30: ALL about how I handle MONEY in my business!
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ALL about how I handle MONEY in my business!
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ALL about how I handle MONEY in my business!
Hellloooo and welcome back to the Montana Diaries Podcast, on today’s episode we’re talking moneyyyy, baby. I’ll take you through why I make it such a big point to be open about money, my personal money values, why I was so conservative at the beginning of my business, how money flows through my business, my money distribution system, and how I handle goal setting with money. Be sure to stick with me until the end because I’ll give you a free resource to help you create a system for handling money in your creative business AND will take you through the goal setting process I use with students in my mentorship calls to figure out how the heck to reverse engineer your financial goals and figure out EXACTLY how much you should be making each month and how to make that happen.
WHY I MAKE IT SUCH A POINT TO BE OPEN ABOUT MONEY AND TALK ABOUT IT A LOT
First, I want to talk for a second about whyyyy I make it such a point to talk about money and be open about it. Something you should know about me is that I don’t feel particularly emotionally attached to money —
The shame attached to money + the taboo of talking about money keeps class lines intact, it keeps people poor and proud, it keeps women in the dark about gender pay gaps in their industries. I believe so strongly in the proximity principle, too, the idea that surrounding yourself with people and ideas that align with where you want to be makes those dreams possible — I remember going to New York for the first time and going to readings and sitting down with real working writers and that industry become less…mystical and far away and whatever else, and finally feeling like 1. My dreams were possible and 2. Not being sure if I wanted the BUSINESS of story and writing to be how I made money. I remember the power of networking and finding a strong support system of women in the photography industry and leaning on each other to blowwww up our businesses and travel the world together, I remember how finding community and being transparent about business and money changed everything for me. I grew up in a household with a lottttt of financial trauma and weirdness around business and money and debt and it made me run the otherrrr way from that mindset when I came into adulthood — I was head in the sand about my bank account, I spent like crazy and gave without a passing thought and paid for everything and spent what I made because I didn’t freaking want to be the person always asking how much something cost or looking for a deal instead of having a nice experience and enjoying nice things. Whichhhhh I would way rather be that version of myself than the alternative I grew up with, but still. There was a happy middle ground. Mostly I just didn’t want to have anyyyy emotional attachments to money whatsoever, which isn’t…I don’t know, sustainable or realistic in a capitalist society. And I don’t HATE capitalism, I kind of nothing it, which I recognize is privileged. But I own a business and money these days is just… gamified, I guess.
The media I consumed while coming of age that informed how I feel about money: The Minimalists, Rent; La Vi Boheme + Big Magic — Elizabeth Gilbert saying she didn’t want to ask writing to finance her life, that she also wanted to stand on her own two feet financially and to have someone else support her was infantilizing and to infantilize oneself is demeaning to the soul. I got it into my head that I wouldn’t have any ego about how I made money, that I just needed to be able to support myself, and that’s served me well. Nothing realllyyyyy feels like life or death in my business, I’m going to figure out how to make money. I’m scrappy.
MY PERSONAL MONEY VALUES
Soooo…all of this brings me to my personal money values that I hold today. My twenties are almost over, I feel like I have enoughish perspective to quantify this for you. If I’m being totally 100% honest — I still feel a lot of, just…dissociation still, when I think about money. I don’t feel any particularly strong attachment to it, but it isn’t all la vi boheme like I romanticized when I was younger. There are things I want — I want to be financially free, which to me means debt free and to own the things that I have. If you know me in real life, you know that my husband and I don’t own nice cars or many frivolous things. I want to own a piece of Montana, I want to cultivate a home. I want to earn those things with our own money, that is very very very important to me and to be honest there are people in our lives that don’t understand how important it is and don’t really respect it. I don’t want..excess in my life, I don’t want to hoard money — I want to FEEL abundant but I want to do whatever I can to not become a person that chases the feeling of abundance by buying things. I want to travel the world.
Buttt I still have this thing where I don’t want to feel fear of losing money, I don’t want to feel fear of losing nice things. I pretty much refuse to. If I ever start feeling that way, I tell myself to stop. And it shouldn’t be as simple as that probably but ya girl has some brain chemistry things going on — there isn’t a better way to describe it then I choose to feel nothing about money things most of the time. If that sounds completely foreign to you then please know that I get it — if you can relate and you’ve done better at putting words to this than I can, then please reach out, I’d love to talk about it.
WHY I WAS SO CONSERVATIVE AT THE BEGINNING OF MY BUSINESS + DAVE RAMSEY
Soooo let’s talk about why I was soooo freaking conservative in my business, especially in the beginning, and our boi Dave Ramsey.
I don’t subscribe to Dave Ramsey’s values in general and I don’t think those are are good with money need to be as extreme as he is, but finding Dave Ramsey straight out of college was a freaking blessingggg — I was in debt and I needed a roadmap and for someone to say it was possible to live debt free. So that’s the plan Brandon and I followed in our personal life in the beginning of our marriage, but the ideals also bled over into Montana Diaries — thank goodness!! Becausseeeee I was so against debt and I was being so conservative with my money, I didn’t go crazy with equipment or tech or subscriptions or anything frivolous. We were barebones in the business for years — I only upgraded equipment when I had the money, I slept in my car after travel weddings, I was the definition of bootstrapped.
Thank goodnesssss — I’m so freaking grateful to have a business today that isn’t built off of stress and debit and credit and I grew alongside my business. I think being frugal and debt free keeps you creative, too. You aren’t beholden to anything and also people are hiring based off of your existing portfolio and you get to blow them away every year with your improved equipment.
CHANGING HOW I REQUEST + RECEIVE MONEY — HONEYBOOK
Sooo now that I’ve painted a picture of how conservative I’ve been in my business, I do want to talk about systems that have really served me and helped me grow, and the first way I systemized how money is handled in my business happened when I changed our process for requesting and receiving money.
In the beginning, my clients paid with check, cash, or through PayPal and everything was a bit scattered and messy. I never really knew when I was getting paid, which resulted in me making the majority of our money during the three months of peak wedding season and being pretty dry the rest of the year. There was a huge cash flow problem in the business and no actual system.
This sounds like a freaking ad, I swear — but for real, everything changed in the business when I FINALLY bit the bullet and got a CRM. I honestly chose Honeybook because literally every podcast I listened to advertised it, and now I’m one of them, I’m such a cliche. But Honeybook is amazing and I love it and I understand now. Here’s a simplified version of how the workflow works: I created an inquiry form in Honeybook that I then embedded in the contact page on my website, so when people fill it out, a project is automatically created on Honeybook. Honeybook is connected to my email inbox, so the filled out form also goes to my inbox.
I have PDFs related to all of my services that I’ve uploaded to my library on Honeybook, so depending on their requests or questions, I just attach the PDF that serves my client best from my library and it gets sent to their email. If they chose a date on the form, the project that was automatically created also gets added to my calendar as a “tentative project.” Which is soooo nice, it makes it so quick to see if I’m available, because I’ll also get a warning about date conflicts.
I alsoooo add all of my meetings and calls and personal time to my calendar, so that warning comes up if projects conflict with those too.
So, when a client agrees to book, I create a proposal which is where their invoice and contract can live all in one place. I’m able to create their payment plan with dates that also get added to my calendar so I know when payments are being made, and then they sign their contract and make the payment online from the same link. Once they pay their retainer and sign the contract, they’re booked officially in my calendar aanndddd honeybook is connected to my bank account, so the payment goes in their automatically.
It’s now SO MUCH EASIER to keep track of the cash flowing through my business, and having a system for requesting and receiving money now has made everything so much more efficient, and I’m able to visually see where the money is coming from and how much more I need to focus on making each month.
Honeybook is dope — you know I have to get my affiliate link in here, it’s montanadiaries.com/honeybook — just get it if you haven’t. Seriously. It does so much more than I’ve even outlined here.
CREATING A SYSTEM FOR MONEY — HOW PROFIT FIRST HELPED ME
Now I want to talk more about the actual system we have for distributing our money once it’s in the account — we’ve modeled our system after the method in the book Profit First, which I highly recommend. Anddddd it’s largely due to how my monkey brain works, let me explain:
When I was in college, I had a lot of jobs, but my most consistent job was waitressing. I would come home with a consistent 80-100 in ones and fives. I think my portion of the rent in college was $375 per month, and I used an envelope system to make sure I was saving the correct amount. I had a January envelope under my bed, so I’d get home from work and stuff my stack of cash in the envelope. Once the envelope reached $375, it would get sealed, and then I would start my February envelope. I was always 6 months ahead on rent because of this envelope method — I knew that my brain needed a physical container to understand what my money was for, and that I would respect it and even forget about it once it was in that physical container. It served me well.
I’m big on working with my brain, not against it.
Aannddd when I found out about Profit First, I realized it was a really similar concept to the envelope method.
A super watered down version, here we go: Basically, I have five bank accounts — Income, Operating Expenses, Owners Comp, Profit, and Taxes. Money flows into the income account, and then I distribute it as follows: 35% to OpEx, 35% to Owner’s Comp, 5% to Profit, 25% to taxes. I distribute it whenever, but I make sure it’s caught up on the 10th and the 25th of each month because I pay myself on those days and I make sure my P&L excel sheet is caught up — would Quickbooks be better? Probably, but this is what I do.
I truly believe that having a plan for your money will enable you to reach whatever goals you want to reach, and this system removes every bit of emotion I might have with how my money is allocated — I know my brain, I do my best to be kind to it. I work with my mind, not against it. Here’s the thing: The operating expenses account is for business spending — there’s no debate about whether or not to use that money because it’s in that account to be used. The percentage that goes to the owner’s pay account is there TO PAY ME, so I’m never able to make excuses not to pay myself. Systems work, they eliminate emotional decision making — defer to the system.
HOW I WORK THROUGH MONEY GOALS WITH STUDENTS + MY METHOD — REVERSE ENGINEERING HOW MUCH MONEY I NEED, GAMIFYING, MONEY ISN’T SCARY IT’S JUST MATH LOL
Nowwww let’s talk about how I work through money goals with students during mentorship calls and my method for reverse engineering how much money you need — I like to make it a game. Money is just points. Money is just math. It isn’t scary, I promise.
You know I’m bigggg into reverse engineering goals, so financial goals are no different. I do a super super super simplified version of the bucket method on mentor calls — the amounts are shifted and the amount of buckets is smaller so I don’t freak people out, but it’s the same concept. I’ll take you through it now:
What is the ideal amount of money you would like to make in a year? A lot of people have noooo idea how to answer this question, so here’s how I frame it: how much money does it take to live comfortably? If your business is a side job, if your partner is the main bread winner — pretend worst case scenario happens and you lose your main job or your partner loses their main job and you have to upkeep your lifestyle. Mortgage, car maintenance, bills, groceries, lifestyle expenses, fun money, everything. How much money would that realistically take? Okay, you have a number to work with now. I think it’s always a great goal to make your business profitable enough that it could finance your life, at least.
Let’s be conservative here and pretend the amount you came up with is $50,000. That’s $50,000 paid out to YOU and not $50,000 that you make in your business. I like to make the numbers easy and make the goals feel superrrr achievable, even if they’re going to be hard work, so I tell my students to plan on paying themselves 50%, put 25% in a tax account, and 25% in the business account for operating expenses.
That means, in our hypothetical scenario — if you want to make 50,000 with your business, then the business needs to make $100,000. Are you still with me?
Now, that total amount for a goal might still seem abstract and a bit far away if you’re at the beginning stages of business. This is where reverse engineering comes in, or working backwards from our main goal. If you’re a service based business, what is the average cost of a client or what is the cost of your main offer? For me, the average client pays around 5,000 — sooo 100,000 divided by 5,000 is 20. I need 20 weddings and elopements if I want my business to reach six figures,that goal feels really doable to me and so then I’d focus my marketing efforts on achieving that goal. But if you don’t have a high ticket offer, it’s still doable! Let’s go even further on the math. Sticking with a photography example — what is a portrait session worth? $500, to low ball it? 100,000 divided by 500 is 200 clients in the calendar year — that seems like a lot. But 200 divided by 12 months is 16 clients. 16 sessions in 1 month still feels like a lot to me, but maybe it doesn’t to you. But these are numbers that are starting to feel possible, they’re starting to make the overarching goal feel realistic. If I was in this position I would think: How can I increase the spend of these clients? Can I make these sessions worth more? Can I upsell prints and albums? Can I add an offer to my suite? Can I run mini sessions or specials every month at that price point that can help me meet these quantity goals without me running around like a chicken with my head cut off? How can I make this possible?
If you’re a product based business, what is your highest selling offer? Maybe you sell hand made earrings or you make skincare products — yes, maybe I’m calling out some of my fave creatives who I know listen to the pod, ha! But let’s say your highest selling product is around $15 — $100,000 might seem so far away. Let’s do the math. $100,000 divided by 15 is 6,666 sales — divide that by 12, it’s around 555 sales per month. Don’t let the math be scary — know the numbers, even the estimates like we’re doing now.
KNOWING what your sales goal per month is will EMPOWER you to make marketing decisions. You’ll pay attention to what marketing channels are bringing people over to your website, what is actually causing people to inquire with you for your services and then how many of those people turn into leads. For product based businesses, you’ll see who is clicking to the website and then what percentage of your traffic turns into paid customers. Once you know that percentage, you’ll have a goal for how many people need to click on your website in the first place, which helps you make decisions for running paid ads if you go that route. It’s not scary, it’s MATH.
And even more than math… money almost turns into a point system with you know your numbers, it turns into a game. You know how in video games you get rewarded with points and if you get enough points you get to the next level? Just think of your money goals like that.
One last thing: Make yourself a visual indicator for tracking your money. A thermometer to color in as you make sales is my favorite one. Do what you can to make your finances fun, because why the heck not. Goal setting in this way doesn’t have to be a scary weird thing — you can’t achieve your big goals unless you define them clearly, you need to know where you’re going.
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