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Broke to 6 Figures: How Your Relationship with Money Affects Your Business Growth

Do you feel like you just can’t earn enough money in your business to fully support yourself? It could be that you’ve been running a business for a while, but your personal income isn’t keeping up with your company’s increase in sales.

Or maybe you’re considering taking your long-term side hustle full time, but not sure if it can replace your day job’s income.

Or perhaps you’re just a couple months into being a freelancer and you don’t know whether you should spend money to get more clients, raise your prices … or both.

But changing your financial strategy is irrelevant until you have a positive relationship with money. That means you need to know how to make money work for you and for your customers, how much money you need for yourself, and what exactly what your business earns – and spends – every month.

Wondering how to get there? It all starts with a better understanding of your customer (don’t worry, I’ll explain).

First, A Quick Background

In 2010 I started a business with less than $200 and turned it into 6-figure revenue by its second full operating year. To say I was bootstrapping is an understatement. I have been exactly where you are now, trying to figure out how to make the most of very little capital and grow a business as quickly as possible.

For my first couple of years, I benefited very little from the growing revenue my company was producing. Even when I crossed the $100,000 revenue mark in December 2012, I had very little left over, and I didn’t pay myself much out of that. I believed in the adage “you gotta spend money to make money,” but I was doing it all wrong.

I was telling my clients to pay themselves first, while putting off my own paycheck at the expense of my personal financial health.

My relationship with money – that it was scarce, that I didn’t deserve more of it and that I would always have to work my butt off to the point of desperation in order to have “earned it” – was stifling the growth of my business.

At the time, I didn’t realize that by improving my services for my customers and making their experience better, the money I needed to pay myself well and grow my business would start flowing.

How My Money Mindset Changed

I used to talk, talk, talk about how successful my business would be some day, but I was too focused on earning more revenue when I needed to be focused on costs – specifically costs that affected my customers’ experiences. In my third full year of business, my revenue was up another 50%, but I still couldn’t pay myself what I needed to support my personal life and obligations. For 2014, revenue is pretty steady, but I’ve cut $4,000 a month in expenses.

Yes. Four thousand dollars every single month.

That’s what I was spending on things I thought I needed instead of what my customers needed.

I shifted almost all of my marketing dollars over to Facebook ads, closed my office to work virtually, let go of my (amazing, fantastic) Public Relations guy, and more. My existing customers barely noticed, because they didn’t need to come to my office and my media attention was irrelevant to them. Besides, most of my leads were coming from internet search and referrals – this was not the time for traditional PR.

My new customers are tuned in to the way I operate right from the start of our projects, and I can give them better service than ever because I’m free of both financial worry and unnecessary expenses.

How to Shift Your Money Mindset

If you’re caught in the cycle of money scarcity and exhausting yourself trying to earn more, and more and more, try these two steps to start shifting your money mindset.

Step 1: Learn to see money as a tool and a resource – not a burden or something that will always be scarce

This was a very difficult shift for me. I grew up in a home where money was scarce, and it seems like we’d never have enough. The problem was I didn’t know what “enough” was. I only knew I needed more of it in order to stop worrying about it. This mindset gets you stuck in a cycle of money going out as fast as it comes in, and it also forces you to put yourself last (I can function on less; I can live on less; others need it more than me).

Every dollar you spend out of your business needs to be consciously and deliberately focused on your clients (see Step 2 for more examples). That includes paying yourself enough so that your own personal financial concerns don’t affect the way you work with customers.

With that burden gone, you can do better work for your clients, and give them better service. You can come to them from a place of abundance and satisfaction. Your customers will notice the difference.

Step 2: Spend money only on things that will help you serve your best customers better

An important lesson here is that if you expect to grow your business faster than I did, you’ll most likely have to spend more than I did. But you also have to spend smart. Review your spending at least quarterly and look for places you can reallocate money to help your customers.

Example 1: I first hired staff to take on overload because I felt I was too busy. I didn’t do it because it would allow me to give my clients more one-on-one attention and follow up with them at critical times in their business development – even though that is a far better reason to add staff. What I needed at that time was better systems, not more people.

Example 2: I bought advertising on business web sites because I thought it would help me reach more people and therefore earn more money. But few people responded to the advertising at all, and most of them weren’t my ideal clients. So instead of advertising, I created better follow-up communication with my previous clients, which boosted my referrals and shortened my sales cycle.

In both cases, better systems improved the customer experience. Spending a little money on a CRM to track referrals and follow-ups was much, much less expensive than hiring and advertising, but it served the same customer-focused goal.

The Bottom Line

Assuming you’re charging a fair price for what you sell, your focus needs to be on how to run your business more efficiently without sacrificing on customer service.

Now, this doesn’t mean you should spend as little as possible. You can instead decide that every penny you spend on your business – including on yourself (see Step 1) – will help improve the experience for your customers.

[tweet_dis]Your customers deserve the best, so put yourself in the best place to serve them.[/tweet_dis] If that means paying yourself more so you can stop worrying about paying the bills, do it. If it means hiring a Virtual Assistant so you can stop filling out intake forms or invoicing and instead send a personalized follow-up to your recent clients, do it. If it means using a more expensive supplier that delivers consistent quality so you can always produce the best product, do it. Spend wisely and attract greater abundance for yourself and your customers.

[tweet_dis]Your 6-figure business awaits. It’s just a matter of deciding that you deserve to build it.[/tweet_dis]

Are your business expenses customer-focused? What costs can you cut – or introduce – to make sure you’re giving your customers exactly what they need? Share your experiences with me – and the Firepole community – in the comments below.

About Jessica Oman

Jessica's outside-the-box approach to business plan writing has helped her clients collectively raise almost $50 million in financing to start and grow new businesses. Sign up for her 5-part business plan training series for FREE here so you can get your business plan done and get your money sooner.

15 thoughts on “Broke to 6 Figures: How Your Relationship with Money Affects Your Business Growth

  1. This article hits home because I want to start a business creating one on one/group personal change. I use hypnosis and NLP. I used to run a sales coaching business that withered and died after 7 years. I don’t have $ but my real problem is not knowing where or how to start getting clients. last time I used networking exclusively. Feel this won’t work this time.i

    • Hi John, I’m curious why you think networking won’t work this time around. I’d guess your business revolves around creating trust, nurturing referrals and reaching out to like-minded business owners for partnerships. That sounds like ‘networking’ to me. Time to rethink your definition of the word maybe? I’d be happy to brainstorm ways to start getting clients sometime. 🙂

  2. Such great insights, Jessica. YEARS ago, I attending a fundraising workshop for the nonprofit I worked for. I’ll never forget what the speaker said, “If you’re going to raise the money for a living, then you need to examine your relationship with money because it will affect everything you do in fundraising.”

    She made us go back and think of some of our first memories with money (ie — a small child about to put a penny in her mouth, but her mom smacks it away, saying, “That’s dirty.” Great food for thought!

    • It’s so true! (but pennies are kinda gross…don’t you think? I’m kinda glad we did away with them in Canada) =)

      Fundraising is a lot like selling, except most of the time the benefits to the donor are completely intangible. And I think that’s what makes it even more important for people in fundraising to have a positive relationship with money. A charity with abundant donations can do so much good work with that money, and it starts with the fundraisers themselves. Thanks for your insight!

  3. I cannot agree more with paying yourself first. In fact, when you don’t pay yourself a fair compensation for the value you provide through your business, it’s a lack mentality and also communicate the message that what you provide is not valuable. If you don’t believe the value you provide, how can you make get your clients to value your services?

    When I work with my clients to cut their unnecessary expenses (and the stress that comes with it), a large part is about getting clarity, taking them out of the comparison trap and really focusing on what they want then find the right tools and people to do the job. Not paying for stuff just because other people have it.

    • Also, not paying for stuff just because someone else says you should have it!

      It’s not to say that an entrepreneur can’t or shouldn’t temporarily defer salary – sometimes there are strategic reasons to do so – but doing that without a plan to develop fair compensation is dangerous. It traps so many people into never being financially rewarded for their work. And you’re right – it absolutely sends the message that their work isn’t really worth it. Thanks for your comment!

      • Agree, when we defer salary, we just need to do it consciously and intentionally – have the business write us an IOU so it is acknowledged. Unfortunately when most people don’t pay themselves, it’s out of fear of lack and uncertainty, and it sends the wrong message to ourselves.

  4. This article truly speaks to me. It seems that no matter how hard I work on building my business, I seem to never get ahead financially. I want the business to be sustaining enough that I can make it my full time venture, not just the side thing. I see that I have financial challenges, and the more I make, the less I actually seem to wind up with. I really am thankful for this article today, and I believe that there are things here I can implement immediately to move towards the changes I want, rather than feeling like I’m going backwards. Thank you for this article.

    • Hi Nick, thank you for your kind comments. I’d love to know specifically what you’ve implemented to start making these changes? Look forward to hearing from you 🙂

      • Hi Jessica,

        The ideas that I’ve started to implement, or at least research to implement are this:
        -How do I create a better customer experience that will allow for repeat customers? Will that also allow for word of mouth advertising, which is the most effective and requires the least amount of cost.
        -How do I create a better relationship with money? I have come from a background of not really having a good relationship with money, which sometimes also leads to me being my own worst enemy.
        -How do I grow my business more effectively? Does money really have to be a part of that, or can I just implement better systems without having to spend money?

        Out of those three specifics, I feel that building a better relationship with money is key. I’ve built my business from bootstrapping, but I seem to be stuck in bootstrap mode, while I spend money on things I don’t really need to for the business. Having a better relationship with money would allow me to build the business in such a way that I wasn’t focused on money, only focused on building better relationships with my customers.

        Again, I thank you so much for this article. I have bookmarked it and written down the ideas that I have shared with you so I can work on implementing them.

  5. The money relationship is so important and I agree with you Jessica, that you need to view it as a resource. It’s helpful to dig up what emotions are tied to it and get them out in the open. When I did that I was shocked at what strong emotions I had around money that were holding me back from earning more. Another thing I’ve found is that most entrepreneurs are spending more than they need to on goods and services they really don’t need. So part of improving the relationship with money is to treat it with respect and not squander it. I like your idea of spending less money on you and more on improving the experience for your customers. Thanks, Jessica!

    • So true Jeannette. Money deserves respect! It’s a tool to accomplish meaningful things. It can be empowering to have more of it if you are learning on how to make good things happen and help people with it. Glad you enjoyed the article!

  6. They quote Rockefeller this way: “How much money does a man need? More.”

    Sometimes that is how we feel, isn’t it.

    I have found my spending venture often to have been mistakes. I think the fear—not of spending, but of futile spending—can be more huge than any other, for me. And there are so, so many marketers who market to me, with their hands out, that I feel as if I am viewing them through a kaleidoscope while riding a merry-go-round. And yes, I feel as if I am a small child when it comes to real wisdom regarding money.

    It’s for saving, right? That was my childhood experience. Never to spend, always to put more away. How to spend when necessary and to hang on to it when necessary, and how to tell the difference—those are the lessons I need.

    • Well, saving is a pretty good idea too. In my business I put 2% of my gross revenue aside every single month, and on a quarterly basis I determine whether to pay myself a bonus or reinvest that money into my business. I’m planning to increase that to 5% in 2015.

      The thing is, you’ll probably never have a totally cut and dry method of knowing when to spend and when to hang on, but with your customer’s needs in mind, it does get a lot easier.

  7. This is interesting stuff, thank you Jessica! I wonder if you have any guidelines or tips on how to evaluate what you really DO need to spend money on and how much is “normal”? My experience was a bit opposite yours in that I grew my business doing everything myself and using a lot of free or low cost tools. It was only a few years ago that I started opening myself up to the idea that you really do need to spend money to make money: At some point it becomes financially unwise to do everything yourself, so you outsource; you realize you have too big a list to keep relationship details and deadlines in your head, so you start accumulating CRM and PM tools; and so on. Can one overdo it? Or is unloading tasks always a good thing, even if it takes a while for your “saved time” to produce the income that makes all the unloading worth it? Thoughts on finding a good balance with this?

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