For business owners who want a richer business and a richer life.
Each week, we’ll have honest conversations about money - how to make more of it, keep more of it, manage it well, and use it to build lasting personal wealth.
We’ll explore money mindset, profit, paying yourself, pricing, investing, financial confidence, and the simple money systems that help you make better decisions with every rand that comes into your business.
Because building wealth isn’t just about earning more. It’s about knowing what to do with the money once you’ve made it.
Your business finances and your personal finances are inextricably linked. Whether you realize it or not, what happens in your personal bank account directly impacts the health of your business, and what happens in your business directly impacts your home life. Today we're diving into the one personal money habit that will relieve massive amounts of pressure off your business and off of you. It'll put you back in total control of your finances and create financial stability in both your personal life and your business. In my private coaching practice, I see so many business owners fall into messy, chaotic money cycles simply because they haven't drawn a clear boundary between their business money and their personal money. Now, there are usually two ways this chaos plays out, and you might recognize yourself in one or both of them. The first is living out of your business. And this is where you view the business account as your personal bank account. You see the money the business generates as your money to spend whenever you want. You make personal lifestyle choices, spend on things perhaps a bit outside of your means, and then use the business as a, let's call it, personal safety net to bail you out. If you buy a new car, take an expensive vacation, or overspend on personal expenses, you just swipe the business credit card or transfer cash over to cover it. Which means the business is paying for your financial mistakes or not so great money decisions. The problem is that this creates a lot of unnecessary pressure on your business. Your business is constantly fighting to keep up with your lifestyle, which inevitably leaves you feeling anxious, stressed, and perpetually strapped for cash because your business now needs to make more and more money just to keep up. Which means you feel the pressure to perform even more because at the end of the day, you are the one responsible for generating the revenue. The second way we create money chaos is the exact opposite. And that is using your personal money to constantly bail out the business. When cash flow is low or when there is an unexpected bill, you start digging into your personal savings, maxing out personal credit cards, or even skipping your own pay to keep the business running. Now, this can create a situation where you actually start to feel resentful towards your business because you are putting in a lot of effort, working really hard, but not getting a return on that effort. And this is where I see so many business owners throw in the towel, lose their drive and passion for their business because it's simply not worth it anymore. And the saddest part is that at this point, where they decide to close the doors, they are left with a mountain of debt and they are completely burnt out because of all of the stress associated with this. Now, to break free from this, you have to realize that you wear two very distinct hats in your business: the employee hat and the owner hat. Now, as an employee, you get paid a salary for what you do in the business. As an owner, you earn a return on what you own in terms of profit. Now, when we look at the employee side, we have to look closely at your salary. You need to pay yourself enough so you can live comfortably. But that number also needs to be realistic for where your business actually is today. Here's the thing: for most lifestyle businesses, your salary directly impacts how much revenue your business is forced to generate. So let's say you decide you need a take-home pay of 70,000 Rand per month. That's 840,000 Rand a year just for your personal salary. But remember, you have to pay taxes on that income, and the business still has to cover all of its own operating expenses. So for you to take home 70,000 Rand, the business actually needs to earn at least double that, maybe 140,000 Rand or more per month, just to cover taxes, software, and over it before you even break even. And this doesn't even account for any team members. So we are assuming that you're doing everything yourself in this situation. Now, depending on where you are in your business, a target like that might not be realistic right now. If your business is still early on, forcing a massive number like that onto yourself could completely spin you out. It creates crushing pressure on both sides. And ironically, that pressure often causes you to generate less revenue because you're operating from panic and desperation. Now, on the other side, when we take too much out of the business, more than it can realistically sustain, we stunt the business's growth potential because we're taking the money that could be used to grow and strengthen the business to fund our lifestyle. And this is why one of the first things I do with my clients inside my private coaching program, The Wealthy Owner, is to determine exactly what you should be paying yourself as a salary from the business for where it is currently. The idea isn't that you need to live as frugally as possible, although that might be the case if your business is still a baby that cannot pay you what you want yet. And in order to know how much the business should pay you, we need to know how much you actually need. And this is where that game-changing personal habit comes in. You need a personal budget. Now, before you tune out or roll your eyes because you think budgets and spreadsheets are boring, restrictive, or soul sucking, let me share a quick story with you. I had a client who for months and months completely refused to do a personal budget. She felt it was way too restrictive and kept telling me she'd much rather just focus her energy on generating more revenue in the business. Then she got hit with an unexpected SARS bill and had to come up with a big chunk of money fast to avoid thousands in penalties. On top of that, her mom had to be moved into a frail care facility and she really wanted to be there for her during that time. She didn't want to push for more revenue because that would mean working more hours. So I suggested we build her personal budget and compare it to what the business was paying her currently. And you know what? She discovered a big chunk of money, leaving her personal account every month completely unintentionally. That money was enough to settle SARS on a six-month payment arrangement without any penalties and without needing to hustle harder, take on extra clients, or burn the midnight oil. She didn't need more revenue to solve the problem. The money was already there. Your personal budget is what ensures you are living within your means so your business can breathe. When you transfer your salary into your personal account, every single Rand or dollar needs a job. Your personal budget should account for firstly your needs. These are your fixed non-negotiable living expenses. Think things like housing, utilities, groceries, insurance, medical aid. It should also take into account any debts that you need to pay off. You want to systematically be clearing any personal debt you hold. Thirdly, your budget should take into account how much you want to save and invest. This is for wealth creation outside of your business. Think things like your emergency funds, retirement, or investment portfolios. And then lastly, your budget needs to also take into account your wants. This is the fun stuff, right? Like dining out, your hobbies, and other personal lifestyle choices. Now I know what some of you might be thinking right now. That sounds amazing, but my business isn't in a position to pay me a consistent salary yet. I'm still drawing money in drips and drabs whenever cash comes in. Now, if that's you, I want you to know that you still need a personal budget. Even if you are drawing money irregularly right now, having a clear personal budget allows you to know exactly what baseline is required to ensure you are taken care of on the personal front. Knowing that baseline number removes so much underlying anxiety and confusion. It gives you clarity so that you can shift your focus away from personal financial panic and towards creating the stability in your business needed to pay that salary consistently every month. In fact, inside The Wealthy Owner, this is something we set up together. We create a financial system in your business designed to smooth out your cash flow so the business can pay you a predictable, consistent salary every month, even when revenue is inconsistent. Because guess what? Revenue is pretty much always going to be inconsistent, even if it is more stable. Now, when you stick to a personal budget built around your salary, you completely detach your personal lifestyle demands from day-to-day business revenue, which actually creates space for you to be creative and have fun with growing your business instead of it being a life or death kind of situation. Drawing a hard line between your business finances and personal finances will bring instant clarity and relief. It stops the cycle of bailing each other out and gives both your business and your personal life room to thrive. Now, if you are ready to get your finances organized and your business optimized for profit, to pay yourself predictably and step into true financial leadership, head over to the link in the show notes to apply for my 12 month private coaching program, The Wealthy Owner. I'll see you again next week.
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