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<\/p>\nDo you have financial habits that you follow as your grow your business?<\/p>\n
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Do you feel like you truly understand your business financials?<\/p>\n
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If I asked you “what’s your average expenses per month been in the past 3 months?”…would you be able to answer confidently?<\/p>\n
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How about this one…”What’s your trailing twelve months sales and profits?”<\/p>\n
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If you’re running an eCommerce business, do you know what percentage of your sales come from Amazon vs Shopify vs Ebay vs Walmart?<\/p>\n
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Likewise, do you know the products that are your best sellers and that make the most profits on a per unit basis?<\/p>\n
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If you’re running a software company, do you know the CAC (customer acquisition cost) and LTV (lifetime value) of your customers? How about your churn rate (amount of turnover)?<\/p>\n
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If you can’t answer these questions about your business, don’t worry!…I couldn’t either when Nathan Hirsch<\/a> and I were starting to run our first business back in 2009.<\/p>\n <\/p>\n There’s enough to worry about while starting and growing a new business…it’s hard to keep track of your finances as well…unless you have the right financial habits and systems in place.<\/p>\n <\/p>\n In this article, I’ll share our top 10 financial habits that we’ve taken on over the past 10 years of being entrepreneurs and business owners. These financial habits are the result of starting and scaling four businesses (EcomBalance<\/a> included).<\/p>\n <\/p>\n The key to remember is that your financial habits and systems can always be improved. Never settle for where you’re at today and alway be looking for ways to improve your financial literacy of your business.<\/p>\n <\/p>\n <\/p>\n Before we dive into the 10 financial habits that we’ve developed over the past 10 years, I want to talk a bit about how it’s all come together.<\/p>\n <\/p>\n <\/p>\n <\/p>\n Together, we’ve started and scaled 4 companies so far. Our first business, Portlight, sold products on Amazon from 2009 until around 2016. With that first business, we learned the headaches of handling bookkeeping for an eCommerce business as we sold over $25 million in total sales over the 6 year period. For hours each month, we’d sit in a room reading out transactions and reconciling them in Quickbooks. We both still have nightmares of those Quickbooks sessions.<\/p>\n <\/p>\n We founded our second business, FreeUp<\/a>, in 2015. We saw a need for a better freelance marketplace specifically for Amazon sellers and eCommerce businesses and we set out to challenge the big boys like Upwork<\/a> and Fiverr<\/a>. FreeUp taught us a tremendous amount about properly managing our financials and truly understanding the numbers. At its peak, the business was doing $12 million in yearly sales from a client base of 1,000+. FreeUp was eventually acquired in late 2019 by The Hoth<\/a>. I’m not sure the sale would have gone through if we hadn’t had all of our financials in such good shape. A true lesson learned in the importance of properly managing your books and knowing your numbers inside and out.<\/p>\n <\/p>\n Our third business is Outsource School<\/a>, an online membership educating business owners on our systems and processes for hiring and building teams of remote virtual assistants and freelancers.<\/p>\n <\/p>\n After reflecting on which industry and problem we wanted to address next, financials and bookkeeping kept coming up. We had learned SO much over the 10 years of working on our first three businesses and we really saw how important they were when we went through the sale of FreeUp. From talking with hundreds of business owners over the years, we also knew that it was a piece of the business that others struggled with or hated handling.<\/p>\n <\/p>\n <\/p>\n It’s been a 10 year journey of lessons learned and testing new habits to find the optimal financial habits that we could use day in and day out to best understand our numbers.<\/p>\n <\/p>\n <\/p>\n Disclaimer: We are not CPAs and we encourage you to follow up on all of this advice with a CPA that knows your business well.<\/p>\n <\/p>\n <\/p>\n If you’ve ever done this, you know why it’s one of the first habits we have. When you intermingle your personal and business finances, it can create an absolute mess in terms of bookkeeping and year-end accounting. It also makes it a LOT harder to see what your actual numbers are.<\/p>\n <\/p>\n Think about it. If you have 1 bank account and 1 credit card that you use for all personal and business finances, how are you going to know what your business is actually<\/em> making at the end of each month? Sure, it’s possible to go through every single transaction and classify them as personal or business, but that’s very tedious and completely unnecessary.<\/p>\n <\/p>\n To avoid such difficulties, we recommend the following set up.\u00a0<\/strong><\/p>\n <\/p>\n Put all of your business related expenses on your business credit card or through your business bank account. Likewise, have all of your revenue flow into your business bank account.<\/p>\n <\/p>\n This will greatly simplify the financials of your business and make it possible for you to see an accurate look at how your business is performing each month.<\/p>\n <\/p>\n <\/p>\n <\/p>\n While we have spoken with some business owners that handle their own bookkeeping and don’t have any troubles getting it completed on time each month, we are strong proponents of passing it off to a reliable and experienced bookkeeper that knows your business model well. For example, if you’re selling on Amazon and Shopify, find a bookkeeper that has experience handling books for eCommerce businesses and that will understand the different transactions that flow through your business.<\/p>\n <\/p>\n The most important part of this financial habit is to consistently get your monthly report on time. In general, you want to hold your bookkeeper to getting you the completed books by the 15th of each month. This gives them enough time to let all transactions settle and then provides it to you in a close enough window that you can make smart decisions based off of the numbers.<\/p>\n <\/p>\n I can’t imagine how we would run our businesses without the help of our bookkeeping team and the on-time reports that they deliver each month. It’s honestly become such an engrained financial habit that it seems odd that it wouldn’t happen that way.<\/p>\n <\/p>\n Here’s the set up we recommend:\u00a0<\/strong><\/p>\n <\/p>\n If you don’t have a bookkeeping set up like this yet, schedule a call with us at EcomBalance<\/a> and we’ll talk you through how we can help you with it for an affordable price.<\/p>\n <\/p>\n <\/p>\n <\/p>\n For us, this is a simple, 30 minute meeting where we set up a phone or Zoom call. We both pull up the most recent month’s report and we go through our Profit and Loss Statement line by line seeing how the month went.<\/p>\n <\/p>\n By the end of the 30 minutes, we have a very clear picture of what happened in the past month, where we need to make adjustments, and what we can expect for the following month.<\/p>\n <\/p>\n This is an important meeting each month where we make key decisions about additional expenses, trimming costs, making new hires, forecasting revenue, etc. Without this meeting, we wouldn’t be as prepared to grow in the next month.<\/p>\n <\/p>\n I can’t imagine how business owners go months without truly knowing what’s happening financially within their business. As a business owner, one of our most important duties is the financials. If we don’t know what’s actually happening, how can we optimize profits and grow the business?<\/p>\n <\/p>\n Here’s what we recommend:<\/strong><\/p>\n <\/p>\n Over the past 2 years, we’ve brought a number of companies that Nathan and I have consulted for through this process and it’s drastically helped them better understand their numbers. This is also a part of the EcomBalance experience that we want to bring to life. We imagine monthly reports being delivered with real, actionable advice for our clients so that they can meet with their business owners and make smart decisions for the next month.<\/p>\n <\/p>\n <\/p>\n <\/p>\n This has been a financial habit that Nathan and I have been strict about since the start of working together. We have 1 year financial plans that we’re always working towards and then we break them down into quarterly goals, monthly goals, and weekly goals. We use them as milestones for ourselves and for our teams so that we all have a collective outcome that we’re working towards. You’d be surprised of the power of an entire team of people working towards the same goal. From our experience, it greatly increases the chances of that goal becoming achieved.<\/p>\n <\/p>\n Here’s what we recommend:\u00a0<\/strong><\/p>\n <\/p>\n <\/p>\n When running a business, it’s important to understand and track your industry specific numbers. These figures represent how your business is performing at a macro and micro level. They are different from your monthly financials that you see on your Profit and Loss statement, but they are important for understanding other aspects that ultimately impact your P & L.<\/p>\n <\/p>\n Here are a few examples of industry specific figures that you should be tracking and understand:<\/p>\n <\/p>\n These figures are ones that you can hire a virtual assistant to help you in organizing or they could be reports that you ask your bookkeeper to create for you on a monthly basis.<\/p>\n <\/p>\n Imagine looking at your financials each month and also having these numbers provided for you to see. You’d for sure be able to better understand how your business is trending and what moves you need to make to continue to grow.<\/p>\n <\/p>\n Here’s what we recommend:\u00a0<\/strong><\/p>\n <\/p>\n <\/p>\n Always, always, always over budget. If you think estimate something might cost $100, budget $150 for it. Over-budgeting is a key skill to have as a business owner as it will put you in better situations where you end up having money left over that can then be spent or dispersed, as opposed to under-budgeting and running out of money.<\/p>\n <\/p>\n One of the most common reasons that businesses shut down<\/a> is due to running out of money. By applying the financial habit of over-budgeting, you help your business to avoid this scenario. Remember, your ultimate goal at the end of the day is to keep the business alive and growing. You can’t do that if you’re under-budgeting and getting into financial troubles.<\/p>\n <\/p>\n Here’s what we recommend:\u00a0<\/strong><\/p>\n <\/p>\n The same goes for projections. Under project on your sales growth. This is one of the most common mistakes that entrepreneurs make when scaling a business. They set unrealistic projections for how much they’ll be making and then they raise their budgets as well. When the sales don’t show up, they end up losing money and have to dig their way out of the hole.<\/p>\n <\/p>\n <\/p>\n <\/p>\n This is an individual or a small group of people that you can share problems and questions with when it comes to your financials. As a business owner, it’s unrealistic to think that you’ll know the answer to everything, especially when it comes to your finances. When you have someone that you trust and you can go to every month or quarter with questions and roadblocks, it lessens the burden on you personally and makes the situation better for the business overall.<\/p>\n <\/p>\n Here’s what we recommend doing:<\/strong><\/p>\n <\/p>\n <\/p>\n This one should go without saying, but there’s a LOT of noise out there on the Internet today. Please do not take financial advice from anyone on social media. Even if they state they are a reputable source, take the time to find a reliable and certified bookkeeper and accountant that you can lean on for financial questions.<\/p>\n <\/p>\n Personally, Nathan and I have been working with the same Accountant since we started our first business 10 years ago. I can’t tell you how valuable it has been to have him in our corner as we’ve gone through all sorts of different events within our businesses. From tough questions about employees to the acquisition of FreeUp, he was there to support us and answer all of our questions.<\/p>\n <\/p>\n If you’re worrying about the expense of a bookkeeper and accountant, don’t worry. You can make it affordable. There are bookkeeping services out there like EcomBalance that start as low as $150 per month for full service bookkeeping. And for an accountant, the best way to set up the relationship is on an as-needed basis. You pay for their time when you need to talk to them and you pay them for the tax filing work they complete for you at the end of each year. Very manageable.<\/p>\n <\/p>\n Here’s what we recommend you do:<\/strong><\/p>\n <\/p>\n <\/p>\n Numbers don’t lie. When making decisions for your business, make sure that you’re looking at your numbers and you’re making smart, informed decisions based off of them.<\/p>\n <\/p>\n There’s a lot of noise on social media and in the news that could alter your decisions or ambitions for your business. Don’t let them stand in the way of your obligation to make the best possible decisions for the long term growth and profitability of your business. Don’t get distracted and stay focused on the facts in front of you in the form of your financials.<\/p>\n <\/p>\n When you apply this financial habit and turn on the blinders, in a sense, to the outside world, you’ll better understand your business and you’ll be in a better position to make smart decisions for your growth.<\/p>\n <\/p>\n This has been something we’ve always battled with as we’ve grown our businesses over the years. News about something or another can drastically impact how you think about your business, its trajectory, and how you want to move forward.<\/p>\n <\/p>\n At the end of the day, you have to remember that your job is to do what’s absolutely best for the business and that those decisions should be based off of how the business is performing and trending. As we said above, it’s smart to have some mentors or advisors on your side that you can consult with when the times get tough, but ignore the outside noise and stay focused on what you can control.<\/p>\n <\/p>\n <\/p>\n <\/p>\n When we decided to actually write down our financial habits and hold each other to them, things got even better. We had “rules” that we had seen success with using in the past and we committed to using them for all of our businesses going forward. And not only using them, but also reviewing them and finding new financial habits that we could add into our repertoire.<\/p>\n <\/p>\n Being an entrepreneur and business owner means constantly learning and adjusting. Never become complacent as it will eventually hurt you and your business.<\/p>\n <\/p>\n Here’s what we recommend:<\/strong><\/p>\n <\/p>\n The more you develop your financial habits, the better they will become over the years and the better off you’ll be as a business owner looking to grow and create more profits.<\/p>\n <\/p>\n <\/p>\n In this article, we’ve shared 10 of our most valuable financial habits that we’ve developed over 10 years of being entrepreneurs together. We’re now applying them to growing our two companies, EcomBalance<\/a> and Outsource School<\/a>. It’s our goal to continue developing them so that we can become smarter with our financials for our ventures. As I said above, it’s critical that you never stop learning and adapting to what your business needs from you.<\/p>\n <\/p>\n If you’re interested in working with us to handle your bookkeeping needs, you can sign up for a free month<\/a> and learn how we do business with our clients. You can also review EcomBalance Pricing<\/a>. You’ll see that we cater to businesses of all sizes and that we customize all of our tiers to best fit each of our clients.<\/p>\n <\/p>\n Lastly, if you have any questions about these 10 financial habits, post in the comments below or reach out to us at Support@EcomBalance.com<\/a>. We’ll answer your questions quickly and will add to this post as we come up with other financial habits that we find worthy of joining the article.<\/p>\n <\/p>\n Thanks for your time! We hope that these financial habits will help guide you and your business to profitability and better financial understanding. Cheers!<\/p>\n <\/p>\n \u00a0<\/span><\/p>\n EcomBalance<\/span><\/a> is a monthly bookkeeping service for eCommerce companies. EcomBalance handles your bookkeeping and sends you a Profit and Loss Statement, Balance Sheet, and Cash Flow Statement by the 15th of each month. EcomBalance also has a sister company,<\/span> AccountsBalance<\/span><\/a>, that caters to agencies, software companies, coaches, and other online companies.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"Our Experiences With Financial Habits<\/h2>\n
Who Are We?<\/h3>\n
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I am Connor Gillivan<\/a> and my business partner is Nathan Hirsch<\/a>. We met in college at Quinnipiac University in Hamden, Connecticut while both studying business. I’m originally from Albany, New York and Nathan is from Longmeadow, Massachussetts. We now both live in Denver, Colorado.<\/p>\n![\"\"](\"https:\/\/ecombalance.com\/wp-content\/uploads\/2021\/09\/Asset-4@3x-8-300x300.png\")
That pain point we saw and which we validated with market research interviews led us to start EcomBalance<\/a>. If we could help thousands of business owners better manage their books and know their numbers better, it would undoubtedly help them grow faster and smarter.<\/p>\n10 Financial Habits We Learned from 10 Years of Entrepreneurship<\/h2>\n
Financial Habit #1: Never intermingle personal and business finances<\/h3>\n
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Financial Habit #2: Always have someone that manages your bookkeeping for you and gets you reliable reports on time<\/h3>\n
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This is one that we learned the hard way! As I eluded to earlier on, Nathan and I handled the books for our first eCommerce business for years before we passed it off to someone else. We always had a CPA that helped us with our year-end tax filings, but the month to month bookkeeping was on our plate. And we were always<\/em> behind.<\/p>\n\n
Financial Habit #3: Meet monthly to go over your financials from the past month<\/h3>\n
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This financial habit is directly related to the previous one. Once you get those monthly reports coming to you consistently, it’s important to then meet with your co-owners or the most important people on your team to look at the books, assess how the month went, make goals for the next month, and see if there are any adjustments that need to be made.<\/p>\n\n
Financial Habit #4: Have clear 1 year financial goals for the business that you update and hold yourself to<\/h3>\n
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Just like with anything in life, having goals helps to propel you towards that reality. The financials and profitability of your business is no different. In order to reach large levels of profitability, you need to set goals and work towards milestones on a month to month basis.<\/p>\n\n
Financial Habit #5: Know your industry specific numbers<\/h3>\n
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Financial Habit #6: Over budget, expect extra expenses to come up<\/h3>\n
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Financial Habit #7: Pick a few people you are comfortable talking about money with.\u00a0 Share ideas, strategies, and new things you come across.<\/h3>\n
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Running a business doesn’t have to be a solo mission. Throughout our years of building, we’ve always surrounded ourselves with other smart people that we trust and that have more experience than us. You can do it in a more formal way where they become advisors to your business or you can do it in a less formal way where you find a group of people willing to be a mentor to you and the business.<\/p>\n\n
Financial Habit #8: Don’t take financial or tax advice from social media posts. Hire a great bookkeeper and accountant.<\/h3>\n
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Financial Habit #9: Ignore the news or anyone predicting the future. No one knows the future.\u00a0 Any decision you make is a risk.\u00a0 Make decisions based on the information you have, the story it’s telling and stick with it.\u00a0 Focus on the decision making process more than results.<\/h3>\n
Financial Habit #10: Write down your financial habits and evaluate them every year<\/h3>\n
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For the first few years of being entrepreneurs together, a lot of our financial habits just fell into place through trial and error. We’d run into a specific situation, we’d problem solve the best possible way to solve it, then we’d continue doing that. We never truly formalized our financial habits until a few years in.<\/p>\n\n
In Conclusion<\/h3>\n
About EcomBalance<\/b><\/h2>\n