business finance

How To Make Money: Get Over Your Hate of Selling

How To Make Money: Get Over Your Hate of Selling

When you’re at a bar at 1am; you’re not drunk, but not not sober, surrounded by a bunch of friends, the last thing you want to do is load several heavy, oddly shaped items into a car only to have to unload them shortly after. This is the worst part about playing in a local band; you have to do everything yourself… but it’s just part of it. It comes with the territory. 

To my freelancer friends and small business buddies who hate selling or pitching or talking about the money part of things. I get it, it sucks, but too bad. It’s the trade off for being able to spend your working life building something you believe in. It’s the cost of mostly being in charge of your life. Talking about money doesn’t have to suck. You can stop hating it, but you have to do some work to change your own perspective on it.

Here are some ways I think about selling. I hope some of it will light up your brain and help you power past some of your limiting beliefs around selling and talking to customers about money.

How to Make Money: Focus On Who You Serve

How to Make Money: Focus On Who You Serve

People talk about opportunities like they’re a nebulous, disembodied thing. Like they’re floating around and will land on your shoulder and boom, your life is changed forever. Let’s say they are. Imagine opportunities are all floating around in form of balloons. Every balloon is connected to a string. And at the end of the string, even though you might not be able to see it, there is a person holding the string.

You see, opportunities are not standalone. They’re always connected to a person.

This article is all about understanding who you serve. Who is your ideal customer, target market and what’s your niche?

Small Business Year-End Tax Strategies

It’s a common misconception that the tax code is rigged so the rich benefit and the poor are penalized. While the uber wealthy can definitely afford shrewd accountants and savvy tax attorneys to help, there’s another perspective to consider. The tax code favors employers versus employees. As a small business owner, you’re an employer. Employers have considerable more strategies available that can help you save money.

How to Stay on Top of Your Business Finances: The Weekly Checklist

My favorite dad-joke about being a freelancer or small business owner is how we end up getting jobs that we never applied for.

No matter what you do, when you first start out, you do it all. You’re the head of marketing, the VP of sales and the director of finance.

If you’re in business, and you’re a little lost on what you need to be doing to stay on top of your finances, here are the things you should be looking at every week to make sure your business will be sustainable in the long run.

How to Save for Taxes

Disclaimer: I am not an accountant and this is not tax advice. There are different methods and strategies for saving for taxes. This is one I’ve found to be very simple.

If you’re tired of being totally freaked out about owing taxes because your business earned money, listen up. Instead of being unsure about how you’ll pay your tax bill, you can get ahead of the curve by saving for your taxes as you earn income.

How To Map Out Your Monthly Income Goals

Photo by Simon Migaj

Photo by Simon Migaj

My wife is a woman of many, many talents, but cooking is not one of them. I marvel that the same woman who is militant about being creative everyday is somehow baffled by the challenge of a freestyle kitchen session.

Besides her lack of interest in preparing food, I think the fact that she doesn’t spend time strategizing and coming up with a plan is a huge factor in her adversity to cooking. And we all know once you’re hungry, you’re no longer a rational person. You’re a shell of a human, hijacked by your emotions and panicked because your tiny brain thinks you aren’t going to survive.

This exact approach, or lack thereof, is how a frightening number of freelancers and small business owners approach the income side of their economic equation. If this is you, know that I’m not judging you nor am I throwing shade. Just realize that if you don’t spend the time strategizing and coming up with a game plan for your monthly income, you may find yourself becoming irrational, taking on weird jobs or working with less-than-ideal clients because you fly into a panic-induced survival mode.

This can set off a chain reaction of problems. For example, let’s say you agree to work for less than you should because you have no clue how much money you’re earning, you just know you need to earn money. And if you’re earning less, you’ll need to work more. And if you work more, you have less time to for the things that bring you joy. And with less joy in your life, you’re a bummer to be around. If you’re a bummer to be around, you don’t attract your ideal clients who can actually afford what you’re selling. And you’re trapped in this cycle.

When you allow yourself the time to project your income for the month (or months) ahead, you’re allowing yourself to have insights, to make plans for future growth or plans to slow down to keep a manageable pace. After you make the projections, you can observe the results. Which allows you to realize what’s working, what isn’t working, what predictions were right and which ones need to be refined. In other words, it’s a way more chill way to be, dudes. And yes, this is the method I use to make sure I’m on track with my business goals.

 

How Much Do You Need to Earn Each Month?

This is the first step; it’s the prequel. You have to first calculate how much you need to earn each month. A good place to start is to look at your expenses. How much does it cost you to stay alive on this lovely planet? And what are the other things you’d like to spend on each month? How many box subscriptions does one need to attain happiness and enlightenment? If you still to figure out how much you need to earn, here are some methods to go about doing so.

 

Make Time to Map It Out

Once you know your monthly income goal, you have to make time to see how close or far you are from that goal, given the information you have at the moment. For the sake of example, let’s say you need $4,000/month to live your best damn life. Here’s what you’ll do during your mapping session.

Pick Your Method. You can go analog with a pen and paper. You can use a fancy calendar app or a quick-and-dirty spreadsheet. Choose a method for mapping out that resonates with you. It’s helpful if it’s a method you feel comfortable using so you’ll keep using it. Set yourself up for success; don’t create barriers to doing the work you need to do.

Do The Math. Once you choose your method, make a list of how much money you know you’ll be earning for the month. List how you’ll be earning it. For example, you have 5 clients who committed to one-hour breakdance lessons at $100/hour. So, 5 hours x $100 = $500. And let’s also say your beautiful face is getting paid $2,500 to be a model for vegan, artisanal, shaving cream or something weird like that.

As of this mapping session, you expect to earn $3,000 ($500+ $2,500), which means you’re short of your monthly income goal by $1,000. If this is where you’re at, I can understand why you have avoided mapping out your revenue. It sucks to have a goal and not achieve it. So process those feels and let’s get on with figuring out a strategy.

Strategize. I think there might be a few options if you’re short of your goal.

Option 1. Learn to live on less. This is a totally viable and reasonable option. It’s all about living with the compromises and understanding the tradeoffs.

Option 2. Do nothing and have good luck and/or good timing. Possible, but maybe not probable?

Option 3. Do things that may help you earn more money. The following is a list of things you can do: Reach out to potential customers who might have previously expressed interest in working with you, try a new marketing channel, try a marketing campaign that makes you stand out, send out an email blast, change your pricing, change or repackage your offering, ask customers for referrals, put a product on sale, sell something you haven’t sold before, ask your friend who runs a popular website to feature you in an article, etc. There is a universe of possibilities here. Go on, get creative.

As an added incentive, knowing your deficit means you need to be specific about the amount of money you need to earn to close the gap. And being specific is perfect because it helps you discern what opportunities to say yes to. And oddly enough, sometimes when you aren’t specific, you fail to see opportunities.

And if you’re reaching your monthly income goal, that side of the coin has plenty of options to weigh as well. Should you keep things the status quo or scale back or raise your prices? Should you take a nap? The possibilities are endless.


 

Track Your Progress

It’s really easy to make predictions and forget about tracking or revisiting them, especially if you’re worried about not reaching your goal.

 

At Least Monthly

You should track your progress at least monthly, if not more frequently. Twice a month or once a week are both great time tables for assessment. Daily might be a little too crazy - unless you’re running a restaurant, in an specific industry or in a critical time where meeting daily goals can have a dramatic impact on the long-term survival of your company.

 

Know When To Change

If you’re consistently not meeting your goals, then think about changing something. The trouble is not just knowing when to change, but also what to change. Are your goals too lofty or are you not hanging on long enough to see true results? Can you move the needle in a meaningful way with small tweaks to your copy or do you need a new marketing strategy? Does one thing need to change or does everything need to change?


 

Listen, Reflect, Be Open

Remember fifth grade science when you learned the Scientific Method? Here’s a refresher: Make an observation, form a question, form a hypothesis, then conduct your experiment, observe the data, analyze and interpret it and come to a conclusion about your hypothesis. That is basically what I’m telling you to do, just through the lens of earning income.

So much of being a freelancer or running business is about experimenting. We have an idea about a problem that we can solve, we start figuring out how to solve it, how to speak to the people who will buy our solution, how to make adjustments to refine our offerings and reach our targets. Make sure to listen to the market and your customers and to be open that the answers are all around you.
 

What Do You Need to File Your Taxes? Your Tax Prep Checklist

What Do You Need to File Your Taxes? Your Tax Prep Checklist.jpg

It’s the most wonderful time of the year, friends. Yes, welcome to the joys of tax season!

The tax checklist below can be used to help you find and organize the tax documents that you’ll need to prepare and file your taxes.

 

Personal Information

  • Your social security number or tax ID number
  • Your spouse's full name and social security number or tax ID number

I f you have a dependent or dependents, here’s what you’ll need to gather:

  • Dates of birth and social security numbers or tax ID numbers of your dependents
  • Childcare records (including the provider's tax ID number) if applicable
  • Income of other adults in your home
  • Form 8332 showing that the child’s custodial parent is releasing their right to claim a child to you, the noncustodial parent (this may or may not be applicable to you)

 

Records of Your Income

If you were employed during the year:

  • Forms W-2

If you received any unemployment benefits:

  • Unemployment, state tax refund (1099-G)

If you received income from being self-employed:

  • Forms 1099-MISC that you receive for work you or your business performed.
  • Schedules K-1 (usually your business’ accountant will prepare these)
  • Records of all expenses — check registers or credit card statements, and receipts. If you have been keeping track of these things through bookkeeping, your expenses should get reported to your annual profit and loss statement.
  • Business-use asset information (cost, date placed in service, etc.) for depreciation. If you have been keeping track of these things through bookkeeping, some of this data will show up on a balance sheet and some of the data your accountant will help you figure out.
  • Office in home information, if applicable. What’s the square footage of the space you use for business only? How much is your monthly rent or mortgage?
  • Record of estimated tax payments (Form 1040ES), if you made any.

If you earn Rental Income from renting a property:

  • Records of income and expenses
  • Rental asset information (cost, date placed in service, etc.) for depreciation
  • Record of estimated tax payments made (Form 1040ES)

If you’re retired and you have Retirement Income from your retirement assets/accounts:

  • Pension/IRA/annuity income (1099-R) - You can usually find this online.
  • Traditional IRA basis - The amounts you contributed to the IRA that were already taxed
  • Social security/RRB income (1099-SSA, RRB-1099)

If you earned interest or dividends from your Savings & Investments  

  • Interest, dividend income (1099-INT, 1099-OID, 1099-DIV) - You can usually find these online.
  • If you sold stocks or other assets/property, how much income did you earn from these sales. This information is usually reported on a 1099-B, 1099-S
  • If form 1099-B doesn’t have the price you paid of the assets you sold, you’ll need to track that down.
  • If you have reimbursements from a Health Savings Account or long-term care reimbursements (1099-SA or 1099-LTC)
  • Expenses related to your investments - What fees do you pay for the privilege of investing your money?
  • Record of estimated tax payments made (Form 1040ES), if you made any

Other Income & Losses. These may or may not be applicable to you:

  • Gambling income (W-2G or records showing income, as well as expense records)
  • Any income from jury duty records
  • Hobby income and expenses
  • Prizes and awards
  • Trusts
  • Royalty Income 1099 Misc.
  • Any other 1099s received
  • Re cord of alimony paid/received with Ex-spouse’s name and SSN

 

Deductions

If you own a Home:

  • Forms 1098 or other mortgage interest statements
  • Real estate and personal property tax records
  • Receipts for energy-saving home improvements
  • All other 1098 series forms

If you made any Charitable Donations:

  • Cash amounts donated to houses of worship, schools, other charitable organizations. Usually the 501c(3) you donated to will provide you with receipt or letter that reflects the amount you donated.
  • Records of non-cash charitable donations
  • Amounts of mi les driven for charitable or medical purposes

Medical Expenses

  • Amounts paid to doctors, dentists, hospitals

Health Insurance - The forms and certificates will be automatically sent to you, so just make sure to keep them with all your tax docs.

  • Form 1095-A if you enrolled in an insurance plan through the Marketplace (Exchange)
  • Form 1095-B and/or 1095-C if you had insurance coverage through any other source (i.e . an employer, insurance company, government health plan such as Medicare, Medicaid, CHIP, TRICARE, VA, etc.)
  • Marketplace exemption certificate (ECN) if you applied for and received an exemption from the Marketplace (Exchange)

If you had any Childcare Expenses:

  • Fees paid to a licensed day care center or family day care for care of an infant or preschooler.
  • Wages paid to a baby-sitter.
  • Don't  include expenses paid through a flexible spending account at work.

If you had any Educational Expenses:

  • Forms 1098-T from educational institutions
  • Form1098-E if you paid student loan interest
  • Receipts that itemize qualified educational expenses
  • Records of any scholarships or fellowships you received

State & Local Taxes or Sales Tax

  • Amount of state/local income tax paid (other than wage withholding), or amount of state and local sales tax paid
  • Invoice showing amount of vehicle sales tax paid

If you made any contributions to a Retirement Account & Other Savings

  • Form 5498-SA showing HSA contributions
  • Form 5498 showing IRA contributions
  • All other 5498 series forms (5498-QA, 5498-ESA)

Job Expenses & Tax Prep Fees

  • Employment related vehicle expenses (tolls, mileage, gas, maintenance, license, property tax, interest expense, parking)
  • For educators in grades K-12, receipts for classroom expenses
  • Employment-related expenses (dues, publications, tools, uniform cost and cleaning, travel)
  • Job-hunting expenses
  • Record of moving expenses not reimbursed by employer
  • Amount paid for preparation of last year’s tax return

If you suffered a Federally Declared Disaster

  • City/county you lived/worked/had property in
  • Records to support property losses (appraisal, clean up costs, etc.)
  • Records of rebuilding/repair costs
  • Insurance reimbursements/claims to be paid
  • FEMA assistance information
  • Check FEMA site to see if my your has been declared a federal disaster area

 

How to Increase Your Revenue

The funny thing about money is that it’s an artificially limited resource controlled by The Federal Reserve. The Fed tries to manipulate our economy by changing the amount of money in circulation, the money supply. It’s not a precious metal or non renewable resource and it’s not backed by gold. It’s printed on a machine. Most transactions these days aren’t even done in printed cash, they happen through bits and bytes and binary codes going from one bank server to another.

What Is a (Business) Line of Credit?

Lately I’ve been working with a lot of small businesses that are growing rapidly. It’s awesome to watch this unfold, but one thing I’m learning quickly is growth comes has a cost. Whether you’re selling products, providing a service or manufacturing something, in order to grow, you need to invest in the business.

As I’m sure you’re painfully aware, business doesn’t happen in a neat timeline. Cash flow timing issues are very real. For example, there’s the furniture designer who is bringing on more staff, expanding to be a bigger storefront and signing new accounts. There’s the retailer who needs to make a purchase from the manufacturing company and the larger order comes at the best price. And then there’s wedding photographer who needs to pay her tax bill during the slow season. A line of credit may be an option to help bridge the gap.

How Your Invoicing Impacts Your Cash Flow

I've worked in financial service since I was in college. In fact, my very first job was as a collections agent for a big, evil bank. For four hours a day, five days a week, I'd sit in a call center in suburban Southern California with a fugly headset on, connected to an automatic dialer. I would speak to people who were past due (bank speak for late on making a payment) on their auto loans. The majority of the time the person on the other end of the line just spaced and forgot to make their payment.

The bank had entire department dedicated to closing the gap between revenue that was owed to them (AKA receivables) and cash. The gap is entirely created because of how, when or if a customer will pay their bill or invoice. As a small business owner, you probably experience the drawbacks of this gap like not being able to pay your vendors or yourself or your other bills. But there are things you can do to help minimize the gap. This is called managing your cash inflow.