Do you run out of money? Doesn’t everyone?
Here’s another question. Do you run out of toilet paper? Not very often I’ll guess. Now, you’re thinking what does one have to do with the other?
They really are the same thing at least in the way you manage them. You use the same skills to keep your household in paper as your money flowing.
Let’s start with how you keep track of the stock of toilet paper. The system I’ve seen most frequently (how do I know stuff like this?) involves monitoring the stash of tissue and restocking when it reaches a certain level before actually running out.
Compare this to how you manage your money. Many small business owners check their bank balance when the statement comes just once a month, make deposits whenever they happen to come in and scramble to make sure checks will clear the bank.
You can’t just run to the supermarket and pick up a package of hundred dollar bills when your bank balance dips. No, but you have more flexibility than you think. You can do more to bring in business so you’ll have more deposits. You also have the ability to conserve your stock of money when you’re running low. That’s not as easily done with that last little square of tissue.
Systems to the Rescue
The trick to keeping an eye on your money as well as you do your toilet paper, is to have a system in place similar to the one you have in your linen closet. You know the one, where you peek in there every so often and see how many rolls are left. Monitor your bank balance the same way. Sign up for online banking and check your balance weekly – or more often. If you don’t want to go online, set up a simple check register and keep it updated.
How Many Rolls?
If you’re planning a party or having houseguests, you usually stock up on the bath tissue ahead of time, right? Well, same thing for your money. If you know about expenses ahead of time, put away some extra cash to cover them.
What if you went to the store and they’re out of your brand of tissue? Going without isn’t a fun option, so you either choose a substitute or go to another store. Treat your bank balance the same. If sales are lean, start working on new products or services and prospect for new customers.
Only you know for sure how many rolls to keep in reserve in the closet but a good rule of thumb for your money is to have three months of ordinary expenses on hand. Of course, that depends on your business and it could be more or less – you’ll find what works best for you.
Wrap it Up
Start treating your money more like toilet paper. You’ll have more of it in the end!*
No post next week – the regular schedule resumes January 5, as in the year 2011. I’ll be taking some of that time to plan new things for your businesses and make art. I’ll be at my desk and checking messages, so go ahead and send me one – it really makes me smile and I promise a reply to each and every one.
A happy season to everyone and many thanks for your support!