For a long time we have seen posts on social media about financial freedom and a lot of people aspire to have financial freedom in the sense that regular bills are paid on time and mortgages are cleared and so on.
One type of financial freedom that doesn’t make the news feed is the business financial freedom, the debt free beauty business. So just as individuals aspire to be mortgage free and owning a home outright business owners too should be applying this thinking to their own business to aim for the ultimate goal to be 100% free of debt professionally too.
Setting up a beauty business is an expensive task, there is space needed, equipment to invest in as well as the fixtures and fittings that are needed to make the beauty space a welcoming environment. In addition to this you have the financial cost of covering operating expenses as well as your staff payments, stock and training. Another thing that you have from day one or before if using a loan to get started is the monthly loan repayments and interest.
Investing in the business and start up loans or lending from family members is often the route to starting a business as you need cash to get started, but you cant earn cash until you are started, so lending becomes the only option for most.
The danger is when these loans and multiple credit card purchases start to add up and then the repayment of the debt starts to drain the business cashflow and in turn creates stress for business owners.
Business Financial Freedom
Also known as the dream…
- The ability to clear credit card balances in full EVERY month.
- Clearing any bills or expenses each month.
- Having NO business loans at all and in turn no interest to pay.
- Paying cash for large investments into machinery or stock.
- Having savings and cash available to pay for interior improvements.
- Having a cash buffer of atleast 3 months of regular running costs.
- Increasing the amount of CASH available from net profit.
- Improvement in business Equity.
- Having the option to make spontaneous investments and decisions.
- Living with no financial stress because cash is available and no one is hounding you for repayments. The number of regular outgoings is greatly reduced and easier to manage.
Get to work on your cashflow today. This is going to be your guide and tool to financial freedom for your business. You need to be committed to your cash flow and ensure that you follow this in everything that you do for this to be effective. The simple rule is If it isn’t on the cashflow plan then it isn’t happening.
Instill discipline and control. As you start to see your cash reserves fill up it can be tempting to spend the money but this is where you need to literally live your best cash life and follow the cash flow plan. Don’t invest in stock just for the sake of it. All you do by investing too heavily into stock is reduce liquidity of the business and covert real cash into cash that is stuck on the shelf.
Attack your debt, and do this with everything. You can use the cashflow plan to sensibly attack and repay your debt to reduce any loan balances and overdrafts. Be clever with this and map it all out on your cashflow forecast. Completely remove any credit card debt and instill good habits by only using the credit card if you can pay off the usage at the end of the month.
Don’t focus too much on profit, profit figures don’t translate into cash. Profit is just a tool to work out how much tax you are going to have to pay at the end of the financial year. Having a profitable business is great on paper but having cash in the bank is even better. By eliminating debt you are gradually turning profit into real life cash. By being debt free not only do you have more cash from your profit but it is the equivalent to owning a hours mortgage free, in the sense that the business has greater Equity.
I invite you to think about how amazing your life would be and your stress levels if your business was debt free. If your business is debt free you totally rock but in my experience this happens rarely despite there being tools and strategies to make all the difference.
Trust the process and a long process at that if you have a large amount of debt that you are starting with. Don’t delay in making a start to your journey to business financial freedom. I take great pride in the fact that my practice was built on cash and not debt. This meant it often took a while before I could invest and hire staff and the software needed to run my business but it is such a great sense of achievement when this is done debt free.
If you want to know how I can help you and your beauty business on the journey to business financial freedom, simply click here.
About Ria-Jaine
Friendly disclaimer: The information contained in this article is for guidance and information purposes only. It should not be relied upon as full and complete accounting, tax or legal advice. For specific advice relevant to your own situation please speak to Ria-Jaine MAAT or another professional direct.
For more business tips and to follow the COVID conversation check out the facebook group here.
Or follow on social media for the #60secondswithria hints and tips here.
If you are looking for podcasts then do check out my interview with the amazing Carl Reader on his The Carl Reader Show’ – Ria-Jaine Raw & Uncut.
and another podcast with Katie Godfrey, owner of KG salon, KG franchise and Lash training academy on ‘The Life Of KG’ – Guest Ria-Jaine
