We’re going to shift gears a little this week and look at some tips to help keep your personal finances in order.  However, these ideas did come from the best practices for business.

With the new year underway and the 2012 resolutions falling by the wayside, I wanted to discuss some ways you can keep your financial house in order. With the economy still sluggish and many people still unemployed or underemployed, it’s more important than ever that you make the most of every dollar.

In business, we have a saying: if you can’t measure it, you can’t manage it.  The same is true for your personal finances. The foundation to transforming your financial life are:

1. Tracking

2. Managing

3. Reviewing

Let’s explore each in detail.

Tracking

The first step to getting your finances on track to serve you is to get a clear picture of the current state of affairs.  You need to know how much you own and how much you owe.

If you are comfortable with technology, there are several tools to help you get your  finances organized and to track them going forward.  Programs like Quicken by Intuit and Mint.com, a cloud based solution, allow you to enter all your financial information and then produce reports so you can see everything organized in one place.  These tools even have the ability to connect directly to your financial institutions to keep your accounts up to date on an ongoing basis with every little work on your part.

If you are less comfortable with technology, at least create a template listing all your accounts that are assets (such as your checking account, any savings accounts, cash, investment and retirement accounts, etc.) on the left side of the page and all your liabilities (such as any credit card accounts, car loans, your mortgage, any personal loans, student loans, etc.) on the right side of the page.  When you are paying your bills each month, use this sheet to write down the current balance of each account.  By summing all the accounts on the left and then the accounts on the right, you will see how much you own and how much you owe.

Managing

Create a system or process to make sure your finances are being kept up to date at all times.  One simple trick to help you is to call all your financial institutions and ask to have your billing cycle go by the calendar month.  That way, all your statements come around the same time (usually the first week of the next month), and all your bills are due at around the same time.  You then need to set aside only 1 time each month to do all your bill payments and account reviews and reconciliations.

From a task management perspective, remember to eliminate, automate, delegate, or do it.  If you have accounts that you no longer use, or you’ve collected extra accounts that you don’t need, eliminate them to simplify your financial management process.  Next, automate as much as you can.  If you have bills that are the same every month, have your bank pay them on an auto-pay using online banking.  If you have services that can automatically charge your credit card or deduct from your bank account, do that.  Just make sure that you have the balance available when the bill comes due.  Most automated billing services will send you an email or text to alert you when the payment is going to be processed on your account.  This will help you minimize the amount of time you need to spend each month on your accounts.

Lastly, set up an approximate monthly budget.  You can use a spreadsheet for this (such as Microsoft Excel, OpenOffice, or Google Docs Spreadsheet).  Or you can use paper for this also.  At the top, list your sources of income each month.  Next, subtract all your regular monthly expenses.  Then take out any payments you have for debt service.  What’s left is the amount you can either put towards lowering your debts, put towards savings, or use for additional spending.  Of course, unexpected things will arise, but the longer you work your budget, the more accurate you will become and the better you will be at planning for the unexpected.

Reviewing

The last step is to review your whole picture.  Everyone should have some type of financial team. It might just be you and your spouse.  Or it might include your accountant or financial planner.  Maybe you just have a trusted friend who’s good with numbers and money that you want to support you. Whoever’s on your team, the goal is that they should help you make the best decisions regarding your financial future.  Meeting with them on a regular basis (monthly, quarterly, or yearly depending on the individual needs that you have) will keep you on top of your finances and your financial planning.  Even if you don’t have savings, just reviewing your finances to check on the rates that you are paying on your credit card debt, or your 2nd mortgage, for example, can open your eyes to ways to save money and to plan for a healthier future.

While it seems like a lot to tackle, if you take it one step at a time, you’ll transform your entire financial picture more quickly than you thought possible.  Remember, the way to eat an elephant is one bite at a time.  That’s also the way to get your financial house in order and to get onto the path to financial freedom.

Over the last few years, the market and the economy have been tough.  In the residential space, the main buying triggers for design services – building new homes and the sale of existing homes – have plummeted.  In the commercial space, companies’ tightening their belts has led to decreased opportunities there.  Given that situation, how can you increase your business – and, more importantly, your profits?

(The examples used relate to interior designers because this article was written for their trade magazine, but the concepts apply to everyone.)

In my work with clients in the industry, we’ve found several effective ways to create opportunities in your business that will keep you afloat and even growing, while your competitors flounder.

1. Update your sales process and conversations

2. Define your niche

3. Market – more and differently

Let’s discuss these three specific and actionable ideas so you can move the needle in your business.

Update Your Sales Process and Conversations

Even though research shows that, unlike past recessions and the Great Depression, the wealthy have managed to actually increase their share of wealth during this downturn, the idea of luxury and conspicuous consumption are not what they were.  With the political and market uncertainty that still abounds, very few are feeling in a decadent mood.  Therefore, if you were selling on luxury and ultra high end before, it might be time to reposition your brand and recraft your sales message.

One of my clients who was known as the ultra high end luxury designer in their city found that even those prospects with the means didn’t want to appear insensitive given the economic climate. And some individuals, who were sold on the company, put the brakes on right before launching the project – out of fear.

We shifted the focus from luxury to value.  Instead of emotionally selling image and vice, we emphasized quality and durability.

Remember, selling is 90% emotional.  Know what you’re selling from an emotional perspective – and know that, during different economic times, your customers are going to want to buy different feelings.  As a consumer of design servicers, the way I want to feel from buying your services was different in 2006 than it is today.  You must adjust accordingly.

Define Your Niche

It never ceases to amaze me how many designers I meet who don’t know who they serve.  If your answer to the question, “who is your ideal client?” is “anyone with money,” I would bet you’re struggling.

We live in a hyper-specialized world.  Those who try to be everything to everyone end up serving no one.  If you want to be successful in today’s competitive environment, you need to define your niche.  You need to know who your perfect client is – in great detail.  The more clearly you can describe your target, the more powerful and connected your communication to them will be and the easier time you’ll have finding them (and the more easily they’ll be attracted to you!).

To be successful in business, your company needs effective marketing – which is the communication about your business to your market.  To be an effective communicator, you must be able to get inside the head of the person to whom you are speaking or writing. Imagine yourself as a prospect for your business.  Do you want someone who seems all over the place and does whatever project comes along?  Or someone who specializes in working with people just like you?

Don’t fear – you can still accept any client that you choose.  But the more targeted you are in defining your niche, the easier it will be to build your business, and then spawn referrals from there!

Market – More and Differently

So now that you know who your target customer is, you must reach out to them.  So many designers think that good work should be enough to create a successful business.  Guess what: being a good designer is just table stakes.  To be successful in your business, you need to be good at marketing and sales as well – or hire or partner with someone who is.

How many different marketing strategies do you use in your business?  How much time do you spend on marketing each day?  What are your returns per strategy? If you want your business to grow and your only marketing is attending one networking event per week, that isn’t going to cut it.  You need to increase your time and resources invested in your marketing, and increase the quality of your marketing activities.

Look to see what your competitors are doing and copy what works.  Research how other companies in different industries, who target the same group of prospects as you, are successful and steal their methods.  And try something no one else is doing in your field.  I had a client who was networking, getting referrals, and doing some online marketing – but wasn’t generating the growth in her business that she wanted.  So we developed a simple and very cost effective direct mail campaign.  Her interior design mentor said not to bother, that it was a waste of money.  In the first mailing, she got a new client that will pay for the entire year’s campaign!

Finally, after you’ve developed your marketing plan and strategies, and systematized them to insure you are marketing with consistency, make sure you track your results.  In the past, I have fallen into this trap myself.  I spent an entire year investing between 5 – 10 hours per week on a marketing strategy.  At the end of the year, I was working with one of my coaches to see which strategies were working and which weren’t.  This strategy that I had spent so much time on over the previous year had yielded zero results.  Track your prospects per marketing activity so you know where to put more time and money and where to cut your losses.

For those who’ve survived the crunch of the last few years, there is great opportunity on the horizon.  Many great businesses were born before and even during the Great Depression.  And the ones who survived were stronger for it.  However, they survived by mastering the business side of their business and keeping their eye on running profitably.  Don’t put all your creativity and energy into your projects, save some for your marketing and your business.  With some energy, creativity, and support, you can create a profitable, growing business and position yourself as a major force in the post recession market.

I was speaking with a client yesterday about the dream of the 4 hour work week.  She wants to go re-read Tim Ferris’s best seller because instead of working 4 hours per week, she’s working 14 hours per day!

The Secret Ingredient: Leverage!

If you are struggling with working too hard in your business, you need to master leverage.

A. Task management

The first step is task management. Look at your priorities. For the tasks and projects coming at you, decide what must be done with them. Use the following categories:

1. Delete or eliminate. Sometimes items creep onto our to do list and plate that don’t actually move us or our businesses forward. Often that’s because we aren’t clear enough in our mission. Once you are clear about your purpose, you know when to say yes and when to say no.

2. Automate. Although it will take an investment of time to set up the process, you will save huge amounts of time in the future by automating repetitive tasks.

3. Delegate. Can someone else do this work for you? If you’ve built a team of superstars, there will be someone on your team even better than you at completing the task if it’s not in your zone of genius. Even if you delegate it to someone who will do it at 80% the level you would, isn’t your time worth the difference?

4. Do. If it’s a quick task, just do it rather than having to keep seeing it in your inbox or task list.

5. Defer and schedule. If you must do it, but it requires more time than you have now, schedule a time to complete it. Most great work takes focused time. Make sure you’re spending time doing the work that really matters, not just the low level processing work.

B. People

The second means of leverage is through people. I mentioned people in the delegation option above. Much like automating a process in your business, attracting and enrolling great people takes time. I discussed that previously in my article “The Top 4 Reasons You’ve Got the Wrong People.”

However, in any business, you can’t grow without people to help you. You need others to highlight your strengths and minimize your weaknesses. And once you’ve got your superstars in place, you just need to trust them.

C. Products

If you are in a product based business, the scalability of product manufacturing, distribution, and sales gives you a great amount of leverage. If you are in a service business, how can you productize your offering to gain more leverage?

There aren’t any billionaires on the Forbes list of richest people who got there through professional services (that I could find). None of them got there through people leverage (selling time for less than you paid for it). They all got there through leveraging products, technology, finance, or real estate (with the first two outweighing the last two).

D. Technology

Technology can help you with the automation step I mentioned above. It can also provide a means to productize your service – as I suggest in point C.

Additionally, technology alone can increase your efficiency if set up and used properly.

If you’re struggling with long days and no time for your family, your friends, or your self, look at the four tools listed above. It might take an investment in the beginning to shift how you’re doing things, but it will pay major dividends as you get your life back.

Photo by: stcynine

I was talking with a client this week who just wanted to go sit on the beach.  Another client wasn’t sure of the right direction for him or his company. While enjoying what he does, he was unclear as to where he was going to end up.

When I see clients losing motivation and focus, the first step in course correction is to revisit their purpose and mission.

Your Core Purpose

Your core purpose is a statement of why you do what you do.  It is what gets you up in the morning.  It is what energizes your team and gives them a sense of meaning and contribution.

If you are floundering in this area, you could need support with defining or clarifying your purpose and your company’s purpose.  Or, if you’ve already spent time defining your mission, maybe it’s time to revisit it and possibly teak it.  Finally, if there’s still a disconnect, it’s possible that your business’s core purpose and yours are no longer aligned.  That might mean it’s time for you to move on and start another business or another phase of your life.

Here are some of my favorite resources to help you with this exploration:

- Simon Sinek is a thought leader who helps companies define their “why.”  You can learn more about his model in his TED talk here.

- One of Stephen Covey’s seven habits of highly effective people (in his book of the same name) is begin with the end in mind.  His company has developed a free online tool to help you define your personal mission or your team’s mission here.

- Jim Collins’ work on your core purpose examines how great companies are clear about why they exist.  In his book Built to Last, he gives examples of some of America’s best companies and their purpose for being.

If you’re an extroverted thinker like me, you might find it helpful to think aloud with someone else supporting you through this process.  If you already have a team in place in your business, working together and accessing their creativity is a great way to define the company’s purpose and begin the alignment process all at once.

Photo by Joyce

Book links are Amazon Affiliate links

When should you bootstrap versus raise money through loans or equity?  I was speaking with a business owner last week about this issue, and it is a critical decision that can make or break a company.

Bootstrapping means that you are growing your company from your company’s profits.  You are growing from your growth.  This constraint limits your rate of growth.  You can’t leverage other people’s money to speed your time to market or to scale.

When you fundraise, you get an infusion of cash which enables you to jump ahead in the growth of your business.  When I’m referring to fundraising here it could be a loan or an equity investment from friends and family, a line of credit or loan from a bank, or an investment by professional investors (along with a bunch of other options – like vendor financing, customer financing, etc.).

In some business, bootstrapping is hard or impossible.  For example, when I opened my restaurant, I needed an infusion of cash to sign the lease, hire and train the team, and purchase the initial equipment and inventory.  Any capital intensive business needs money to start or to grow.

Many technology companies choose to fundraise to enable them to execute faster.  In some cases, the initial investment in the software development requires more resources than the founders have.   Some fundraise to buy customers to speed their growth.

When you have a choice, which should you pursue?  There are pros and cons to each.

If you get an infusion of cash, like we saw during the dot-com years, when you haven’t yet found your market, haven’t figure out your product or service, and haven’t developed your business processes, you can waste a lot of capital.  During the bubble, money poured into businesses that didn’t have a customer base or even a market for their goods or services.  And yet, the money was spent.

Many of these young companies didn’t have the expertise to build a profitable company.  In fact, the frenzy was fed by the notion that profitability is an old fashioned yard stick – and clicks are more important now in measuring a company’s success.  (Now, over 10 years later, the technology heavy NASDAQ still hasn’t reached its pre-bubble level.)

If your justification for fundraising is that you need more money to get to profitability, be careful.  In the service sector, this is almost never the case.  And in manufacturing or technology, make sure you’ve got enough affirmation from the market that they value your goods and services enough to pay what you need to generate to be profitable.

Call me old fashioned and conservative, but I actually like to see that a company that can make money before it starts leveraging other people’s money.  In addition, when you grow organically, chances are your mistakes will be smaller and relatively less expensive.  In addition, you don’t lose control of your company.

It’s an interesting time in the tech start-up space.   At the venture capital round, the money is starting to flow very freely again.  And valuations are being based on fiction.  Have we learned our lesson from 10 years ago, or is it Groundhog Day all over again?

Photo by: Jamie Welsh

If you have team members who don’t have great organizational skills, they’re going to need your coaching to guide them in how to be more effective with their projects and tasks.

There are two key elements to help you be a successful coach here.

First, look at how they are currently working.  What are they currently doing effectively?  And how do they like to work?  That might be leaning on technology – or that might be working with a paper based system.  Try to find their strengths and leverage them as much as possible.

If you have a smaller organization, you probably have more leeway to  accommodate different organizational styles.  If you are running a team of sales people, where you have 5 or more individuals on the team, you’re going to have to start standardizing the reporting, data entry, task management, and prioritization systems so that you can guide your team effectively and efficiently.

The second element is the accountability and follow-up.  No matter how complicated or simple a system is for managing your tasks and priorities, it’s easy to drop the system and fall out of integrity with it.  For your team to follow an organized productivity system (especially a team member who is naturally disorganized), they’re going to need to form new habits – which takes practice and reinforcement.  You can support them by providing check-ins to make sure your team members are using the new systems that you helped them build.

One of my favorite books on organization is David Allen’s Getting Things Done.  While your team might not be able to implement the entire system (it’s a bit unwieldy), just taking one or two points or ideas and putting them into practice will help.

Getting Things Done link is an Amazon Affiliate Link.

Photo by: Addie

One of my favorite business quotes is:

The problem with most failing businesses is not that their owners don’t know enough about finance, marketing, management, and operations—they don’t, but those things are easy enough to learn—but that they spend their time and energy defending what they think they know.

My experience has shown me that the people who are exceptionally good in business aren’t so because of what they know, but because of their insatiable need to know more.

— Michael Gerber

Learning Goals

What learning goals have you outlined for yourself this year and this quarter?  What programs, workshops, books, blogs, magazines, expert advice are you consuming?  What regular habits of learning have you developed to continue to push you forward.

“We can’t solve problems by using the same kind of thinking we used when we created them.”

— Albert Einstein

To get to a new place in your business, you need some combination of:

- New actions

- New relationships/people (internal and/or external)

The new actions and connections will come from new ideas.  The new ideas might come to you spontaneously, but, more likely, they will sprout from some outside source – an observation, a conversation, a challenge.

I am always looking for ways to improve myself and my business.  I am taking a yearlong training program with executive coach Bryan Franklin this year.  I am almost always reading a business book (I am about to start Derek Sivers’s new book Anything You Want).  I brainstorm new business ideas daily with my accountability buddy.  Next week I’m going to Fabienne Fredrickson’s New York workshop.

So what about you?

Photo by: US Fish & Wildlife Service NW Region
Link to Anything You Want is an affiliate link.

I’m a bit of a vampire junkie.  Last year for Halloween, I went as the Vampire Armand from the Anne Rice series (that’s me in the picture).  I showed the picture to my business mastermind group, and the conversation quickly shifted to energy vampires in our businesses.

Do you have someone associated with your company who takes more energy than they give?  One of my board members mentioned a client who fights her guidance every step of the process.  In my business, I had a professional advisor I used to work with who always seemed to deflect any issues I raised with our lack of results by shifting blame.

Whether it’s an employee, a client, a freelancer, a business partner, or a vendor, you can’t accomplish the big goals you have for yourself and your business with this dead weight.

In a post earlier this year, I discussed 6 key words to use to help you evaluate if you’re engaging with A players.  The sixth word is energy.  When you’re with people with the right energy for you, your business, and their position, you’ll leave the interaction feeling at least some of the following:

- Enlightened

- Encouraged

- Supported

- Confident

- Filled with creativity

- Happy

- Excited

How often do you feel that way in your business relationships?

Where you’re not feeling that way, it’s a clue a change is needed.

There is no such thing as time management.  Time exists completely outside of us.  Time moves forward without any help or guidance from us.

When someone discusses time management, she is usually referring to productivity.  Productivity is the amount of output you generate over a given period of time.  The other dimension to productivity is the value of the output.

So if we can’t manage time, what can we do? All we can ever do is manage ourselves in any given moment.  All we have in this life is a series of moments.

So how do you maximize each given moment? Prioritization and focus.

Prioritization

I have met people who believe that those individuals who are great at time management get everything done and have clean, clear to do lists.  Even the most successful have a backlog of work to complete.  The only time you have no tasks outstanding is if you’re not working to achieve anything or if you’re dead.

The difference between the highly effective and the unproductive is what they choose to do.  Highly effective and successful people are masterful at prioritizing the right things.

Some questions to help you choose what are the highest impact items to focus on:

-          Does this task move me towards accomplishing my goals?

-          What are the consequences of avoiding or delaying completing this item?

-          Can this item be delegated or deleted?

-          What value will be created by completing this task?

-          Is there low hanging fruit that would provide more return for the same amount of effort?

Plan out your week first, then each day, by identifying the highest impact items that will move you and your business forward.  Coach your team to do the same.

Focus

Once you’ve chosen the tasks to complete, you must bring focus to your work so that they are completed with creativity, intelligence, and excellence.

This article discusses a study which found that “workers distracted by email and phone calls suffer a fall in IQ more than twice that found in marijuana smokers.”

Multi-tasking is a myth.  We don’t have the ability to do more than one thing at a time.  All we can do is rapid refocusing.

And no great work is done while checking emails, texting, answering the phone, and surfing the web.  In fact, even those tasks are completed less efficiently if you’re not focused on them while completing them.

The habit of focusing takes practice, but it’s worth the effort.

Photo by: Alan Cleaver

Are you one of the many business owners who struggles with getting more business? If you’re seeing lots of prospects but they’re not turning into business, that’s a sales challenge.  Most of the struggling business owners I encounter claim that they close the majority of their prospects, but they don’t have enough leads in the pipeline. That’s a marketing problem.

Where are the leads?

If you’re short on leads in your business, there are only four possible explanations.

1. You aren’t doing enough marketing.

2. Your marketing is ineffective.

3. You’re marketing to the wrong people.

4. There isn’t a market for your product or service (or not a big enough one).

This assumes that you have a good product and are delivering on your promises to your customers.

Let’s examine each of these in turn.

1. You aren’t doing enough marketing.

You’ve been there before: you do some great marketing and selling. Customers come in and you’re slammed servicing those clients.  What do you skip when you’re busy?  Marketing!

Or your business has grown to the point where you need a full time marketing professional, but you don’t know how to manage that type of position, or where to find one, or if you’ll get a return – so you don’t build out those capabilities in your company.

Whatever the situation or excuse, neglecting marketing will strip your business of leads.

2. Your marketing is ineffective.

It could be a poorly written sales letter, or a weak headline on an advertisement, or a muddy elevator pitch.

You might be spending a lot of time and money on marketing, but you’re not getting any results.  You need to face reality and make a change.

Maybe you need to hire an outside professional to improve your marketing effectiveness.

Are you tracking all your marketing activity? Without solid tracking, you might not even know which activities are effective.  What’s your ROI per strategy? Once you know which strategies are working, cut the others.

I’ve saved many clients thousands of dollars by eliminating ineffective marketing.

3. You’re marketing to the wrong people.

You can have the best pregnancy test on the market, but if you’re only letting people know about it through Men’s Health magazine, you aren’t going to get sales.

While that example is obvious, I’ve seen many businesses marketing in the wrong place.  Maybe part of the issue is that they haven’t defined their target market clearly enough.

But it is sometimes a result of living in the “hope bubble.” An example of the hope bubble going to the same networking event week after week, even though it’s never generated a lead. You feel busy and productive, but you aren’t creating results.

Remember marketing is generating leads.  If you aren’t doing that, you are wasting time.

4. There isn’t a market for your product or service (or not a big enough one)

Are you trying to sell horseshoes in New York City in 2011?

Maybe not, but are you in touch with the realities of your particular market and niche.

In the last two years, while real estate prices here haven’t fallen as much as in other places, the transaction volume has plummeted.  If you were a transactional real estate attorney or an interior designer (working mostly on renovating apartments when people purchase), you’re business has fallen with the transaction volume.

If there are external market factors against you, can you adjust your business model or service offering to counter that?

Insanity

Doing the same thing and expecting a different result is one definition of insanity.  What can you change or try to generate more leads in your business?

Photo by: Michael Reuter