5 books to help you make better financial decisions in 2019
The end of Q1 is a great time to start planning how you’re going to make 2019 a standout profitable year. If you loved your results of Q1, how do you keep up the momentum and ramp up even faster, and if you didn’t like where you ended up, how can you make changes that will get you on a better track for the rest of the year?
Now is the perfect time to review your yearly projections, identify growth opportunities, and ask how you can become more profitable and scalable this year. This might mean making a date with your bookkeeper (even if it’s yourself) and or your finance person. How can you spend less and make more in 2019? What kind of capital will you need to grow the business? And is there another way of keeping your books that is simpler requires less of your time and helps you focus on marketing and sales?
I know that finances are sometimes the last thing we want to think about, especially when we’re fired up about the parts we love (new products! cool marketing ideas! hiring new team members!). But in reality, the time you invest in making sure your financial house is in order will set you up to succeed in all those other areas.
You can get insights by reaching out to fellow CEOs to ask how they manage their finances and do financial planning, meeting with your bookkeeper or finance person, or reading books and articles on finance on sites like Daily Worth.
Here’s a snapshot of 5 books that have been great resources to women in Million Dollar Women and can help you make better financial decisions in 2019.
1. Profit First by Mike Michalowicz
Mike’s methodology is so simple and relatable. He teaches the four methods to manage your cash that flip on its head the way people usually manage their cash. Mike knows as an entrepreneur himself that entrepreneurs have a hard time not spending the money that comes in the door. There is always one more marketing campaign we want to try, one more product we want to create. Often this means we are running on low cash and we know that over half of all businesses fail in the first five years, many of them because they run out of cash (and women are twice as likely to shut their doors because they run out of cash!).
Mike’s Profit First theory boils down to this set of four simple rules:
- Keep separate accounts: Put money into multiple, smaller accounts that are used for a specific purpose. Mike likens this to using a smaller plate when you’re dieting, which helps you consume less calories. When it comes to your finances, having one checking account is like having one big plate—you’re more likely to consume it all.
- Set priorities: Instead of spending on expenses, then owner’s pay, then profit, Mike flips this concept on its head, encouraging business owners to first add funds to the account where they keep profits, then the owner’s pay account, then taxes, then expenses.
- Resist temptation: When you make your accumulating profit, tax and under funds more difficult to view and access, you’ll be less tempted to dip into your funds for unintended purposes.
- Establish a rhythm: Set two dates each month that you use to manage the books—Mike recommends the 10th and 25th—to get a sense of cash flow without becoming consumed by your finances.
Many entrepreneurs s wear by Profit First and credit it with radically changing their business for the better. They not only see the difference in their bank accounts, they’re sleeping better at night because they know their profits are safe and sound.
2. Accounting for the Numberphobic: A Survival Guide for Small Business Owners, by Dawn Fotopulos
If the thought of looking at your books and keeping track of your numbers fills you with dread, you are not alone. But the reality is, even if you have an accountant, he/she could never be as invested in your company as you are, so you need to be able to look at the numbers, interpret your financial health and set your books up in a way that serve your business. It may not be the fun part, but it’s also not as bad as it seems and once you “set it and get it,” you’ll be glad you did!
Dawn’s book is easy to read and it’s written in plain English for those of us who don’t have a finance background — I fall in that camp — which makes it easy to understand how the net income statement, cash flow statement and balance sheet affects the overall health of your business. So grab a copy and a coffee and dive in!
3. Money: A Love Story, by Kate Northrup
Where do you stand on your relationship with money? Are you “playing hard to get” or is it “true love”? Many women entrepreneurs have this tendency to compare up —meaning we feel bad about what we don’t have in comparison with peers or people we admire.
In her practical book, Money: A Love Story, Kathy Northrup helps you discover how you feel about yourself in relation to your money. I read it when I was writing Million Dollar Women and found it extremely helpful in unpacking some of my own money stories, like how growing up with a single mother who worked really hard but didn’t earn a lot impacted my relationship with money. There are step-by-step exercises that address the emotional an every day aspects of your financial life. Northrup helps us see how our perception of our financial situation (whether you have millions in the bank or are just getting by) is a key factor in determining financial success.
One of my favorite things she points out is that men are much more apt to talk about money socially—they have fewer qualms than women do about discussing stocks and investing and she encourages women to do more of that.
There are personal stories (including Kate’s own money saga and how she broke through, got free of nearly $30k of debt and became financially independent by age 28) and practical ways to let go of thought patterns that may be holding you back.
4. Simple Numbers, Straight Talk, Big Profits, by Greg Crabtree
Greg Crabtree is a successful accountant, small business advisor and a well-known presenter. He uses his book to give insights into how to make smart business decisions as you grow your company. I love this book because he writes for the lay person, who is not an accountant, and provides easy to follow steps and real-life examples.
He has taught many entrepreneurs how to avoid common financial errors and increase their profitability. Some of the things you’ll learn are: why your numbers are lying to you, how labor productivity is the key to profitability and why the amount of tax you pay is your #1 key performance indicator. A practical and easy read!
5. The Millionaire Next Door: The Surprising Secrets to America’s Wealthy, by Dr. Thomas J. Stanley
Did you know that most of America’s wealthiest people don’t live in Beverly Hills or on Park Avenue—they actually live next door? There’s no map to the stars’ homes in this book, but it does explain why those of us looking to increase profits and become more financially successful need to adapt certain behaviors.
Stanley did about 20 years of research to determine what separates Under Accumulators of Wealth (UAW) and Prodigious Accumulators of Wealth (PAW). What he found, and included in this book, are the secret habits of millionaires and how you can adapt some of their behaviors to become more financially stable and accumulate more wealth.
The Millionaire Next Door gives us a new perspective on America’s real millionaires—the frugal, self-made entrepreneurs who don’t seek attention or flaunt their wealth—and how they haven’t done anything overly extraordinary to achieve financial success.
Set yourself up for success in 2019
The financial aspects of our businesses do not have to daunt us. We also should not rely solely on our accountants to manage our businesses’ financial health. Reading one or two of these books will help you get a handle on the basics and show you how to set yourself up with good systems that give you a much higher chance of profitability and all around success. And once you’ve mastered this vital part of your business, you’ll be able to share what you’ve learned with another woman entrepreneur and encourage her to do the same!
P.S. If you are ready to find out how to make your business more profitable, scalable and high revenue generating, set up a free 45-minute Accelerate Session and we will take a 45 minute deep dive into your business to help you see what your next steps are.