3 Reasons your Business is Broke
Written by Simone LeBeaux Craig on October 20th, 2020
Are you tired of running a business that you give so much to but continue to be financially depleted by? Not fun.

I know you’re not the quitting type. But you’re smart enough and have also been in the business world long enough to know that what you’re doing isn’t sustainable. And something has to change.

Here are 3 reasons why your business is broke and what you can do to turn it around.

#1 - You’re making financial decisions in your business based on sales, instead of profits.

Sales will not save your business from poor financial management. Only profits can do that.

I was trained in a traditional accounting background, so I see profits in a very narrow and specific way. And when it comes to my business (and personal) finances, it’s served me and my clients' bottom line very well.

I’ve noticed that a multitude of B2B marketers promote their products and services as something that helps to increase “profits”. When I dive deeper into what they're actually selling, they're not talking about real profits or profitability resulting from investing in their product or service. They're talking about increasing sales.

While sales, of course, contributes to profits, sales and profits are two different things.

Solution: Be Narrow-minded about your Profits

This will likely go against your growth-mindset, entrepreneurial whimsy. But hey, someone’s got to give it to you straight, lady.

Profits do not equal Sales. It sounds good for marketing purposes but it’s not true, and worse, will keep your business broke. The truth is Profit = Sales minus Expenses. Admittedly, there are some nuances to this formula. But unless you're an accountant, your time isn’t best spent focusing on accounting nuances.

As a business owner, for the purposes of improving your business finances, be narrow-minded in your view of what your profits are. Profit = Sales minus Expenses. That’s it.

Start making financial decisions in your business based on real profits, not sales.

#2 - You’re not paying yourself.

You must be willing to pay yourself. The amount you pay yourself doesn’t matter as much as the actual act of paying yourself. If as a business owner, you find that you can’t afford to pay yourself, that is indicative of an issue with how you're allocating money.

If you want to break out of the broke cycle in your business, where you are allocating money must be addressed. It also places an emotional burden on you that will likely cause you to become resentful of your team, your clients and your business. The hard truth is that you're likely upset with yourself because you’re not taking care of yourself in a very basic, fundamental and essential way, which is paying yourself for the work that you do.

Solution: Start paying yourself, no matter how small the amount.

#3 - You aren’t putting money aside for taxes.

I’ve seen one too many business budgets created without considering taxes.

For service based businesses especially, taxes are usually the second highest expense for the business owner. It can wipe out any remaining profits you have or are planning for in the future.
There is a misconception that our accountants are proactively looking for tax savings for us. Most, my dear, are not. Don’t believe me? Call your accountant and ask them.. if you can get in touch with them.

Solution: Put aside a portion of your sales for taxes. Then, start working with an accountant who will help you save money in taxes. (We do exist!)

Simone LeBeaux Craig

Simone is celebrating her 14th year as an entrepreneur. Her company, SLC Global, provides wealth consulting services for women entrepreneurs helping them create generational wealth for their families. Simone loves teaching her clients, from all around the world, how to have the mindset and money management skills, to enjoy optimal business success and live a wealthy, joyful life.
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