Remember that starting today means breathing easier tomorrow.
Here’s another quick tip to help you get started quickly and easily: If you have your business checking or banking account in place, simply filter transactions by January 1, 2021, through today, export the information in a CSV, Excel Sheet, or PDF, and paste the information into your finance tracking system then categorize each item as income or expenses. You’ll instantly feel better knowing that your numbers are out of your bank account and one step closer to being organized in your new system.
I’m a firm believer that growing your business to six figures and beyond is only possible if you’re regularly checking in on your numbers. I’ve seen it happen over and over with my clients. Waiting until tax time once a year is too late to determine the financial health of your business or to make decisions about your business. Plus, by that time, you’ll be relying on outdated data to make those critical decisions.
Avoid the stress and aggravation that comes with scrambling right at the tax deadline to get your numbers organized and taxes filed on time by spending just five minutes a day with your finances.
“Implementing an effective financial management system is the ultimate peace of mind.”
About the author: Nicole Barham is a finance coach who created and founded Design Your Wealth to help women solopreneurs go from stressing about money to financial peace of mind by showing them how to be not just the boss in their business but also be the boss of their finances—all in just 5 minutes a day. Through her 5 Minute Money Suite of digital products including her flagship, 5 Minute Bookkeeper™, Nicole shows just how easy it is to put a super-simple, efficient financial system in place with just five minutes a day so finances never have to be left for “later” again. Learn more about Nicole here: https://www.nicolebarham.com/.
Featured image: Smith House Photo