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In this episode, we explore the crucial difference between making money and managing money as an entrepreneur. We discuss various strategies for boosting revenue, such as increasing sales, diversifying revenue streams, and adjusting pricing. However, we also emphasize the importance of effective financial management, including budgeting, cash flow management, expense control, and investment planning. By finding the right balance between income generation and financial management, entrepreneurs can build resilient and sustainable businesses that are prepared for both short-term challenges and long-term growth.
Connect with Keila!
LinkedIn - https://www.linkedin.com/in/keilahilltrawick
Website - http://www.hellokeila.com
RESOURCES:
- (00:00) - Introduction to Entrepreneurship and Money Management
- (01:31) - Ways to Increase Revenue
- (02:10) - Understanding Market Opportunities and Adjustments
- (03:01) - Boosting Revenue: Strategies and Considerations
- (05:00) - Managing Incoming Revenue
- (05:19) - Budgeting and Cash Flow Management
- (06:03) - Expense Control and Investment Planning
- (08:29) - Balancing Short-Term and Long-Term Financial Goals
- (09:56) - Setting Financial Goals and Measuring Success
- (11:08) - Lessons from Littlefish: Practical Insights
- (13:25) - Final Thoughts
Connect with Keila!
LinkedIn - https://www.linkedin.com/in/keilahilltrawick
Website - http://www.hellokeila.com
RESOURCES:
Learn more about Little Fish’s suite of services and sign up for our newsletter at www.littlefishaccounting.com
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Creators & Guests
What is Build to Enough ?
Little Fish Accounting presents Build To Enough. The pursuit of endless growth and scaling can leave entrepreneurs feeling burned out and unfulfilled. This podcast explores how to build sustainable, purpose-driven businesses that align with your lifestyle and values, rather than defined by rapid expansion alone. On this show, we’ll reframe definitions of success, provide strategies for structuring companies around desired lifestyles, and share stories of entrepreneurs finding deeper fulfillment by focusing on “enough.” Join us as we discuss moving off the hamster wheel and building businesses with balance and meaning.
There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.
Keila Hill-Trawick: [00:00:06] Hello. You're listening to Build to Enough, a podcast for [00:00:10] entrepreneurs who want to scale at their own pace. I'm your host, Keyla Hill Traywick, and I'll be your chief storyteller and cheerleader in a world that glorifies endless expansion, we're tuning [00:00:20] out the noise and discussing the beauty of enough. Each episode will dive into inspiring stories, practical insights, and strategies to cultivate sustainable success on your [00:00:30] own terms. So whether you're a solopreneur, small business owner, or aspiring entrepreneur, get ready for a refreshing take on the entrepreneurial journey. This is build to enough. [00:00:40] Listen. When we become entrepreneurs, the first thing we want to do is make some money. Most of our goal is like, [00:00:50] can I make at least as much as I was making from my W-2 job? But there's a difference between making money and managing money, and [00:01:00] today I want to talk about that difference. There are common challenges faced by business owners as we try to make the decision between revenue generation. So [00:01:10] actually bringing money into the business and financial management, which is like, what do I do with it? How do I spend it? Save it a combination of the two. Once I receive it, [00:01:20] we're going to talk about how we can optimize getting money and the importance of learning how to manage it, and finding the balance between the two. All right, let's [00:01:30] get started. So there's various ways to make money, right. You can increase sales. That usually is the way that most people are thinking.
Keila Hill-Trawick: [00:01:39] The thing [00:01:40] that I already do let me sell more of it. You could also diversify revenue streams. So I was doing this thing. Now I do three things, and that second [00:01:50] and third thing actually make more than my original sales. And we can change prices. So I don't sell more, but I charge more for the thing that I do in [00:02:00] order to bring more income into the business. Now, it is important to figure out which of those levers that we're pulling in order to bring in revenue. [00:02:10] You've got to think about things like market opportunities, what is going on in the economy, in your clients lives or in their businesses. What do we need to be considering [00:02:20] when we're trying to figure out what our clients need, what they find valuable, and then how to charge and charge accordingly for it? The other thing [00:02:30] is figuring out, as those things change, where we need to make pivots or adjustments. So you may be in an industry that is really hot right now, and you have the opportunity [00:02:40] to charge more than you would have been able to one, three, even five years ago. You also may be in an industry that is not doing so well, and so [00:02:50] this might be where you want to diversify your revenue stream so that you're not only dependent on the one thing that is not the thing that everybody is interested in right [00:03:00] now. A couple of ways that you can think about boosting revenue is one, when we're thinking about increasing sales, investing in marketing [00:03:10] is one way, but also just reaching out to your network.
Keila Hill-Trawick: [00:03:13] The network that you already have is watching you. And so do they know what you do? Are they aware of who you're [00:03:20] focused on and what kind of services that you offer? Can you just let people know with more information how you would serve? When we think about diversifying revenue streams, [00:03:30] what are you good at? What do you like and how does it interact with something that you already do in the business? It can be really hard to bring together two completely different businesses, but [00:03:40] it's worth your while if you have a high skill, skill and another complementary area to potentially bring that in as not just as [00:03:50] another revenue stream, but also as an opportunity to potentially bundle what you do differently. Finally, thinking about pricing strategies, like I said, seeing whether [00:04:00] your industry, your service, the thing you do is hot or not, or just thinking about when's the last time that you actually updated your pricing, can really give you some insight [00:04:10] as to whether or not there need to be some adjustments on that end where you don't necessarily touch any of the other two, but instead you really get closer to charging [00:04:20] appropriately for what you're offering. Whichever one you choose, you want to make sure that you're doing a balance of boosting revenue without one sacrificing [00:04:30] profitability. So if revenue goes up by $10,000, but so do your expenses, you might not have necessarily achieved what you were hoping for or long term sustainability. [00:04:40]
Keila Hill-Trawick: [00:04:40] You can bring in a lot of money by discounting prices or going really hard on marketing or, you know, adding all of these revenue streams. But if [00:04:50] they aren't things that you can consistently do well for a long period, it's just kind of a flash in the pan and you won't be able to rely on it to bring in more money to the business. All [00:05:00] right. So now that we've got some income in, we've got these. Diversification of revenue stream pricing slash increased sales. The money is there. What do [00:05:10] you do with it? Well, there's a couple of tools that you got to think through. I'm talking budgeting, cash flow management, expense control and investment planning. Budgeting [00:05:20] means making a plan. How much do I expect to spend? How much do I think that I'm going to have to put out for all of the things that is, that are required [00:05:30] for me to run this business? Cash flow management is different. It is. Does the timing of the money that's coming in line up with when it needs to go out? I think [00:05:40] about things like tax payments and the ability to know that the revenue that I'm getting in certain periods is going to match up for when my tax bill is going to come due. Now, [00:05:50] real talk. I just really want you saving your tax money to the side, um, every month.
Keila Hill-Trawick: [00:05:54] But as an example, you may have cash outflows that are not coming in at the same [00:06:00] time as your cash inflows, and you want to be prepared for that. Expense control is really important when you're making your budget. You want to be realistic about what it costs to run the business, but also [00:06:10] trim the fat where needed. There are a lot of areas where you may be overspending, subscriptions that you're still paying for, or people that you thought you needed [00:06:20] that you're not necessarily using for what you needed them for. And that can be not just like actual team members, but maybe even service providers that are providing more than what [00:06:30] your business currently needs. Watch for that so that you are paying for what you need, but also so that you have the money available for other things that you might want to [00:06:40] invest in for the business. Because the thing is, if you don't do this well, if you don't manage cash flow or you are beyond your budget, you have [00:06:50] missed opportunities. You may have excessive debt because you're spending more than you make. You have debt to have to cover that gap. [00:07:00] You may also miss growth opportunities. There may be places where you want to be able to get into that would build for more revenue for you down the line, [00:07:10] but you're cutting it so close with your expenses, with your budget, with the way that you're managing your finances, that you actually can't take advantage of those.
Keila Hill-Trawick: [00:07:19] One thing [00:07:20] I tell everyone is to make a budget. Now, I'm not the best at this, especially personally. I do have one for the business though. And the reason that I bring this up is because [00:07:30] at the very least, you want to have a realistic expectation of what it costs to run your business. That can backwards affect how you price, how you [00:07:40] determine how many sales you're going to take on and what revenue streams you have. So, for example, if your business costs $10,000 a month to run, [00:07:50] then you can't make $8,000 a month and you'll need to figure out which switch you need to hit to make sure that you're making enough to cover those expenses and end [00:08:00] up with a profit. In addition, if you listen to our episode about getting paid on time, which we'll link in the show notes, you also know that you need [00:08:10] to get paid early enough to be able to cover all of the upcoming expenses, and so if you have good payment terms in place, you're getting paid in advance of the work [00:08:20] or at specific milestones. You also have the opportunity to manage better because you're not always again, in that crunch of just trying to cover expenses. So how do you find [00:08:30] a balance? Well, one, it's hard making money and managing money are two different things and at different phases of your business, one [00:08:40] or both can feel harder or easier than the other.
Keila Hill-Trawick: [00:08:44] There are phases and times in your business where you can make a ton of money with what feels like no [00:08:50] effort, but you can't keep up with all the expenses of where the money is going out. And then the flip side can happen. You've got a really smooth expense plan. You know exactly [00:09:00] when money should be coming in and out, but you're just not making enough to cover it. The first thing to know is that there are some trade offs between short term revenue generation and long term [00:09:10] financial sustainability. Like I mentioned earlier, if you are taking on every client that comes in, yeah, you will make more money, but can you keep doing that [00:09:20] long term? Will they come back if you don't provide the service that you have promised to them, and are you going to burn out along the way? If you provide major discounts [00:09:30] for people to buy from you, sure, money will come in, but will they get so used to the discounts that they don't pay full price or don't see the value in doing so? So [00:09:40] making sure that you are looking at what could make me money now and be real. There are some times when you just need to do that because the money needs to come in, but be aware [00:09:50] of what that means for you long term, because what you can do now isn't necessarily what you can do forever. Also, set financial goals. Another thing not [00:10:00] that great with, but when you have a financial goal.
Keila Hill-Trawick: [00:10:03] What? Whether that is just to make enough to cover your expenses, or if that is having enough to be [00:10:10] able to take a sabbatical for half of the year, whatever that looks like. Again, that backs directly into how many clients you can take or how many customers you have to get. [00:10:20] It also leans into how much you need to charge and how much you need to make. So when we're thinking about, hey, how much can I do? [00:10:30] Part of that is based on the goal of like, what do you want to be able to do with the money? Do you want to hire people? Do you want to hire yourself out? Do you [00:10:40] want to be able to bring on additional service providers, to be able to get things off of your plate, making sure that you have a sense of what that will cost, so you understand what revenue needs to [00:10:50] come in to be able to cover. It is going to be really important for small businesses. I am not perfect at it, but I feel like we've gotten really good at measuring [00:11:00] revenue versus management. And here are some things that we have decided kind of along the way as a company. The first thing is we don't take everybody. [00:11:10] And I did not have that when we first started this firm. When I started Little Fish, I took everyone like, that's how businesses start, right? Like you get clients [00:11:20] who are saying yes to you and you say yes, yes, yes, yes, yes.
Keila Hill-Trawick: [00:11:22] I'm so glad that you will pay me. I will take you. But the reality is I was underpriced at the time, so I had to take a lot of people to cover the work [00:11:30] we were doing. And even when I took a lot of people, I didn't make enough to be able to afford to pay a team, to be able to support me, which, of course, was inevitably going to lead to burnout. [00:11:40] The second thing is we don't offer a lot of services. There are two entry points to be able to work with little fish, and that has taken years for us to get to. And I'm [00:11:50] not saying that that's the best decision for everybody, but what that has done for us is to help us to really understand what bandwidth is required for each of those [00:12:00] services, and how many clients we can take in each of those before we're in effect, full. And we did a whole episode about what it means to be full. So we'll definitely drop that [00:12:10] in the show notes so you can go back and listen to that too. But when you are thinking about the types of services that you offer, the combination of [00:12:20] services that you're willing to do, you will have to have a sense of what fits out the best with the team that you have, with the expenses that [00:12:30] you're going to incur with the time that you have.
Keila Hill-Trawick: [00:12:32] I would say, finally, what's helped us to maintain a balance between making and managing money is being [00:12:40] attentive to our numbers. I know my current numbers. I know my budget. I know the forecast of where we're headed. It doesn't mean that I'm not [00:12:50] ever surprised. There are always going to be surprises in entrepreneurship, but what it does mean is that I'm prepared. I know how much cash runway we have on hand. I know what [00:13:00] it means. If certain things happen within the business, I can scenario plan in advance for those. And as a result, when it comes to saying no, when it comes to what opportunities [00:13:10] we take on, when it comes to what investments I'm willing to make, I have a very clear picture of how that will affect our current financial standing and our [00:13:20] future. Just because that information is already set up for me to go through. So what does all that mean for you? I think the first thing, and I will repeat [00:13:30] this constantly, is to do what you need to do and also be aware of what you are focused on. So if you are focused on revenue, some [00:13:40] of those levers that you'll pull may cost you money in the short run. If you are paying for marketing or SEO optimization or help on [00:13:50] the team, you may have a crunch where you are managing money a little bit tighter, but it is bringing you on more revenue. The other side of that is once [00:14:00] you get the money in, you need to have a plan for how you're going to use it.
Keila Hill-Trawick: [00:14:03] What do you need to put to the side for business savings or tax savings? What are the baseline, [00:14:10] um, costs that you know you're going to have to incur for the business? What are the things that you need to be aware of if something goes wrong? That balance between making [00:14:20] and managing money is a thin line, but they're not the same thing. And they require two different mindsets to be able to take care of them. Make sure that when you're thinking about [00:14:30] income generation, you're also thinking about what it will mean to take care of that money. Once it's there. You want to build a resilient and sustainable business, and [00:14:40] you need both aspects to be able to do so. So don't just focus on one over the other. You need both and be mindful of how those will affect [00:14:50] your business, so that you can continue to make strategic decisions about what you consider success. Thank you so much for listening. We'll talk next week. Thank you for tuning [00:15:00] in to another episode of Build to Enough. If you enjoyed today's episode, don't forget to subscribe, rate and share the love with your fellow entrepreneur friends, and make sure to sign up for the Build [00:15:10] to Enough newsletter. The link is in the show notes. Stay tuned for more episodes as we continue to redefine success one intentional step at a time.