Latest / The Sharon Francisco Show / Everyone Gets Paid First — But What About You?

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Everyone Gets Paid First — But What About You? · The Sharon Francisco Show

• 0:02
  SPEAKER_00: Welcome to the Sharon Francisco Show.
• 0:06
  SPEAKER_00: How much did you pay yourself last month?
• 0:09
  SPEAKER_00: And a more important question: are you happy with how much you paid yourself last month?
• 0:16
  SPEAKER_00: Because we can get very good at explaining why it wasn't more.
• 0:22
  SPEAKER_00: Think about it.
• 0:24
  SPEAKER_00: We needed another team member.
• 0:26
  SPEAKER_00: We had unexpected expenses.
• 0:29
  SPEAKER_00: A client hasn't paid their invoice for a while.
• 0:33
  SPEAKER_00: In our heads, we can really justify this kind of behavior.
• 0:37
  SPEAKER_00: How do I know that?
• 0:40
  SPEAKER_00: I've been in a few different businesses over the years and I've done the same thing.
• 0:45
  SPEAKER_00: But we still did the work, didn't we?
• 0:48
  SPEAKER_00: We still put in the hours.
• 0:50
  SPEAKER_00: We showed up and we took responsibility for making sure everyone else was looked after.
• 0:56
  SPEAKER_00: And somehow, when it comes to us, we're quite comfortable saying, you know what?
• 1:02
  SPEAKER_00: Just wait.
• 1:04
  SPEAKER_00: I don't need it.
• 1:05
  SPEAKER_00: It's okay.
• 1:06
  SPEAKER_00: Well, we might not be comfortable with it, actually.
• 1:11
  SPEAKER_00: We might be quite upset about it, but we keep doing it because we can't see any other way around it.
• 1:20
  SPEAKER_00: Today, what I'm going to do is look at an example.
• 1:23
  SPEAKER_00: And we're going to call that example Rebecca.
• 1:27
  SPEAKER_00: And we're going to talk about Rebecca's story.
• 1:30
  SPEAKER_00: And as we go through this, I want you to have a little think about if you can recognize any of the things in Rebecca, Rebecca's story, it's completely fictional, by the way, fictional, Rebecca's fictional, but it's sort of a snapshot of many, many conversations that I've had with different clients over many, many years.
• 1:50
  SPEAKER_00: So this is not just in the bookkeeping industry or the accounting industry.
• 1:53
  SPEAKER_00: This is conversations that I've had for 30 plus years with different business owners, working in franchises, having my own business and talking with other business owners, as well as coaching business coaches and also working with accountants and bookkeepers that I do now.
• 2:10
  SPEAKER_00: So think about it as I go through this, see if you can recognize any of this sort of examples in yourself.
• 2:17
  SPEAKER_00: It might be all of it, but it also might be just little pieces that you go, yeah, maybe, maybe I do a little bit of that.
• 2:24
  SPEAKER_00: So try to be honest with yourself and see if there's any sort of things in there that you can recognize.
• 2:29
  SPEAKER_00: So picture of Rebecca at the end of the week.
• 2:31
  SPEAKER_00: She's been busy looking after the clients all week.
• 2:33
  SPEAKER_00: She's been answering questions from a team and making sure all the work gets done.
• 2:36
  SPEAKER_00: She's making sure everyone else is happy.
• 2:39
  SPEAKER_00: She's had a couple of things that she's wanted to do for her own business, but she hasn't got to those yet.
• 2:45
  SPEAKER_00: Again, there's just been too much client work to get to that.
• 2:49
  SPEAKER_00: So she processes the wages, she checks the bills and she looks at what's coming in over the next few days.
• 2:54
  SPEAKER_00: Then she works out if she can what she can transfer for herself for her wages, how much she's going to pay herself that month.
• 3:01
  SPEAKER_00: She'd like to take more out, but she's a little bit worried that she might actually have to put it back.
• 3:06
  SPEAKER_00: So she takes a smaller amount out and tells herself, you know what, I'll top it up when the next client pays.
• 3:12
  SPEAKER_00: Now, imagine her partner asking her how work's going.
• 3:19
  SPEAKER_00: And she says, busy.
• 3:22
  SPEAKER_00: Actually, you know what?
• 3:23
  SPEAKER_00: Really busy.
• 3:24
  SPEAKER_00: And it is.
• 3:25
  SPEAKER_00: She's not exaggerating.
• 3:27
  SPEAKER_00: She's really busy.
• 3:28
  SPEAKER_00: But what if the next question was, are you making enough money for the work you're doing?
• 3:35
  SPEAKER_00: And that's what I'd like to talk about.
• 3:39
  SPEAKER_00: I'd like to have that conversation because it's a very different conversation, isn't it?
• 3:43
  SPEAKER_00: Because being busy can feel really reassuring.
• 3:48
  SPEAKER_00: People want your help.
• 3:50
  SPEAKER_00: So that having that feeling of like people needing you is really reassuring.
• 3:54
  SPEAKER_00: And there's work coming in, which again is really reassuring.
• 3:57
  SPEAKER_00: And you've got a team to do some of the work, which is great.
• 4:00
  SPEAKER_00: But we also need to be able to pay ourselves well and properly for the amount of work that we're doing.
• 4:06
  SPEAKER_00: So now I want you to picture this little scenario: a dinner table.
• 4:12
  SPEAKER_00: Now imagine inviting a whole bunch of people for dinner.
• 4:16
  SPEAKER_00: Now, you've been a busy person, you've been out buying the groceries, you've gone out, and if you're anything like me, you've bought a whole bunch of organic groceries and grass-fed meat, and you've made a beautiful dinner.
• 4:27
  SPEAKER_00: You've prepared all day and you've made this magnificent meal.
• 4:31
  SPEAKER_00: And you sit down at the table and you make sure that everyone else is fed, right?
• 4:36
  SPEAKER_00: You've bought the food, you've served it up, and everyone's going, Wow, this is great, smells awesome, awesome.
• 4:40
  SPEAKER_00: Everyone's eating, loving it.
• 4:43
  SPEAKER_00: And then you go, hang on, there's not enough left for me.
• 4:49
  SPEAKER_00: There's a little bit there.
• 4:50
  SPEAKER_00: And then you realize, oh, even the little bit left was actually scooped up by somebody at the table.
• 4:58
  SPEAKER_00: Now, you probably wouldn't say anything the first time.
• 5:02
  SPEAKER_00: Actually, what you probably would think is like, gee whiz, I didn't cook enough food for everyone.
• 5:07
  SPEAKER_00: And I'm a little bit embarrassed actually that I didn't cook enough food for everyone.
• 5:10
  SPEAKER_00: So I'll make sure that I do that next time.
• 5:13
  SPEAKER_00: But what if it happened like this every week?
• 5:16
  SPEAKER_00: Surely at some point we'd say, you know what, we need to organize things differently because I'd like to have a meal as well.
• 5:24
  SPEAKER_00: We'd allow enough for ourselves when we're planning for the meal.
• 5:29
  SPEAKER_00: Yet in business, we can keep leaving ourselves out and then hoping and crossing our fingers and toes that there'll be enough left for us.
• 5:41
  SPEAKER_00: Have we actually worked out what the business needs to earn to actually pay us properly?
• 5:47
  SPEAKER_00: Or are we just waiting to see what's available after everyone else has been paid or fed?
• 5:54
  SPEAKER_00: Like at the dinner table.
• 5:56
  SPEAKER_00: And how long have we been doing that for?
• 5:59
  SPEAKER_00: And I can tell you, in my experience, guys, I have seen this time and time and time again.
• 6:05
  SPEAKER_00: And sometimes in my dinner story analogy, the guests have gone to the cupboard and taken out even more, meaning that when you're in business, sometimes I see where business owners will be working for clients and doing bookwork and um keeping up, making sure everyone's up to date and things and paying their team and paying their the clients are paying them, they're paying the team, they're doing all the things right.
• 6:34
  SPEAKER_00: But at the end of the day, there's actually more going out than coming in.
• 6:39
  SPEAKER_00: And that's scary.
• 6:40
  SPEAKER_00: That's really scary because you're actually going backwards.
• 6:43
  SPEAKER_00: And that happens with scope creep.
• 6:45
  SPEAKER_00: It can happen with scope creep with you, and it can also happen with scope creep with your bookkeepers, especially if they're not on a contractual basis.
• 6:53
  SPEAKER_00: So if they're just being paid a salary and we're not measuring how many billable hours they're doing against jobs, and many bookkeepers do that.
• 7:02
  SPEAKER_00: So for someone in Rebecca's situation, there could be quite a few things going on there.
• 7:09
  SPEAKER_00: We might think the business can't afford to pay us anymore, and we might think it's true at that moment, and we need to make sure that we have a look at the figures, but we also might be making decisions that keep us stuck in that way.
• 7:24
  SPEAKER_00: We might be reluctant to review a client file or their fees because they've been clients for years and they're really good clients and they pay us well.
• 7:34
  SPEAKER_00: And you know what?
• 7:34
  SPEAKER_00: I just don't really want to confront that.
• 7:36
  SPEAKER_00: So we don't charge for the additional work.
• 7:39
  SPEAKER_00: And anyway, in our heads, we go, it's not that much anyway.
• 7:41
  SPEAKER_00: So we'll just leave it.
• 7:43
  SPEAKER_00: We take on another little job because it doesn't really seem worth making a fuss about.
• 7:48
  SPEAKER_00: So we just do it and we don't sort of charge for it.
• 7:50
  SPEAKER_00: We understand every single one of our clients' circumstances.
• 7:55
  SPEAKER_00: Have we given our own circumstances that same consideration?
• 7:59
  SPEAKER_00: And that's what we need to really look at here.
• 8:02
  SPEAKER_00: What about the things that we want to do for ourselves?
• 8:06
  SPEAKER_00: The savings we want to build for our own personal savings, the holiday we might keep putting off, the ability to pay the household bills without wondering whether we've transferred too much out of the business.
• 8:20
  SPEAKER_00: So we need to include those things in the conversation here.
• 8:24
  SPEAKER_00: And we can do that while still being caring, generous, good people.
• 8:31
  SPEAKER_00: We can discuss a fee respectfully, and we can actually explain what's included and what will cost extra.
• 8:39
  SPEAKER_00: Our clients need to know what it costs for us to do the work properly.
• 8:45
  SPEAKER_00: So, what does the research tell us?
• 8:47
  SPEAKER_00: There's a study that's really useful to bring in here.
• 8:50
  SPEAKER_00: In 2013, Anandy Marney and her colleagues published research in the journal Science looking at financial pressure and thinking.
• 9:01
  SPEAKER_00: One part followed sugarcane farmers in India before and after their harvest income arrived.
• 9:11
  SPEAKER_00: The same farmers performed better on cognitive tests after the harvest when they had more money available.
• 9:19
  SPEAKER_00: The researchers suggested that the financial worries were using mental resources that would otherwise be available for other tasks.
• 9:28
  SPEAKER_00: Now, this was research about poverty.
• 9:30
  SPEAKER_00: It wasn't research or study of bookkeeping businesses and accounting businesses.
• 9:35
  SPEAKER_00: So we need to be careful with applying it directly to that.
• 9:40
  SPEAKER_00: But it also gives us a reason to take financial worry seriously.
• 9:45
  SPEAKER_00: So have a think about how much attention goes into worrying whether a client has paid, checking the account again, deciding what can wait, and worrying about next week or the following week.
• 9:58
  SPEAKER_00: That's time and attention we could be using elsewhere and not worrying about whether we should charge and whether we shouldn't charge or whatever.
• 10:06
  SPEAKER_00: So in Rebecca's situation, we'd want to understand both the financial gap and how much of her day she's spending worrying about it.
• 10:15
  SPEAKER_00: So when we look at it, the three stages, we can look at our pay here in three stages.
• 10:22
  SPEAKER_00: So have a think about where you are with this.
• 10:25
  SPEAKER_00: The first is taking whatever is left, which I know a lot of business owners do.
• 10:30
  SPEAKER_00: There isn't a regular amount that's coming out.
• 10:33
  SPEAKER_00: We check the account, make the decision.
• 10:35
  SPEAKER_00: A good week might mean that you take a little bit more, and on another week it might be a little bit less.
• 10:42
  SPEAKER_00: It makes it difficult to plan at home because we don't really know how much we're going to have, how much we're going to pay ourselves.
• 10:49
  SPEAKER_00: The second stage is paying ourselves regularly, but the amount doesn't properly reflect the work that we're doing.
• 10:57
  SPEAKER_00: So we've got consistency, which is really helpful, but perhaps we set that amount a few years ago and we haven't reviewed it or we haven't looked at it again, even though our hours and responsibilities have actually increased.
• 11:12
  SPEAKER_00: And we we might tell ourselves, you know what, we're being paid, we're being paid uh reasonably, but we're only counting on those hours we're spent on client work.
• 11:22
  SPEAKER_00: So, you know what?
• 11:24
  SPEAKER_00: What about managing the team?
• 11:26
  SPEAKER_00: What about preparing proposals, following up on inquiries, sorting out problems?
• 11:31
  SPEAKER_00: Those hours belong in this calculation as well.
• 11:35
  SPEAKER_00: The third stage is planning for appropriate pay for our role and checking whether the business can actually support it.
• 11:45
  SPEAKER_00: We know what we're aiming for as far as what we want to pay ourselves, and we know what the business needs to earn, and we review the cost and the workload alongside of that.
• 11:54
  SPEAKER_00: So it's really strategic the way that we're looking at paying ourselves.
• 11:58
  SPEAKER_00: We need to make sure before we get there, but at least we're making decisions with our own pay included.
• 12:05
  SPEAKER_00: Which of those sounds like you?
• 12:08
  SPEAKER_00: The first one, the second one, or the third one?
• 12:11
  SPEAKER_00: And if you're in the first stage or the second stage, what's keeping you there?
• 12:17
  SPEAKER_00: Let's look at the numbers.
• 12:19
  SPEAKER_00: Let's use some simple figures for this.
• 12:23
  SPEAKER_00: This uh these are an illustration, not Rebecca's actual financial results.
• 12:28
  SPEAKER_00: So we're going to do a bit of an analogy here.
• 12:31
  SPEAKER_00: So say the owner receives$1,000 a week before personal taxes and works 50 hours.
• 12:37
  SPEAKER_00: That works out to be$20 for each hour worked.
• 12:41
  SPEAKER_00: It's a rough comparison before considering things like super and other benefits.
• 12:46
  SPEAKER_00: Now, we might look at that and say, well, yes, but I don't always work 50 hours.
• 12:52
  SPEAKER_00: Okay, so let's record it and find out.
• 12:56
  SPEAKER_00: Include the half hour before breakfast, the email after dinner, and a Sunday afternoon we spent getting ready for the Monday and Beyond's work.
• 13:07
  SPEAKER_00: We can be very good at forgetting those little bits because they don't feel like they're in the full work day, do they?
• 13:14
  SPEAKER_00: But there's still time we're giving to the business.
• 13:19
  SPEAKER_00: Once we've got an honest figure, we can take a look at whether we're happy with it or not.
• 13:25
  SPEAKER_00: If we are, and it supports the life that we want, that's our choice.
• 13:31
  SPEAKER_00: If we're not, we need to look at the work and see what needs to change.
• 13:36
  SPEAKER_00: All right.
• 13:37
  SPEAKER_00: What we would explore with Rebecca.
• 13:40
  SPEAKER_00: So with Rebecca, we'd start looking at what she pays herself now and what she needs to be paid or wants to be paid.
• 13:48
  SPEAKER_00: Then we'd look at the gap.
• 13:50
  SPEAKER_00: We wouldn't automatically assume that she needs more clients.
• 13:54
  SPEAKER_00: She's already full-on busy at the moment and she needs to understand whether the work she's got is profitable.
• 14:01
  SPEAKER_00: We'd look at the clients taking more time than their fees allow, and we'd check where additional work has become part of the service without any discussion on price with that client.
• 14:13
  SPEAKER_00: We'd also look at how Rebecca spends her time.
• 14:17
  SPEAKER_00: Has she employed people to help, but continue to doing the same work herself, which is a lot why I see this a lot with bookkeepers?
• 14:26
  SPEAKER_00: And does everything still need to go through her?
• 14:30
  SPEAKER_00: There could be several reasons for this.
• 14:32
  SPEAKER_00: We need to find the ones that apply to her, and then we choose where to start.
• 14:38
  SPEAKER_00: So, for example, if a client's work has grown substantially, the next step might be preparing for a fair review.
• 14:45
  SPEAKER_00: That means knowing what's changed, what the service now involves, and what it needs to cost.
• 14:51
  SPEAKER_00: Rebecca might feel really uncomfortable about having that conversation and we can work through that.
• 14:58
  SPEAKER_00: But leaving it for another six months has a cost as well.
• 15:03
  SPEAKER_00: And she needs to see that really clearly.
• 15:07
  SPEAKER_00: We don't need to promise her everything will be fixed immediately.
• 15:11
  SPEAKER_00: We do need a practical plan she can follow.
• 15:16
  SPEAKER_00: All right, what we could do this week to help have a look at the last three months in your business.
• 15:23
  SPEAKER_00: What did you actually pay yourself?
• 15:26
  SPEAKER_00: What hours did you work?
• 15:28
  SPEAKER_00: And what amount would properly recognize your role and support the life that you want?
• 15:36
  SPEAKER_00: Then choose the thing to investigate.
• 15:40
  SPEAKER_00: It might be a client fee, it might be to work through what you're giving away.
• 15:48
  SPEAKER_00: So it might be figuring out if you're giving away work, and it might be how we're using the team, meaning, are we using the team effectively or not with transferring some of the work that you're doing?
• 16:01
  SPEAKER_00: Um, and are they at capacity at the moment?
• 16:05
  SPEAKER_00: Put time into your diary for this.
• 16:07
  SPEAKER_00: We call it the director's appointment because otherwise we know what happens, don't we?
• 16:13
  SPEAKER_00: Another client needs something and our business gets pushed into the background again.
• 16:18
  SPEAKER_00: So I suggest here to put in your director's appointment.
• 16:21
  SPEAKER_00: Your director's appointment is a two or three hour meeting every week with yourself.
• 16:26
  SPEAKER_00: To begin with, if you are so busy, I would set aside maybe one hour and maybe putting an hour or two on the weekend or in the evenings to catch up with that.
• 16:37
  SPEAKER_00: If the figures don't support more pay yet, we need to know that.
• 16:42
  SPEAKER_00: Then we can make a plan based on what's actually happening.
• 16:46
  SPEAKER_00: We deserve that attention too, like more than the other clients.
• 16:50
  SPEAKER_00: It's like, you know, I always give the analogy when you're on a plane and the plane's going down.
• 16:55
  SPEAKER_00: What do they tell you?
• 16:56
  SPEAKER_00: Do they say, look, you know, forget yourself, just take care of everyone else?
• 17:00
  SPEAKER_00: No, they say take care of yourself first because how helpful are you if you can't breathe?
• 17:05
  SPEAKER_00: How helpful are you if you're dead?
• 17:08
  SPEAKER_00: And okay, you your children and your partner might have their little mask on their face, but if you're not there, you can't help anyone.
• 17:17
  SPEAKER_00: So put the mask on yourself first, then help everyone else.
• 17:20
  SPEAKER_00: And I think the same analogy needs to be said in business.
• 17:23
  SPEAKER_00: Put your own mask on first, then help your clients and your team and everything after that.
• 17:29
  SPEAKER_00: So coming back to the question that we started with, how much did you pay yourself last month?
• 17:34
  SPEAKER_00: And are you happy with that?
• 17:35
  SPEAKER_00: If the answer is no, let's give it some proper attention this week.
• 17:39
  SPEAKER_00: We spend so much time helping other people run their businesses.
• 17:44
  SPEAKER_00: Our own business needs that care as well, beyond everyone's first.
• 17:49
  SPEAKER_00: Like ours needs the help first.
• 17:52
  SPEAKER_00: When we say build a business that loves you back, that includes paying ourselves properly.
• 17:58
  SPEAKER_00: I hope that this has been helpful, guys.
• 18:00
  SPEAKER_00: And till next week, talk to you soon.
• 18:02
  SPEAKER_00: Bye.