Hey there! Welcome back to the next edition of this blog series.
In our last financial edition, we spoke about money mindset (you can access that link here) and why it’s so important to think about your personal and business finances together (access that link here).
This month, let’s go into the one simple routine you want to have in your Beauty Booth Rental business to put you into the best possible financial situation.
What I’ve seen for my clients is that when we manage their finances with this simple routine, they can better plan their income, be prepared for what they need on the personal finance side, make more money, and even save time in the process. Let alone how good they feel knowing that this money stuff is under control.
WHY Routines Matter
Why do routines matter?
As a business owner, you are responsible for it all—booking clients, stocking your back bar, product purchases, appointments, licenses, continuing education, finding new clients, sales to seat amazing clients every day, customer service, technology, and of course, finances.
It’s a long list, right?
If you think about it, you’ve already got routines for many things you do.
As far as finances go, we’re just trying to make sure we’re setting up your financial routines to really support the life and the business you’re trying to create.
A good financial routine means that you know when you’re paying yourself, you know when you are paying your taxes, buying your product, forecasting your next paycheck based on client appointments, and you’re able to save time by doing this entire system all at once.
Believe it or not, the idea of routines sounds super drab, but I’ve seen my clients make more money because they were focused and intentional with planning for their upcoming paychecks.
Finding Your “Right” Payday
This may seem obvious, but many business owners that I work with just move money from their business account to their personal account on a whim.
In order to create this new routine, we want to find the best payday that makes sense for your life.
So, the process will look a bit like this…
You decide on a pay frequency. Will you pay yourself weekly (like every Friday)? Will you pay yourself on the 15th and 30th because it coincides with your partner’s pay? Monthly? Or something in between? I highly recommend you pick a payday that fits in with your personal life.
Next question….what do you have time for?
If you selected Friday as a payday, but you are slammed in back-to-back appointments, it might be hard for even the most ambitious person to stick to a Friday pay date. Maybe Tuesday is a better day. You get to decide!
We also need to know when your payment processor (AKA Square, Venmo Business, etc.) actually deposits money into your account.
So, for example, when a client pays you through Square, do those deposits generally hit the next business day? Or does a different payment processor take a bit longer?
Our goal is to group multiple days of deposits together so you feel like you have a bigger pot of money to work with based on the sales from many days of working instead of $200 here and there from a client. By grouping deposits based on the day they’re actually deposited into your account, not the day the sale is made, this ensures the funds are available in your bank account for your payday!
Let’s look at an example.
So, let’s say that you decide to pay yourself weekly on Fridays and use Square as your main merchant processor, which generally deposits money into your bank account the next business day after a client appointment.
To set up your new payday routine, we’re using the sales from last Friday until the day before payday, Thursday. This is because the money earned on Thursday via Square (if that’s your merchant processor) doesn’t get deposited until Friday. That way, on Friday, when you go to pay yourself, all the money from the last week is sitting in your business checking account, waiting for you to spend it.
What To Do Each Pay Period
So, now that the money is all in your account and it is finally PAYDAY.
What happens next?
I see this time as two-fold:
- Use it to divvy up your money to pay yourself, your taxes, and any personal bills. Essentially, you are budgeting the money you’ve already earned.
- Review your upcoming personal finance bills and your bookings schedule, and see what can be done (if needed) to follow up with clients and to fill more appointments in the coming weeks for your next pay cycle.
Our goal is to use this payday as dedicated time to knock out bills, set aside money for taxes, and plan any marketing activities to ensure your next forecasted paycheck covers your business and personal finance bills.
It may sound like a lot, but this can be done straight from your phone or a notebook and should only take 15-30 minutes, depending on how frequently you pay yourself.
Just like any new routine, it cannot be stressed enough how important it is to experiment and see how you feel with this routine, just like you would with any other routine.
Does the day you set to be your payday work? Does it feel confusing? Do you find yourself too busy to make that time happen each week? Do you find yourself still needing to pull money to cover a personal bill? Buy more products than you planned? Are clients rescheduling and hurting your financial goals?
It’s so important to experiment until we find the process that feels efficient, works financially and feels very clear. It generally takes my clients about 2-3 months to get into a good groove so please don’t feel discouraged if it doesn’t go well at first. It gets better and easier the more we learn what is and isn’t working.
Getting into a predictable routine with your finances has been pivotal for my clients to achieve their financial goals of saving, paying off debt, taking care of taxes, and getting control of their finances.
I highly encourage you to block out some time to figure out your ideal payday frequency. Then, begin to structure your finances around those paydays. Observe and experiment with those pay dates to see if they are working or not for you. Additionally, use those pay dates to review your forecasted booked appointments and expected sales to ensure you’re ready to hit your next paycheck amount.
This simple routine has been monumental for my clients to feel so much more in control of their finances.
Don’t forget you can get more of the step-by-step videos, templates, and checklists inside the Money Habits program to help with your personal finances and booth rental finances. To play around with these numbers more, I highly recommend the Financial Tracker and the Income Calculator tools inside the free Prosper U PRO App too.
Darcie Milfeld of Green Bites Project® is a financial wellness coach helping women hit their biggest financial goals, from small business finances to personal finances. She is a former SVP at Bank of America and holds an MBA from the University of Texas at Austin. Darcie created Money Habits inside Prosper U.
Are you interested in learning more about taking control of your finances? Sign up for the Money Habits online course led by Darcie Milfeld. This 7-hour online course gives you the financial skills to succeed in your life and career as a beauty professional. It includes the critical financial foundations for staying in power in this industry. Check it out here!