Managing The Money Your Online Business Makes
(Today’s article is a clip from the most recent post at the Blog Marketing Academy. Thought it’d be worth sharing in THE EDGE).
Money is a form of energy. It is like the gas in your business fuel tank. So, it is really hard to have a sovereign and self-reliant business if you don’t have any financial reserves.
Does your business have a “rainy day fund”? Do you put any percentage of your business income into reserves or diversify any of it into wealth preserving (or growing) assets?
Entrepreneurs who don’t manage their money can really reduce their durability by not having any reserves. It means your business cannot weather an economic slowdown. Or if that promo you just did didn’t work out as well as you planned, it means you could have a tough time paying your bills.
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Obviously, the first level priority here is…. make more money.
When your business is flowing more money (more energy), then everything opens up. That is ALWAYS the first level priority. Make more money.
Secondly, keep expenses under control and keep a really high profit margin. Most solopreneur businesses (especially online) can have very high profit margins. So, as long as you’re not out there blowing money, you should be able to maintain a high profit margin in your business.
Thirdly, keep business reserves. Take a chunk of business income every month (target at least 10% if you can) and put it aside. Consider it a “rainy day” fund.
Fourth, consider ways to park reserves into non-cash assets that can preserve or grow the wealth of the business.
With inflation being what it is, parking cash in your bank just means it is dwindling away. Cash is trash, as Ray Dalio has said. So, how about parking chunks of business reserves into non-cash or even income producing assets?
I don’t give financial advice. That is not my thing. 🙂 But, I can tell you what I do.
I am a big believer in the future of cryptocurrency and I have invested money into it. Almost all of it personal. However, I did also take part of my business reserves account and I used it to purchase Ethereum (ETH) many months ago.
Now, anybody that knows crypto knows it goes up and down all the time. But, I put somewhere around $4K of business funds into ETH at the time. As of this writing, that account is at about $8K. Not only that, it is held on Nexo where the account is earning 4% interest. Obviously, 4% interest is lightyears better than if that cash was sitting in the bank.
I am also a massive fan (and user) of Celsius and I keep a tidy sum on Celsius and earn way more interest than from a bank. But, I use Nexo for those business reserve funds just so I can keep the funds separated. And, of course, if (or when) the crypto markets start to drop off into a bear market, I’ll need to sell.
BTW, if you’re curious to learn more about using crypto accounts (even dollars, if you’re not comfortable with crypto) to earn interest, check out my article on Plain English Crypto on earning interest on your crypto holdings (and blowing your bank away).
Have a strategy that works for you. Keep reserves for your business. And consider doing something with them rather than just having it rot in a bank making zero interest.
The point of those reserves, though, is to give your business backup funds for the unexpected.
I want to make a quick point here…
This newsletter is called THE EDGE. And sometimes, I like to discuss things that I think are on the edge of innovation. And I definitely think this new breed of bank (aka “crypto banks”) is indeed on the edge of innovation.
This is in no way a recommendation that you dive into crypto. It is a volatile thing, as you’ve probably heard. It is kinda like the early days of the internet. So, do your own homework. The bigger point is just…. think beyond just putting cash in your bank. That’s a really important thing to do these days.
First off, as I write this I literally just got off with Cloudways support. Cloudways is who I use for hosting and who I generally recommend to people these days. I wrote a massive tutorial on how to get set up with them and move your sites. But, as for their support…
Great experience! The issue I had was rather technical (having to do with Redis caching) and I was able to get it worked out over live chat. I freakin’ love hosts that offer solid live chat support. So, kudos to Cloudways!
Speaking of hosting…
My previous web host was WPX. I moved away from WPX for several reasons, but I’m always the first to say that their support was stellar. Well, apparently, WPX is going to be making several improvements coming up. The biggest one, in my opinion, is a brand new control panel. While I don’t use WPX anymore, this is welcomed news because I think their current control panel sucks. If any of you are on WPX, rest assured…. an improved experience is on the way. 🙂
An on the tech front, I am moving full steam ahead on finalizing the switch from Drip to FluentCRM for email marketing here at the Blog Marketing Academy.
Which means… before too long, I will be emailing you about and from the new system. Issues of THE EDGE may look a little different, too, because of differences in the email editor.
I’m going to try to make the switchover as seamless as possible for members. And I’m also documenting the process and the various in’s and out’s of this project so I can talk about it on the blog after it is done.
FluentCRM is pretty amazing. Sure, there are a few little issues I need to work around, but overall I’m really looking forward to having this all in house.