[00:00:00] EMMA: A big revenue month can still mean a broke business if you haven't done the maths underneath it You land a $10,000 sale, the payment arrives, you open your banking app, you see the balance and think, " Beauty, I've got 10 grand." That $10,000 already has several jobs waiting for it.
[00:00:19] Some may belong to the ATO. Some will cover wages, superannuation, suppliers, software, marketing, and other operating expenses. A portion may be profit. A portion may eventually become yours.
[00:00:38] Understanding that changed the way
[00:00:39] I manage my money in my business because revenue is the starting point. It tells you how much came into the business at the top.
[00:00:50] It doesn't tell you how much you can spend. So grab your cuppa, open your banking app if you're feeling brave. Let's talk about giving every dollar a little job to do. Your business account is not your wallet
[00:01:06] One of the most useful shifts I made was treating my business like its own financial entity.
[00:01:12] The money coming into the business belongs to the business first. The business has responsibilities, it has commitments, it has bills arriving next week, and next month, and months from now. Depending on your business, that might include wages, your salary, please freaking pay yourself, superannuation, GST, income tax, software, insurance, contractors, suppliers, marketing, events.
[00:01:44] Oh, my Lord, travel. The list goes on. Rent, venue hire, professional services. healthy-looking bank balance can disappear like that very quickly once those commitments are paid. And this is where so many [00:02:00] business owners get caught, and it breaks my heart. They make a sale, they spend from the main account and assume there will be enough left when the BAS arrives.
[00:02:10] Then the BAS arrives, cue the panic. Suddenly, they're moving money around. They're delaying something else, or trying to create a quick injection of sales to cover an expense they knew was coming. I have a very simple belief about this. Your money needs instructions. If you leave it sitting in one big account, it becomes incredibly difficult to see what is available, what is committed, and what belongs elsewhere.
[00:02:40] So number one, get comfortable with your numbers. I know plenty of women who avoid looking at their numbers. Plenty. They feel overwhelmed. They worry they'll discover something they don't wanna know. Usually, they do. Some carry shame because they believe they should already understand all of this. You shouldn't.
[00:03:01] How would you? You're running a business. You can actually learn this stuff. You can ask questions. You can engage a brilliant bookkeeper or a brilliant accountant. You can build simple weekly practice
[00:03:13] that helps you understand
[00:03:15] what's happening in your business. You don't need to do every piece of financial administration yourself, but you need to understand it.
[00:03:23] And a lot of us outsource this before understanding it, right? We need to understand our business finances well enough to make informed decisions. Knowing your numbers gives you options. It helps you decide whether you can hire someone, whether you can outsource, whether you can attend an event, whether you can invest in marketing, increase your salary, or take time away.
[00:03:43] And that knowledge, that's incredibly empowering. I like simple systems. I'm gonna make it really simple Every week, three buckets. I allocate the money in my business across
[00:03:55] three main buckets
[00:03:57] your percentages might look different to mine. [00:04:00] You need to speak to your accountant or your bookkeeper, and find the numbers that suit your actual revenue, your structure, your expenses, and your tax obligations.
[00:04:10] The buckets are really important to me. Bucket one is daily expenses. This is like the operating account, right? It keeps the lights on and the business moving. Things come in and out of it, et cetera, et cetera. Staff wages come out of here. My salary comes out of here. Superannuation comes out of here.
[00:04:28] all the things I've already mentioned, they all come out of here.
[00:04:31] If it's part of running a business on the daily,
[00:04:33] this account covers it. The balance in this account tells me what the business has available for its regular operations. It gives me a much more accurate view than one really large account containing money for tax and profit and expenses.
[00:04:49] I also want you to notice that my salary sits in this bucket Paying yourself is part of running the business. If you're not paying yourself, you might have a hobby. We'll get back to that shortly. Bucket two is tax. This bucket removes an enormous amount of stress for my clients and for me. Each week, we move around 30% of our revenue into a completely separate tax account.
[00:05:12] GST lives there. Any income tax lives there. Money that will eventually be paid to the ATO lives there. That money's not mine. The exact percentage your business requires depends on your circumstances. No, no financial advice here, but please speak to your accountant. 30% gives me the buffer I want in my business.
[00:05:32] I would rather reach BAS time or tax time and find extra money in the account than scramble to cover an amount I've already spent. Future Emma is always very grateful to current Emma for doing it this way. And yes, it can feel, uh, strange to see money sitting there when you wanna invest in something, or your operating account feels a bit tight, but that tax [00:06:00] account has a clear job, and I treat it like that.
[00:06:02] Tax shouldn't be a surprise. The dates are coming. They've always been there. The obligations exist, and your weekly allocation prepares you for all of that. Bucket three is profit. Each week, I move around 20% into a profit account. I've worked up to 20%. Now, I can hear some of you already saying, "Emma, I can't afford to move 20%."
[00:06:23] Yeah, I know. I don't know why I put that voice on. Doesn't matter. Anyway, start with a percentage your business can sustain. It might only be 2%. It might be 5%. It might be 10%. If you start with 1%, you'll barely notice it, But the habit teaches you to create profit intentionally. And many businesses spend every dollar that they make.
[00:06:42] More revenue comes in, expenses rise, and the owner continues to, like, wonder, " Why is there never any money left?" That's why profit, I reckon, deserves its own place in your financial system. A profitable business gives you choice. You can build a buffer, or as I call it, running away from home money. You can manage a slower month, or you can take an opportunity without putting everything on a credit card.
[00:07:06] It also proves that the business is financially supporting the life that you actually wanna create. You need to start small if you need to. Start this week. Please pay yourself. Please pay yourself. I want to spend a moment on this because I see far too many people not doing this. Business owners will happily pay every supplier before they pay themselves.
[00:07:28] The software gets paid. The advertising gets paid. The contractors get paid. The venue gets paid. All of those need to get paid, I agree. Everyone receives their money, and then the owner looks at what remains, and they're like, "Wait, wait, I'll just wait until next month." The next month comes around, the same things happens.
[00:07:48] That's the definition of insanity, people. If you work in your business, you create the discipline of paying yourself consistently. The amount may begin below your long-term [00:08:00] goal. That's fine. Choose an amount the business can currently support and pay it on the regular. Your wage belongs in your financial plan.
[00:08:09] Without it, the business can appear profitable while relying on your unpaid labour and that gives you a really inaccurate picture of its actual performance. It also creates resentment and exhaustion. You know it. Your business should support you. Paying yourself is part of building a sustainable business, right?
[00:08:30] So I spend time with my numbers every week. I love my numbers, my numbers love me. I look at what has come in, I look at what needs to move and what is coming up. I review the budget in Xero. I check what's working and where we need to make changes. You can call it a money date, a finance hour, a weekly review.
[00:08:50] The name doesn't matter. Put it in your calendar and protect the time. And during that review, ask yourself What revenue came in this week? How much needs to be moved into the tax account? And how much will I move into profit? What expenses are due soon? And have wages and superannuation been covered? Are there any upcoming costs we need to prepare for?
[00:09:16] Do we need to create more revenue? Which revenue-generating activities will we complete next? That final question, that's super important. If the numbers tell you the business needs more money, move into action, please. Follow up the proposals. Contact potential clients. Make the phone calls. Send the emails.
[00:09:38] Book sales conversations. Your numbers give you information. You then use that information to decide what happens next. Don't be slow with what happens next. So three questions for this week for you. Open your online banking and ask yourself these questions. Question one, do I have separate bank accounts for the different jobs my money needs to [00:10:00] do?
[00:10:00] PS, they cannot be personal. Question two, if someone asked me how much I currently owe in GST or tax, could I answer them? And question three, am I intentionally creating profit each week? Write down your answers, then choose one action. You might open a separate tax account. You might set up an automatic weekly transfer.
[00:10:24] You might book a meeting with your bookkeeper or your accountant, and you might begin paying yourself a regular amount. Keep it simple and make it repeatable. Money with a plan creates confidence. You understand where it is, where it's going, and what it needs to do, and that understanding creates calm, and calm business owners make better decisions.
[00:10:47] Celebrate the sales when they land. I do. Then allocate the money and let it do its job. I also want to say here that we've talked a lot about a bank account. I don't think that's the best way to track your finances. What I will say is make sure you've got a financial system. We use Xero, we love Xero, and we think it provides all the data and information we need.
[00:11:08] Remember, cash is queen and every dollar has a job. See you next week.
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