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Is Your Business A Financial Hot Mess? Recover by Following These 5 Steps

I’m a recovering financial hot mess.

Before 2011, organizing myself financially was never top of mind. Receiving a regular paycheck ensured that.

I wasn’t an extravagant spender. Also, I suppose I lived within my means the way I knew how. For example, I cooked my meals most often, brought coffee to work, and took mass transportation when I could.

From a salary perspective, I’d say I was fortunate. For most of my 12-year corporate career I earned anywhere from $85k to $110k annually before bonuses. That’s a lot for a single girl.

Sadly, I had little to show for my earnings. I wish I had a showroom full of Gucci and Louis Vuitton bags and shoes. I also wish I can tell all of you about the many lavish vacations taken. As for my former apartments, I wish I could tell you that I lived on Park Avenue or Miami Beach.

Or maybe the evidence was not tangible. Rather, I should talk about the big fat sums of cash sitting in my offshore bank account. Or I should be telling tales of my stock market exploits and share how I got rich from commodities. How about I brag from here to tomorrow about all the loot I put away for the rainiest of days.

Unfortunately, here is the truth. I honestly don't know where my money went.

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In 2010, I could no longer rely on a regular paycheck because I was first laid off during the mortgage back securities crisis. I was living in New York City, and was lucky to receive a three-month severance package. Within those three months, I found an accounting job in another major city.

Just as I was starting to recover financially (and mentally), I was laid off again in 2013. This time it was due to the downturn of the oil and gas industry. I was living in Houston.

Eventually I hit financial rock bottom. I was broke and would have been homeless with a dog had it not been for my parents.

Being broke forced me to look at my spending habits. I needed to stop being clueless about how and where I spent my money. Instead, I needed to develop a healthy relationship with money. And, really, I needed to face myself.

Using Wave, I saw the harsh reality of my spending, going back to 2011. I did not like what I saw. Talk about a wake up call. I was ashamed.

However, being broke was the best thing that happened to me. It taught me lessons beyond what was learned in business school.

...well, okay, I don’t wish anyone to be broke and face homelessness. But the growth I experienced was fabulous.

My personal story is the reason why I have chosen to serve small businesses. I can relate to not knowing where the money that is earned goes. And, I understand looking at your bank and spending based on the amount that is there. I also understand not having a financial plan and taking on a bad client, bad job, or bad anything just to generate money. And I understand taking care of everyone else first, which means you are last.

Honestly, it’s difficult to look inward. It’s easier and more acceptable for small businesses to busy themselves with selling more services or products as a way to stop to cash leaks. And despite the high revenues, there are many small businesses that have little to show for their earnings. …just like I did…

That’s why I understand…

As a fully recovered financial hot mess, here are some of the lessons I have learned and shared with other small businesses:

1. Do Your Bookkeeping

Maybe I am a sensitive accountant, however it sometimes comes across to me that many business owners believe they are too good to be doing the bookkeeping. Bookkeeping is the foundation to organizing your finances.

Software such as QuickBooks, Xero, Freshbooks, and more make this process a breeze at such a basic level because they automate the work, which saves so much time. And if you’re concerned about cost, use Wave. It’s free.*

Automation puts you in the driver’s seat. You are able to work smarter, not harder.

Now you can focus your efforts on running your business efficiently, rather than doing mind numbing, soul crushing, hair pulling data entry.

Don’t forget to reconcile your accounts! Doing so ensures you have accounted for everything, and you can even catch errors too! Yes, you deserve to keep what is yours!

2. Look At Yourself In The Financial Mirror

This part can be uncomfortable, but it is necessary. Looking at your financial self can put you on the path to change.

As you do your bookkeeping, start to notice patterns. Take a good look at what you spend your money on and where you spend it. Perhaps you are having trouble collecting for services rendered. Or maybe the downturn in sales is a direct result of your decreased marketing efforts. Maybe it you have the need to “prove” you are successful by buying all the drinks at the weekly happy hours. Like I said, the truth is uncomfortable.

Take your time and observe anything and everything. What you notice and feel is relevant.

3. Put Pen To Paper

One of my yoga buddies used to volunteer at a men’s prison. And yes, you guessed right, he taught yoga to the incarcerated. At the end of class, he’d instruct the men to write their thoughts on a sheet of paper or a journal, if they had one. The reason is, what you write is your truth. If you make a mistake, you can cross out the “error”, however your truth is still on that paper regardless of the lines going through it.

I used the ‘put pen to paper’ concept as a strong tool in my financial hot mess recovery. I wrote what I had observed about my financial behavior in a journal.

I wrote about the occurrence of late fees despite having the money to pay for the expense. I wrote about the number of trips made to the convenience store to buy 20 oz. vanilla cokes. Yea…there were a lot of trips. I also wrote about how I felt when I got paid.

When you write things down, you see what is in front of you. Doing this practice also helped me plan. Which brings me to the next lesson…

4. “We need a plan of attack!”

If you spend too much, separate your needs from your wants. If sales are not high enough, create a client or customer generation plan. If invoicing timely is an issue, create reminders. And if you are accumulating debt because an aspect of your business is a cash-eating monster, identify the monster, and maybe decide to redirect the funds that were once eaten by the monster to paying down debt.

5. “I have a plan. Attack!”

I had to sneak in the Avengers references after watching it recently. Such a good movie.

Anyway, the lesson says it all.

Just remember, even a baby step is a step forward.

Cheers to being in recovery!


Have one or some of you experienced financial recovery? Or are you in the middle of it? Please share your comments or even your own stories. Your perspective can help another person in need, so don’t be afraid to share! Also please share this article with anyone that might need some inspiration. We are stronger together!

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