In recent articles I've discussed the importance of building a strong team and time management in a business. The third key resource that business owners need control of is money. For most business owners, money is a very sensitive topic. Money is a resource that can be plentiful at one moment and completely gone the next. Money concerns probably keep business owners awake at night more than any other business issue.

Most of us are familiar with the statistic that 80% of all new businesses fail in the first five years. The sad irony is that most people go into business to make more money and ultimately money issues become the top reason businesses fail.

Money “mastery” (and I use the term lightly, so as to not infer “perfection”) has several key components. In our firm, we've found that if business owners are able to embrace the following concepts and implement money mastery strategies, they can create a strong foundation for business growth and prevent many of the surprises that can occur with poor financial management.

Key #1 – Money Mastery is a Choice

Many business owners have consciously avoided learning how to read their financials, develop a budget, analyze their profit margins, etc. Fear of failure and lack of knowledge keep them from taking a proactive stance on their financial situation and ultimately this can prove to destroy their business. According to Dr. Wayne Dyer, author of “The Power of Intention”, money is described as ‘energy' and as such can be attracted or repelled by the choices and decisions we make. This energy is limitless and therefore we can choose to have as much or as little as we want. It's been our experience that when business owners make a firm, conscious choice to overcome this fear of their “money situation”, a new world of knowledge and understanding is opened. The business owner can then choose to take control of their money vs. being controlled by it.

Key #2 – Money Mastery is a Learned Discipline

As with other areas of business, most business owners learn their lessons on money from the “school of hard knocks.” However, there are other alternatives. Once the choice has been made to take control of your financial situation, there are hosts of resources available to make money mastery a reality. Start with the experts that surround you – your CPA, banker, business coach, financial planner, etc. There are loads of great books that make reading and understanding financials very easy and practical. There are also financial classes available from many educational institutions. Many courses are even offered on-line. If you're committed to learning, the knowledge is readily available for you to receive.

Key #3 – Money Mastery Areas of Focus

Once you've made the choice to achieve money mastery and gain the knowledge you need, here are a few key strategies to implement in order to build a strong financial foundation for your business:

Develop an annual budget – Plan your expected revenues and expenses for your business. Your budget should also include expected cash inflows and cash outflows for each month.

Develop monthly revenue and profit goals – Having a budget is great, but rarely does a budget alone motivate someone to action. Establishing monthly revenue and profit goals with corresponding strategies to achieve those goals will be the catalyst to enable you to reach your financial goals.

Break Even Analysis – It's surprising how many business owners have done this in their head, but have never formally completed this exercise on paper. Your break even analysis should also be broken down into monthly, weekly and daily sales needed to reach your break even point.

Establish Key Performance Measures – These metrics include sales (new & repeat business), gross profit margins, profit by customer, profit by product/service, etc. Measure these each month and set goals to improve each financial metric on a monthly or quarterly basis.

Making the choice to develop money mastery in your business will yield great dividends, both short term and long term. Although the concepts and process may seem intimidating and frustrating at times, the decision to obtain money mastery is essential to building a strong business foundation.

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