Break This Law to Make More Money

Not THE law.

(Although you can probably make some money by doing that, too. Just don’t tell us about it… )

We’re talking about… drum roll… Parkinson’s Law

Work expands to fill the available time to be completed.

However much time you give yourself to get something done, that’s how long it’ll take. So if you’ve got three days (no wiggle room) to complete a project, then boom—whatever you’ve got at the end of three days is what you’ll be handing in.

But if you give yourself three weeks to do the same project, somehow the workload multiplies. New details keep spinning out ad infinitum until your to-do list is—you guessed it—about three weeks long.

Being human is so fun. Right? ????

Here’s the thing, though. Parkinson’s Law ALSO applies to your finances. Big time.

Let’s say you start an Amazon business. At first, you run it super lean, because you have to. Maybe you used your personal savings to fund your startup expenses. Or maybe you’re new to the game and don’t want to spend too much until you know which expenses are worth it.

And you do pretty great! But as revenue grows, so do your expenses. Huh.

Now you can ditch that boring packaging, and invest in something really beautiful. Or maybe you’d like to put more money into advertising. Or hire some help. You’ll never run out of things to spend that money on!

On the personal front, more money means the chance to upgrade. Maybe you do some traveling. Stay in nicer hotels. Eat at better restaurants. Get a bigger car. Buy the kids what they want for their birthdays, instead of what they need.

Before too long, this extra money will seem like a distant memory (because it will be).

And here’s why this matters. Accruing more expenses will shrink your profit margin until it’s barely visible. You can keep making more and more money, but if you keep spending more and more, you’ll never be able to grow.

Getting a handle on this can feel complicated at first. But if you focus on these 5 things, you’ll be in pretty good shape…  

Set a salary for yourself, and stick to it. Payroll is just one of your business expenses, so don’t treat your business like an ATM. (Roughly 15-30% of your gross revenue should go toward payroll, by the way).

Get a grip on what’s coming in, what’s going out, and where it’s all going. At the very least, you should be consistently monitoring your weekly cash flow, profit margins, and anything that’s left over.

Learn to manage cash flow. Selling physical products is difficult. There’s a constant ebb and flow of cash, as well as expense surges, new purchase orders going out, and more. The more you can anticipate upcoming income and expenses, the better off you’ll be.

Make reinvesting your first priority, not your last. It’s so common for business owners to leave profit ‘til the end—whatever’s left over AFTER all the expenses, equals profit. But what if you flipped this around? Try something like Profit First to create a new hierarchy for your money.
Set some money aside for that car, though. The whole point of this is to create a better life for yourself and your family, right? So yeah, some of that money IS for you. Just try to work it into your larger business budget, so you’re not robbing your future to pay for the present.
This isn’t about putting you on a “money diet,” or wagging a finger at you, or peering at you disapprovingly over our reading glasses…

It’s about recognizing that your business is its own separate entity, and that you—dad, partner, lover of fine wine, fierce goalie—are not the same as you the business owner.

The business is like a kid. It needs things (mostly money) to survive and grow into a healthy, well-adjusted adult you can ship off to college sell for boatloads of cash.

See, when it’s all working properly, your business is ongoing investment in itself. As it continues to grow and thrive, it produces even more capital to re-invest. And so on.

By improperly managing your cash flow today, you’re robbing your business (and yourself) of a future.

But also—a beautiful thing happens when you get your expenses in order.

You enjoy those lifestyle perks a thousand times more, because you know you’ve planned for them, and they’re not coming at the expense of your growth.

You start to shift from reacting and putting out fires, to planning weeks into the future. Or months. Or years.

First things first…

The best place to start is by auditing your accounts and ensuring you have accurate, up-to-date reports about all your business’ finances. Bring in some expert help if you need it.

Then, get clear on your priorities (and make sure reinvestment is one of them!). Ask yourself, “When it comes to my business, what’s most important to me?”

Now, if you started your business so you could stay in nice hotels and drive a better car, then that’s great! Carry on.

BUT… if you want this business to be an investment in your future, then you have to learn how to scale.

And if you want to do that…

Then you, my friend, are going to have to break the law.