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Money. It’s a word that makes some shudder with uncertainty or fills others with pure delight, but is it for the right reasons? Is your attitude and behaviour towards your finances a healthy one? Earning money is completely different to having a solid financial strategy. With the upcoming CISI Financial Planning Week (7th-11th October), I think that now is a good time to talk about the importance of having a tailor-made financial plan in place.

 

Money Talks but a Finance Strategy Speaks Volumes

We’re often encouraged to talk about money and to change our mindset to be financially abundant. We’re encouraged to be open about what we earn, where we spend it, and how we plan to make more, but few of us really talk about our financial plans. It’s not enough just to focus on earning money for today, both individuals and business owners need to gain a good grasp on their financial status as a whole. I recently had a financial planning call with a CFP (Certified Financial Planner) professional about managing my finances as a small business owner and I learned so much! In this post I am going to be sharing with you what I learned from my financial planning strategy call and the work of CISI – a non-profit organisation that can assist you with better understanding your finances.

CISI Financial Planning Week

Managing Your Finances as a Small Business Owner

The rise in the number of small business owners has risen dramatically over the past few years and continues to increase each year. As small business owners, we often focus our efforts on becoming experts in our own fields and making sure that we can earn an income from doing so. Naturally, sole traders are short on time and don’t always have the opportunity to outsource tasks or hire additional help in their business and quite often, that means neglecting those numbers! There’s a big difference between earning an income you’re happy with and being in full control of your business finances. Mastering a financial plan and getting really good with numbers will help you to maintain and increase your income, as well as offering you the chance to make your money work for you!

One of the points that came up during my finance planning call was capital expenditure – expenses that can be classed as business expenses. If you work from home anything from your phone bill, internet package to buying a new computer or mobile phone can be categorised as a business expense. When you work from home, and especially when you’re just starting out, you can easily forget that these outgoings can be listed as business expenses. Curating your own finance strategy isn’t as difficult as you might think. It’s the small, regular habits that produce positive, long-term results.

 

What I Learned from my Financial Planning Strategy Session

Several pages of notes later and a newfound positive outlook on my business finances was how our discussion concluded as I ended the call. I came away from my planning session feeling empowered and uplifted. I wasn’t sure what to expect before the call but I was really excited all the same. Before the financial planning sessions, I had always believed that my finances were under control. I wasn’t stupid with money and I managed my business income well, so I was excited to see what I would learn during the 1-hour strategy session. The call wasn’t at all intimidating and the financial professional I spoke to made me feel very at ease.

Numbers can be very daunting and women especially tend to overlook their money movements all together. My financial planner advised me to get to know my numbers inside-out. She said that the better you know your numbers, the more control you will have. Knowing where your monthly and annual income comes from is crucial in business, especially if you have more than one source of income. So, if you sell a variety of products or services, looking over your numbers will show you which streams are most profitable and advantageous. Once you have a good idea of what your income looks like, you can then start to factor in growth plans because you will know how to increase your earnings both on a long-term and short-term basis.

This session was very in-depth and the plan we established was tailor-made to my own personal needs, so I won’t bore you with numbers and percentages that probably won’t apply to you. However, there are some additional tips and interesting snippets of information that will help you to rethink your financial mindset.

 

A Financial Planning Advisors Advice on Money Mindset

Over the past few years, there have been tonnes of content released on overcoming money blocks and teaching you how to become financially abundant. I feel that this has its own importance but I was interested in hearing a professional’s opinion on how this could fit in to my financial plan. My advisor explained that having a positive mindset is important however, you need to accompany this with a proper financial strategy. It’s not enough just to train your mind to believing that money will come to you in all forms if you don’t put in the work that will actually earn you the sums you long for. I’ve read quite a few books on money blocks and financial abundance and just like my financial planner said: “they lack a plan that will help you to actually achieve your goals.” It’s true that when you adopt a positive mindset, you will always attract something, but this behaviour lacks the prospect of financial stability and control. If becoming financially abundant just by following the law of attraction without taking any further action was all you needed to do then everybody would be better off – but of course, that isn’t the case.

 

Why Some Small Businesses Fail

Lots of small businesses succeed but there are also many that don’t. More often than not, the main reason why a business fails – usually within its first two years, is due to financial issues. When we think of the phrase “financial issues” we immediately think: money problems. However, money problems are a result of lacking knowledge on certain aspects of your business. This could come as a result of not knowing who to market to because you’re unaware of where your business sits within the market. Other issues include: not knowing where your money comes from, underestimating the extent of your outgoings in comparison with your revenue, and even undervaluing your services in a bid to win more clients. Becoming fully aware of your profits, expenditure and revenue is essential no matter how big or small your business. Still need further justification? Think about the hit TV series “Dragons’ Den” and the reactions from the Dragons when a contestant is unable to give clear answers when asked about their profit and losses! These contestants almost never get any funding from the Dragons because they’re not considered as a safe or reliable investment.

 

How to Become Better at Financial Planning Today

After the call was over, I created a spreadsheet and added in my earnings and outgoings from both last year and this year. I went on to list down where I’d earned my money from each month, my monthly revenue, and expenditure. I had already got into the habit of doing this anyway, only I focused on the month at hand rather than comparing it to previous months. Once you know where the largest proportion of your income comes from, you can focus on using these income streams to increase your income over time. If you haven’t already done so, you really need to get clear on your ideal customer so that you know which market you’re targeting and whether your business fits into it. Track your progress at all times and keep referring back to your spreadsheet regularly so that you’re aware of your situation. Where you focus your attention is where you will start to see results. Subsequently, hitting your financial targets will give you just the boost you need to keep going. Having income goals are the measurable milestones you need in your business which will allow you to see how far you’ve come and what you need to do next.

CISI Financial Planning Week

Book Your Financial Planner Session

Consumers in England, Scotland, Wales and Northern Ireland are being encouraged to start their autumn with a free, personal finance guidance session, which can be arranged before, during and after CISI Financial Planning Week 7-11 October.

The free, hour long, confidential sessions worth up to £500 are being offered by CERTIFIED FINANCIAL PLANNERTM (CFPTM) professionals who are giving their time again this year on a pro-bono basis, offering consumers a helping hand to achieve financial well-being, resilience and life goal planning.  It will offer a chance for members of the UK public to work through and discuss their life goals and then the financial planner will help plan how to achieve them.

The annual campaign, organised by the not-for-profit professional body the Chartered Institute for Securities & Investment (CISI) is a national initiative to help improve the financial fitness of the UK public, while highlighting the fact that CFPTM practitioners represent the pinnacle of professionalism for their knowledge, skills and integrity.

The CFPTM professional’s ethos is to support consumers in shaping practical, easy-to-understand, holistic financial solutions for every life stage.

The CISI is encouraging consumers to sign up to the free sessions with a local CFPTM professional or other financial planner via cisi.org/findaplanner or by calling 020 7645 0777.

With financial planning offices across the UK offering surgeries, the aim is to highlight the benefits of financial planning, which differs to financial advice i.e. financial planning helps people to organise their money to achieve specific life goals, whereas “financial advice” focuses more on financial services products. The focus of the 2019 campaign specifically for those members of the public who have a pension but don’t have a financial plan.

The free, one-hour money management sessions Financial planning firms will be offering:

  • Free consultation surgeries, either in person, via skype or over the phone
  • ‘Ask a Planner’ online sessions
  • Talks to schools across the country about the merits of the financial planning profession as a career

CFP professionals are supremely qualified to offer financial guidance not only to pre or post retirees, but to anyone at differing life stages.


*#AD – This post was promised as part of an arranged collaboration, but all opinions are my own!*


 

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