Uncensored Money Season Five: It's Time To Take Comfort In Your Numbers
Melissa Browne: Ex-Accountant, Ex-Financial Advisor, Ex-Working Till I Drop, Now Serial Entrepreneur & Author, Financial Wellness Advocate, Living a Life by Design | 16/06/2024
Show Notes
For many business owners, metrics and numbers bring much more anxiety than they do comfort. This is especially true in a post Covid world, with business uncertainty is especially high.
In this episode of Uncensored Money, Mel discusses the idea of taking comfort in the numbers. Using an example of a former client, Mel breaks down how taking comfort in your numbers can work, and how with a better understanding, they can help you stay accountable and on track.
Books and resources mentioned in this episode
If you're on insta, come play over at @MelBrowne.Money and make sure you’re signed up to Mel's Money Musings for more tips, tricks and ideas on how to best work with your money.
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Transcript
Mel: Hey everyone. I'm Mel Browne. I'm an ex-accountant and ex-financial advisor, so I have the theory, but I also have the life experience. I'm now financially independent in my own right after coming back from less than nothing in my early thirties. I want this podcast to be like a chat with your girlfriends about money. My aim is to help you discover why you're behaving the way you are with money, to suggest new ways you might behave that are a better fit for you, and to increase your financial literacy and financial confidence. I hope it inspires challenges, educates and empowers you with how you do money. So let's get into it. Welcome to Uncensored Money.
Mel: If you're a business owner, whether that is a small business, a hobby, a side hustle, or a global business, chances are you are finding it a little bit tough at the moment. Tha's because for a while now, we've had so much uncertainty. There was a relative ease coming into the pandemic. You know, times were good. People felt really confident. If we looked at the business confidence scales and research, it would say that for the most part, both businesses and consumers felt really confident going into the pandemic. However, obviously all of that changed. We found, uh, felt uncertain. We found an uncertain footing, and it felt like every time we kind of started to sort that out, things would shift again. Now, COVID is mostly a thing of the past. Lockdowns are a thing of the past, and yet business is more uncertain than ever before. And I know that a lot of the stats are saying that over the next five years, many businesses will close, many businesses will fail.
Mel: And a big part of that is because if you've just been relying on being great at what you do to get through business, that will get you so far. But during times of uncertainty, when times are getting tougher and tougher, it's more important than ever before that you become great at business. And what I want to talk to you today about is about something that gives me a lot of comfort as a business owner. And chances are, it is not necessarily the same for you. But I wanna give you the concept. I wanna share with you the concept that perhaps it could give you comfort and then share with you a few ways that I wanna help that with you practically this month. Now, if we step away from business, chocolate is one of those things that gives me a great deal of comfort. I don't think I've hidden that in any small measure.
Mel: Uh, if you followed me on Insta, you'll know that chocolate frogs, chocolate bullets, chocolate anything gives me a great deal of comfort. There is something about the smell and taste of chocolate that somehow puts a smile on my face and makes me feel like a kid again. I'm sure you have something similar, whether it's a glass of red wine after a tough day, maybe it's a favorite blanket. You can curl up with a piece of music or a favorite place or person that you go to and you can instantly feel safe. There is something about finding comfort in our daily lives that can soothe and nourish and calm us, particularly if there is so much uncertainty in other areas of our life, it can feel really safe to go to that place. Now, few people, few business people, I'm sure would admit to finding comfort in figures.
Mel: Finding comfort in the numbers. I mean, even at the thought of numbers, I'm sure many of you were instantly transported back to school, to a particular maths class, maybe to a particular year or a particular teacher. And that no doubt comes with, it's a whole own breed of anxiety and stress over the fact maybe that you hated it or you felt that you didn't have a head for it or felt shame all less than. And that's a shame because as business owners, I believe there is real comfort to be had in numbers. And I'm saying this not as a math geek, I mean, I was really good at maths at school, but I want to tell a secret that I, I not a lot of people know about me. And that is that I didn't study maths in year 12. I loved instead history and English and words.
Mel: I hated maths and science even though I just happened to be good at it. So when a teacher said to me, you know what? If you're gonna keep dropping down grades, you may as well not take it at all. And of course, the rebel in me instantly went, really, I could do that. And yet what I know as a business owner is that I don't need to love maths. But the numbers in business can tell a story. The number in business can make me feel safe, can give me strategy, can help me realize what I need to do instead of me hoping that I'm doing enough. You know, for many business owners, I what I know is the stress of not having enough money in the bank to pay bills, to keep the doors open, to pay staff to reward themselves for their effort to pay tax, to ha, to have any in reserve, to invest or a rainy day can keep us up at night.
Mel: I don't know about you, but sometimes I wish there was an easy way, a silver bullet, a magical unicorn, a fairy godmother ready to grant me three wishes. I mean, think of all the miracle diets, fitness fads, promising a six pack in six weeks, or finance bros promising riches by following this easy formula. Do you believe a word of it?Well, the part that longs for a quick fix might be taken in, but you are smarter than that. Personally, what I believe in is consistency, educating myself, finding an expert to help me, surrounding myself with a community who are going to motivate me to keep going and make me feel like I can do it because they're doing it too or are further down the road than I am. That's exactly what we've created inside the My Financial Adulting Plan. If you feel like you're on top of your finances, you have a plan for this year that you're super comfortable with and have everything you need to make that happen, then just ignore this ad. But for the rest of you, make sure you check out my life-changing 12 week course or for less than the price of a cup of coffee a day. Head to the show notes to join the wait list for the next round. Or you might be lucky enough to find that the doors are open and you can join now.
Mel: And not having any cash or not having enough cash is not simply the domain of a new business. You know, if you're a fast growing business, you can find yourselves in that place too, struggling to fill full orders simply 'cause you don't have enough cash in the bank to fund stock or overheads. 'cause the money isn't coming in fast enough. Nevermind in a time of rising costs that can seem like, hey, look at those sales are still there, but at the end of the day, there's not a lot left for me. So other than at the bottom of a glass of wine or a bag of chocolate, where can a business owner find comfort in these situations? And as I said, I believe it's in the numbers because with almost every business, whether it's a new business, a growing business, or an established business, there is an element of stress.
Mel: Whether it's the pressure of needing to find new customers, paying bills, and having enough money to fund growth, or simply trying to survive and to alleviate that stress, you as a business owner can break down what you need to concentrate on. We need to focus on by looking at the numbers. That way we don't just have to guess. We don't just have to be busy. We don't have to spend time in our inbox or in social media where that's not necessarily gonna bring in cash to pay the bills. So what I wanna do is give you an example to prove that to you. So I wanna give you the example of Kath. So Kath's a marketing expert. She's been incredibly stressed with her business. You can insert your own name and your own business for her. So since taking on staff, she's struggled with the rising cost of her business and the pressure of making sure everyone is paid, including herself.
Mel: When I suggested that she takes comfort in the numbers, Kath just laughs and says she tries to avoid looking at them. So how can she take comfort in the numbers? Well, I wanna step through a number five different ways. So number one, first Kath adds up her business expenses because it's really important that we as business owners understand how much it costs to keep our lights on. We understand how much it costs for us to do business every single month. So Kath adds that up and they, she's discovers that these total 250 grand a year or $4,807 per week. Her next step, number two, she works out how much she needs personally and she works out that she needs to make 750 a week to cover her personal living expenses and she'd like to have an extra 500 per week buffer and to invest, et cetera.
Mel: So if we add up one and two together, that means she needs to earn, she needs to be bringing in her business $6,057 per week plus gst if you're in Australia, just simply not even just to make a profit, just to pay her staff, her overheads and herself. Now at this point, if Kath looked at that and realized that that was simply wasn't doable, then she has a choice. She can either unwind this business and sell it for parts, or she could decide to get a job and maybe just close it down. But the the worst thing you can do is keep going and keep going and realize in three years time, oh my gosh, I've existed, this business has existed to pay everyone else and they're all thriving. And I'm not. I've seen far too many business owners in that position where their suppliers are doing well out of their business.
Mel: They're taught their staff are even doing well out of their business. But them, yeah, they're not. And I know, 'cause I've been in that place back in the day. So Kath is looking at 6,057 a week. Now that is the minimum amount. As I said, the business needs to make, pays to pay bills and give her the wage and buffer that she wants. Not to make a profit, but just to pay everyone and herself. So she Kath can now break this number up into whatever figure will give her the most drive to chase that revenue. You know, whether it's the number of new customers, maybe it's the average client spend, maybe it's the average hourly rate per fee owner or average hourly rate per firm. What Kath now has is she has an amount that she can monitor, measure and be accountable. 'cause you want, you break that down into an hourly rate or a per sale rate.
Mel: Or if I know my average at sale is a hundred bucks, I now know that okay, well I've gotta make 600 sales in that week. Is that possible? And if you know that's inherently possible, now you've got something you can chase. Now you've got something that you can start to put activity around. You know how Kath finds comfort in a figure like that? 6,057 is by knowing she has certainty around what she needs to make each week in order to meet her goals. You know, of course she now needs to create action plans around how she's gonna meet that sales figure to measure and monitor what she's going to do regularly to make sure she's on track. But she can find comfort in knowing that when she regularly achieves that figure, she can relax by avoiding the numbers Kath stressed about the unknown, by recognizing them, acknowledging them, and deciding to act on them.
Mel: She can find comfort in them knowing that she'll be able to pay her bills, her team and herself if she stays on tracks. You know, now the process of finding those numbers might seem daunting to you, but that's okay. Really, it simply involves a little education and a good advisor. But once you've found the numbers, you can rest in them. Knowing that you're measuring them, monitoring them and reaching them should mean that you're on track. You know, numbers are not just your sales numbers. Numbers might also be that leading to that sales, as I said, things like retention rate leads, average sale rates, the number of times a customer does business to you. This might all sound like Greek to you and you may not know how to find these right now, but these are all things that have ultimately once you know, taken those five steps, they're all extra steps you should really be taking in order to run a great business.
Mel: Not one where you're hoping you're doing enough, but one where you're actually doing enough. And I get it, you know, the numbers side of your business may never be something that comes naturally to you. That's certainly not what I'm promising. However, what I do know through personal experience and working with hundreds, thousands of clients over the years is that knowledge brings power with power comes a sense of control. And often that alone is enough to alleviate tension and provide relief, which is a truly comforting thought, comfort in the numbers. Who knew? Right? But what I know from having been an accountant for such a long time, having been a financial advisor for such a long time, is that while this is natural for me, it's not natural for everyone. And I also know from lots of conversations at the moment that business is hurting. At the moment, business owners are hurting.
Mel: So what I wanna do in June is I, I'm running a couple of cheap 90 minute master classes. They're happening in the last week of June. The first one's called Understanding Your Numbers, Double Your Business in 12 Months. I'm gonna show you how changes of less than 10% and understanding your numbers can mean absolutely doubling your profit in 12 months. And no, I'm not talking about doubling your sales or doubling your pricing, like doubling how much your customers are paying. The second masterclass is the Psychology of Pricing. This is an area that I see way too many business owners get wrong. And if you get this right, this is where it can absolutely propel your business, where it can bring, uh, so much more profitability to your business without you necessarily having to go out and find a whole stack of new customers. So I'll put the details for that in the show notes.
Mel: They're happening in the last week of June. But there's something that I wanted to do because whilst I'm not an accountant anymore and we have great accountants in our little black book that we send people to inside the My Financial Adulting Plan, and whilst we do have a business module inside the My Financial Adulting Plan, this is something extra that I wanted to do as part of a give back to business owners that I really know are struggling at the moment. Comfort in the numbers. For many of you, I'm sure it seems like a foreign concept, what I've talked about today. But what I promise is you find the numbers you need to track, you make a plan and hold yourself accountable to it. There is real comfort to be found there. Maybe not the same comfort that you currently find in that blanket or chocolate or or wine or safe person, but the comfort of knowing what you would need to achieve. I encourage you to step outside your box, change your mindset, and find comfort in numbers too.
Mel: If you enjoyed this episode, we would love it if you subscribed and give us a review, then make sure you come and play with me on Insta. I'm at @melbrowne.money Remember there's an E on the end of Browne. I'm one of those fancy Browne's, and don't forget to check out the show notes for even more ways you can work with me to transform your finances.
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