2: Three Reasons You Don't Have Cash on Hand Even Though You Have a Multi-6 Figure Business

Are you currently making multi six figures in your business but seem to never have the cash to show for it? You know how to make money, but you seem to know even better how to spend it. Your cash flow systems just are not efficient for you. You have payment plans for your offer, but you don't know exactly when you should expect those payments. You don't know what you must bring in and holistically what is going out in your business cash flow wise. You may even have business debt.

You get a pay-in-full client that comes in and you're unsure if you should be paying off that debt or if you should wait or you don't really know exactly what's going on. You may even be tempted to do and yet another stripe or payment processor advance to get you afloat for the next few months. And as soon as you pay it off, you're tempted all over again.

Or finally, you might even have a five figure tax debt that you have on payment plan, but you're unsure if you should just knock it out because when you did last time, six months later, something else came up in your business. If you have experienced any one of these scenarios, I'm going to tell you that there is no shame that you are not alone. There is absolutely a better way to handle your cash and both your business and personal life.

In this episode, I'm sharing how to create healthy cashflow in your business and life. Stay tuned. This is the Harmonious Wealth Podcast, where we're breaking online business owners free from chasing every next revenue milestone and instead prioritizing lifestyle and legacy goals so you can finally have the personal wealth to show for your business success. I'm your host, Iyanna Vaughn, fractional CFO and bookkeeper here to guide you. Now let's start building your financial legacy.

Hello and welcome back. Welcome back to Episode 2 of Harmonious Wealth. I am so excited to have you. I'm feeling better today. If you know, you know from Episode 1. But before we get into the, to the episode, I wanted to share that I will be doing an open house on Friday, April 26th, 12 p. m. Eastern. And it's going to be all about Your Revenue Goals Don't Matter If You Don't Have the Lifestyle and Legacy Plan to show for it.

I'll be teaching you how to uncover what that legacy goal is, what your life current immediate lifestyle goals are, so that you can then turn around and create business revenue goals to show for it. And I'll be kind of sharing how I can support you long term.

So today I want to talk to you about why your cash isn't matching up with said revenue. And it's because of three important things. The first thing is definitely your mindset. I know that was That's always going to be the cause, right? Whatever is in our mind, and whatever is in our heart, whatever is in our thoughts becomes our reality. And you might be avoided of your money because you don't, first, maybe you don't understand what's going on.

But if you do understand, And you're still avoidant because you don't want to see what's going on and you have that fear and shame around your business. You might feel like, okay, I don't want to be miserable while still worrying about it and actually looking at it. I want to do something about it. And instead of actually doing something about it to focus on your business growth, you're kind of acting out of desperation, anxiety, and still avoiding it.

And this is causing you to be in that consistent poverty mindset loop. And I did a quick Google search on a poverty mindset or the mentality of someone that is in poverty. And it is one that is influenced behaviors consistent with the beliefs that money should not be spent.

Or on the other end, in this case, I see where, or I've even experienced this, where you might think that this part of your success is a fluke, so you just want to go ahead and spend it as soon as possible before it just evaporates from you. Then you also think that your opportunities are limited, right? And taking a risk is dangerous. Again, on the other hand, you might be, okay, risk is all that I know. I grew up with all these risks or inadequacies in finances.

So I'm just going to go ahead and try whatever. And one thing that was relevant for me is I was used to not being what I termed as rock bottom. So I would do anything to risk not getting back to that low place that I experienced and incrementally that rock bottom kind of like a little bit raised only slightly until I really understood what was really holding me back from getting to where I need to be in my business and my own money management or cash on hand for business and personal life.

You also feel the money that you have in your life and business now is exactly what you're comfortable with most of the time. Of course, things happen in the market or there are seasons in your business, but if you are comfortable with making money.

10, 000 or keeping 5, 000 in your bank account, that's kind of like where you'll have it versus if someone received 100k at the end of the year and then in their mind they're depleting it because they're thinking, oh this is this one time opportunity, it's gonna go. And then on top of this, you're ending up attaching yourself or attaching your own value to whatever is in your bank account and that is simply not fair to you.

I'm going to be sharing like a bunch of different wealth growth books, books about money, psychology of money, things like that. But in this book, The Psychology of Money by Morgan Housel, the author states exactly like, chapter one, like, we are not crazy. We just do crazy things with money. And that's how we can kind of, once we are aware of the crazy things that we do with money. We can then move on to the other reasons why we don't see the cash.

And the second reason is because we're not assessing the trends. Are you looking at your reports? The reports that you receive or should receive every single month from your accountant or bookkeeper is your income statement, aka your profit and loss statement, and it shows your revenue, expenses, net income. After you should receive your balance sheet, and that shows your assets, what you own, liabilities, what you owe, what's left over in equity, and finally your statement of cash flows.

If you're not understanding or seeing your trends, it's really hard to maintain healthy cashflow because any opportunity that comes up to you, you don't know how it would impact every single area of your financials. You're just going off of whim and just by your gut and just making these decisions willy nilly and it's impacting your cash tremendously.

Usually when I am asking clients or potential clients what they made in revenue for the past year, they almost always just kind of just reflect and say, okay, I made 500k, I made 250, 000, I made close to 300k. They can recall it really quickly. But then when it comes to like, hey, what did you make in profit? They're like I would have to check. Oh, I don't know. Or it came up as a surprise once they got their tax return, they knew their business net income.

And now it's on their tax return as business income. And they figured it out then. And while I've seen this a lot, I do want. to say that this should not be the case. If you're doing your own bookkeeping, try to keep up with it throughout the year or get someone that can actually support you throughout the year and also have a tax estimate so that you're not having any tax surprises.

So once we understand your mindset, you're self aware of your habits and how that impacts your cash on hand, right? You then look at the trends.

The final reason that you don't have the cash on hand that you desire is because you don't have a plan for success. We think about sales, profit, what you pay yourself, and then your cash, but you should be flipping it. and think of what you should be paying yourself, what your profit should be, and what then what your revenue should be. So then you can have the adequate cash on hand to support all those things.

So immediately after figuring out how do you serve humanity, how do you serve God's children through integrity, by providing a service, a product, any of those things, you should be thinking about how can your business satisfy your personal wealth goals. So that you can feel that excitement for your business or have that grit to continue in your business when things get rough. So first you need to understand what you must pay yourself.

And that involves figuring out above and beyond comfortability and just paying your bills. But moving beyond of like, okay, what would it look like to consistently pay debt, consistently save, consistently invest? After you figure out that number, then you're able to go and say, okay, this is what I must pay myself and my business. And realistically, how can I execute this in the next 12 months?

Once you understand what you must pay yourself, then you're like, okay, let me add a buffer so that I can keep and retain profit in my business to have adequate cash. So that might mean if I wanted to pay myself $100K then that means my business and profit must have at least $150K or more in profit. And that I know. If it's $150K in profit to have that buffer of $50K in profit left over, then I know, okay, my business wants to make $300K in revenue.

So when it comes to planning out your profit, of course there are different years in business where things change. However, you can look at the trends and see, okay, how is your team affecting your profitability? Are they able to execute on your behalf so that you can feel confident that you're able to only work on things that can generate you more revenue or are you having to go in and hover over your team or do corrections? Or are you the only person on your team?

Do you have guidelines on what you should be spending on different areas of your business? Because if not, then you can have a best guess, but sometimes it might not be the right outcome for your business.

And finally, when it comes to investing in your different programs and courses and softwares and things of that nature, you might feel that, okay, this is just something that I want to invest in, but you're not committed to actually executing on it to then get the value or return of that investment in your business. When you have a plan for success for profit, you're able to eliminate all those things.

Also with debt, because we have a cushion of your profit, you then can use or utilize your debt because you created a cushion to have enough profit. Now you also have some funds to pay off your debt and have adequate cash flow. So creating a plan for success is going to be extremely important when you tie in your mindset, look at your trends, and then create a plan for success. Then you're able to create harmony in both your business and personal life.

With our profit planning intensive clients as well as our CFO clients have a four step framework. The first step is to create a legacy plan and that is to really uncover What your goals are, what your immediate lifestyle goals are, what your long term goals are, where do you want your life to be at 60? What do you want to retire with things of that nature? And then we want to assess the trends for you or with you so that you understand what's going on.

And then we're gonna, we're gonna understand what the gap is between your legacy and where you are right now. And we're gonna help you create immediate, casual, gaps, fill in those immediate cashflow gaps, and then create a profit plan for you so that you understand where you must be to hit that plan of success to pay yourself a profit and your revenue so that you can have adequate cash on hand.

Now, when it comes to highlighting the gaps, what's really important is having a cashflow forecast on a weekly basis. Yes, weekly. Because things, so much things happen in between the weeks of your business within a month that if you make a decision to purchase something big ticket it will affect your July in a particular week when you are ready to run payroll and you're figuring out what's going on. So, with a weekly cashflow forecast, you're able to assess those cashflow leaks immediately.

And in 30 days with working with our clients, we're able to help them create healthy and predictable cashflow for both their business and personal finances. With that, you'll be able to prioritize where your cash will go and no longer be caught up with figuring out the cash deficit loop that you consistently find yourself in and avoid cashflow surprises. And finally, when we work together, you'll become more neutral about your money and help you make better business decisions.

And on top of that, we help you create a tax strategy so that with increased profits, chances are it is going to be an increased tax liability. So with a tax strategy, we help you legally reduce your tax liability and be able to help you save for those taxes throughout the year and As along with reducing your tax liability with your plan for profit. So if you want to know a little bit more stay tuned

Now let's get a little deeper into why you are avoiding your money. Raise your hand if you're great at making money. Keep it raised if you aren't the best at keeping your money. Yeah. I think we all could agree that making and keeping are definitely different habits, different skill sets, different mindsets entirely. I know when you try to make more money You're creating like cash injection strategies, which are tremendously great.

However, it's not great for long term because you're reactive and it's not necessarily a conducive strategy to assessing like, okay, what is the root cause of me not having this cash on hand? Because if I do this cash injection strategy and something comes up three months later, or even two weeks later, I'm back in the same place.

When I said before that we place our value and what's in our bank account that shows up in so many areas of our life, especially if you are a person of color, a woman, a black woman, grew up in poverty or around it. There's also an essence of if I appear like I'm okay, then I will be treated well. Like literally if I appear to look good, people will treat me good.

And that creates an essence of subconsciously trying to put your value and material things like your bank account, what you have on, what your house looks like, what you're driving. And that is the consequence of no matter what you do, you're never satisfied. And then turns into why you avoid your money because at the end of the day when the door is closed or when you're about to go to bed, you know what's really going on with your money. And that is causing extreme turmoil within yourself.

And when we start to detach from the materialistic while still being committed to wanting wealth for your life in the real, in real time, you're not as attached or you're trying to detach from material things.

Another thing that I've seen when it comes to your anxiety and money and why you're avoiding it is to counteract that you're, you're being told to price with your, what you're worth. And to me, even when I first heard it years ago, I was like, that doesn't sound. Right to me, because what you're worth, you're invaluable on a personal level, but your service, that's up for debate. I don't believe that you're pricing what you're worth personally, but you're pricing what you're offering is worth.

Whenever you're pricing what you're worth and you're raising your rates blindly, you're then met with no sales. You're met with no results at times and desperately decreasing your prices because you're like having a fluctuation of like increase to decrease because you're literally reacting to people. Something that I've done in the past is like, because I work with money, I'm assuming that they, I want to be more cognizant of what they're spending on me. And that did nothing for me.

I underpriced for so long. When I raised my rates, I was afraid to share, right. And kept clients on their current rate. And then it was kind of a mess. It takes sometimes you getting support from an outsider to say, okay, let's stop the madness. Let's just price where you need to price, give everyone one price and then move on from there. Another thing that I've seen is you might have, I love a good affirmation song.

I love affirmations, but when you're blindly affirming yourself without changing your habits throughout the day, there's going to be a little voice in your head saying like, that's not true. That's a lie. And the affirmations tend to get empty. There was this affirmations album that I would listen to all the time. And at the time I felt, it felt good, right? But was I really practicing what the affirmations were saying, or was I just feeling good in the moment?

versus actually committing myself to improving my habits. And the consequence of not actively enhancing or improving your habits is you're going to self sabotage. Because as soon as you get the cash in, you'll spend it. Mentally, if you're comfortable with a thousand dollars in your bank and nothing more, as soon as you get more, you're going to spend it to get it down.

If you're used to having 10k in your business and then at the end of the year, you get a deposit for like a hundred thousand because you had a few pay in full clients come in. You're going to go right back down to 10, 000 because you're going to find something to deplete your cash on hand and your business. I'm reading this book again, it's called the let me look it up. It's called The Secret of the Millionaire Mind by T. Harv Ecker. And as I was listening to it, he was talking about his wife.

She was just used to asking for money and she spent exactly what she asked for. And when she asked for a hundred, she'll spend exactly a hundred. So the same deal when it comes to earning your money, when you earn a hundred thousand, you're going to spend a hundred thousand. When you want to pay yourself more, you're going to spend more versus saving it for your future self.

So my approach when working with clients who have, one, issues with their relationship with money or even going further with money trauma, we're going to have I want to reassure them that I will not judge. I'm not a therapist, but I will not judge you and I will hold your hand along the way to the point where I can show you exactly what's going on. And if you're feeling like you're having a reaction to your money or having a trauma response, definitely leaning towards your therapist.

I'll also share like some Bible verses that have helped me in the past. And I'll honestly, just quite frankly, pray for my clients, pray before every experience, every interaction so that I can be the best that I can be to provide whatever service I need to.

Once we have that conversation of reassurance that you will not be judged and that we can move forward, what I do with my clients is help them understand their immediate lifestyle goals and that can be like going to family vacation, that can be like paying off 10k in debt, that can be getting a new car, that can be buying your home, anything like that. We kind of assess where you're immediate and when I think of immediate, I think within the next 12 months.

With something that you were thinking that took years, maybe we, what can we do within the next 12 months? What can we do in the next three months, one month to figure out how you can immediately feel the impact positively from your business.

So the next thing when it comes to why you don't have cash in your business, I want to talk a little bit more about why you haven't been assessing your numbers, the common thing is people don't look at their reports. We talked about You know what you must receive in your reports.

That is your income statement your balance sheet and your statement of cash flows, and even if you do receive , those reports, if you're not meeting with your accountant or your bookkeeper, you're not going to look at it, even if you did receive it. And 1 of the things that I want us to break the cycle of is not have or not needing someone with you to look at your numbers, especially if someone has helped you understand, what's going on, or you can have like a video.

on one screen, your report on the other screen, write some notes. And if you have any questions, definitely relay it to your accountant. That's what I would suggest. When it comes to your reports, maybe you're just looking at revenue, but then you have no idea what your profit is. And when it comes to bookkeeping, entrepreneurs are typically behind in their bookkeeping. So they just go off their dashboard and say, okay, yeah, I made this for the month. Or they maybe made a little bit more.

Or they have different ways that they're processing their income. So they're just adding that PayPal and Stripe and just and Shopify, maybe and calling it a day. And for a client for, if you're making six figures in your business, it is non negotiable to look at your trends because we need to assess those trends so that we can be able to file our taxes, buy a home. And so that you can understand what you need to do throughout the year before tax season comes through a tax strategy.

When you avoid looking at your numbers, looking at your trends, looking at your reporting, you don't know exactly what's going on in your business. You see consistent net losses potentially for that particular month, but then you're deceived by a positive profit for the year or quarter. You also think, okay, my profit was pretty good for this year or this quarter, but then why doesn't my cash look the same? So you're going to assume that your profit is similar to cashflow, but that's different.

So cashflow, I'm going to do a quick synopsis is first cash starts with your beginning bank balance, right? And then anything that comes in is your revenue. And then you have like what you contributed to your business. So say if you contributed 10, 000 from your personal put it into your business and then reinvest in your business. Those are all the things that come in and cash in your business. So we have your beginning bank balance. All the cash that came in minus all the cash that came out.

So it came out in your business could be your expenses. It then is your debt that you're paying off to like your credit card bill. And then it also was you paying yourself. So what a misconception is all the cash that went out was just your expenses, but you don't take into account what you've been paying yourself, which if depending on your tax structure, you can pay yourself from the balance sheet and equity, which is what's left over.

Or if you are an S Corp and you are now an employee of your company, you are an expense. So my approach is helping our clients create a financial system from the start. So when we have our onboarding for intensives, we help you set up your accounting software, if you don't have one already, or if you do get you caught up and then we're going to give you a report. It's called a money education session.

And that's when we will help you understand what's going on in your trends and also helping you understand a tax estimate. That is going to help you understand how we can move to the next step of planning for success. And after we've done the money education session, we then follow up. If you're going to go to a book as a bookkeeping client or CFO client, you'll get your report every second Thursday of the month. So that you can receive your finances timely along with the tax estimate.

Then every quarter you will meet with one of our accountants who will work with you to kind of help you understand even more where your trends are and help you accomplish those goals that you have. And then every quarter you'll be able to meet with your accountant. as a bookkeeping client or meet with your client, your accountant every single month as a CFO client.

Either way, you'll be able to understand where your trends are and you'll be able to understand what goals, the goals that we've set in the beginning of our time together and how they are actualizing throughout the year. So what this means is during each quarterly call or each monthly call, We review your month as a journal entry. I like to ask clients, how was this month? Usually they feel like, okay, it's already next month because we're already deep into the, into the month.

We help them understand. Okay. So your goal for the last quarter or last month was X, Y, and Z. Here's how we seen it be accomplished in your finances. And then we we're going to help you create new goals for that next month. Quarter or the next month and Then each month or quarter will help you create a tax estimate during the call so then you'll be able to Not go into tax season with a surprise. So say for instance if you were coming in It's April now.

So if you were coming in as a intensive client in April We'll say, okay, let's hook you up with 1 of our referrals or CPAs who will do your tax preparation and we will create. We'll do a project within the month to clean up your bookkeeping. We'll give you your money education session so that your tax accountant is able to execute your, your taxes on your behalf. So while we don't do taxes, we will refer you to a CPA that'll take care of you.

They'll be able to get invited to the portal without any issues and we'll be able to create tax exports for them so that they can create the tax preparation. But mind you, you will receive tax estimates each and every month.

So whenever your tax accountant has completed your tax return, it should line up pretty similarly to what the estimates are, but it will be extremely important to receive your prior year tax return so that we can get your personal taxes really close to the estimates that we have, mostly based off of your business income.

The third reason why you don't have the cash on hand that you desire as a multi six figure business owner is because don't yet have a plan for success or you haven't defined it for yourself. So, when it comes to people making more revenue alone, they don't plan to have like, how can I plan for the cash on hand that I have? That's never been a sentence that I've heard. And I want us to change that.

Like how can we not only get the revenue that we desire, but also have the cash that we desire or that we need to not only survive, but to thrive. The reasons why this happens is because it's really typical to avoid this planning because you hate the term budget. You have not identified what success means to you. A lot of times we, as entrepreneurs, we don't look past 12, 12 months. We're looking a quarter ahead, a month ahead at times.

And when you don't have a plan for the next three years, you will perpetually make mistakes. You might even overestimate or underestimate your own business. And when we underestimate how quickly our businesses grow, we are not prepared for when we make 300, 000 and then next year making a million. When you don't plan for that success, your taxes go up. Along with other things can be a nightmare.

What's even worse is when you're at the counter that you're working with, they assume that you're going to stay the same. You're going to stay small. You're going to be the same profit every year. And they're not proactive and really planning for taxes throughout the year because you're in the mindset of scaling your business. You don't have a financial professional to work on your business and help you with your future. You're looking at your business from a rear view mirror.

So in accounting, we're looking backwards, but with finance, we're looking forward. So whenever you're looking or you're looking at your trends, it already happened. You can't change what already happened, but you can change the future by looking and planning for success for your, your finances. When you don't have someone working with you intimately with your finances, who sees the whole picture, there's a lack of preparation for when things do go well or expand in your business.

And then you're faced with depleting those profits within the same year as you've, as you're growing. So with our clients, we'd like to counteract those ways by planning for profit. We not only help you plan for profit for the next 12 months, but over the next three years, there was a client where we did a profit plan in 2021. And I, I accurately predicted her 2023 income.

And it was because I made us, I looked at her trends, looked at where she's been growing these past few years, looked at what her goals were. And then I said, okay, by 2023, you should be making. More than 2 million, almost 3 million in your business. And that's exactly what she made. So when you have someone that can help you create a plan for profit beyond the 12 months, you're able to get a pulse of what your, a pulse of what your future goals will be.

So with this client, we were able to go and look at what she's been with. We're like, okay, 2023, we're coming to an end. We uncovered that yes, we were on the track to hit and surpass the goal that we initially set. And we look back at her lifestyle goals that we've set and some of her legacy goals, and we noticed that she was able to accomplish them. So going back to the profit plan, it allows you to see the gaps between where you are and where you want to be.

And we're able to provide that for you. So let me know in the comments below, what's your number one reason why you don't have the cash on hand in your business that you desire? Is it your mindset? One, your mindset. Two, you're not assessing your trends. Or three, you don't have a plan for success. Or is it four, all of the above? Let me know in the comments if you're watching on YouTube.

So we just went through three reasons why you don't have the cash on hand in your business, despite being a multi six figure business owner. If you're ready to take control of your cash flow, I recommend you purchase the Harmonious Cash Flow Planner so that you can have control of your business and personal finances today. To ensure you have something to show for your business success, it's imperative that you create a plan for success.

And your cash, make sure you're maintaining profit in your business and that you're paying yourself well consistently with my harmonious cashflow planner, you'll be able to map out your cashflow monthly for the entire year, save payoff debt and much more visit lovely financials. com slash cashflow to get started.

If you're a woman growing your business and family and want better cash on hand in your business to build personal wealth and to create a legacy, subscribe either on YouTube or wherever you listen to your favorite podcasts. I'm on a mission to help 100 women reach at least 1 million in net worth to create generational wealth and break generational curses. If this aligns with you, I'd love for you to be a part of this community and tune into more episodes of Harmonious Wealth.

Hey there girlfriend, if you're ready to finally have the lifestyle and legacy to show for your business success, I would love for you to click that subscribe button on your favorite podcast app or YouTube.