🎙️Show Notes for Episode 016 - 5 New Ways to Think About Money As A Consulting Business OwnerJun 30, 2021
As an Independent Consultant, it’s important to refresh the way you think about money so you don’t fall into the trap of underearning and overworking.
It’s a shift from the old employee mindset to a business owner mindset in the way you think about money so you can:
- Earn more
- Work less
- Scale your business
Listen in to learn how to avoid the employee mindset money traps and make the shift to the business owner mindset to help you grow your business further and faster.
In this episode,
[02:48] Why you should care about how you think about money
[07:25] Employee Money Mindset Trap #1
[09:58] Employee Money Mindset Trap #2
[11:39] Employee Money Mindset Trap #3
[13:51] Employee Money Mindset Trap #4
[17:51] Employee Money Mindset Trap #5
[19:48] Four steps to put this podcast into action in your business
RESOURCES MENTIONED —
The 26 Minute Lead Generation Method for independent consultants
- The simple mindset shifts to step into the successful business owner way of thinking:
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**note: This is an automated transcript, so please ignore spelling errors and grammar mistakes*
Welcome to the Grow Your Independent Consulting Business podcast. I'm Melisa Liberman, a fellow IC and business coach. On this podcast, I teach you to become a consistently booked independent consultant without becoming a pushy salesperson or working 24/7. If I can do it, you can too.
Listen on to find out how. Welcome back to Episode 16 of the podcast. I'm excited that you're here again this week. And we're going to dive into another topic in this series shifting your mindset from employee to business owner so that you can make more money and spend less time working. So I started this series last week and episode 15. If you haven't caught that, go back and do it. But stick with me here, because they're independent episodes. And today we're gonna, I'm going to share with you the five new ways to think about money now that you're a business owner. So it's all about money today, shifting from your employee base thinking that was ingrained in you from, you know, the early days of your corporate career into thinking about money as a business owner, how you're spending money, how you're saving money, how you're investing money, how you're charging money, all the things about money. So, so excited to share this topic with you. I think I say that every week. But it's so true every week, I'm so excited about the topic. And I feel like it's even better than the last week if I don't say so myself. So with that, let's talk about how you are thinking about money, and how you can make and pinpoint some adjustments that will help you ultimately make more money and worry less about money. So I'm going to walk you through today a framework. First, we'll talk about why I care about this topic. So make sure that you hear that because it's really important. A lot of times we shut off when we start hearing about money. Money's not appropriate to talk about all the cultural constraints we have around money. So don't tune this out, I'm going to tell you why you should care about this topic, and really dig into listening as we go through it. And then I'm going to walk you through five separate ways that we have been taught as good employees to think about money, and how you want to shift those into usually the exact opposite in order to succeed and reach your goals as a business owner, an independent consulting business owner. Okay, that's our agenda for today. And I'm going to also as we go tell you how to implement this so that you walk away with a really clear understanding of what to do next. Alright, so with that agenda, let's dive into number one. Why should you even care about this topic? Why care about thinking about money, and what that looks like as an employee versus a business owner. Very simply put, your thoughts about money and those that are ingrained from your corporate days can very easily cause you to underearn and overwork. So understanding and cleaning up these thoughts about money are so critical as a foundation to your business so that you are not limiting the money that you're bringing in and overworking as a result. I see this time and time again in my clients. And honestly, I've had to make I had to make these shifts for myself as well, in the last several years. If you don't see where your thoughts are about money, and how those are holding you back, and shift them into business owner quality thinking, what ultimately happens and why you should care about this episode is you slow down your earning. And that compounds over time, right? If you're making 30k less this year, that's 30k less than that may be as a foundation for you that you're not building upon next year, and so on and so on. And it becomes this compounding effect. The other impact that it can have is creating an inconsistent revenue stream, you know, that roller coaster of revenue, or the feast and famine cycle, right? Where you're making a lot of money working on a client and then all of a sudden it's dry. And this all dives down into your thoughts about money at the very base of it. So this episode is so so important. The other thing is that your thoughts about money lead to our schedule flexibility. We'll talk about how your thoughts about money actually impact your schedule, and your inability to have that flexibility that led you to become an IC in the first place. And your thoughts about money also could cause you or do cause you missed opportunities to scale your business and make money from a scaling perspective. So as you can see These thoughts about money can really be foundational to your business, and either cause you to wildly succeed, or to constantly struggle. And I don't want you to constantly struggle. So I'm going to walk you through the five ways of thinking about money that is greatly ingrained in us as an employee, then how to recognize those, and then how to shift them into really high-quality business owner-type thinking. And again, this is where making these shifts will help you to create the results and the momentum that you're looking for. And the first caveat I want to give you is nothing has gone wrong here, you've done nothing wrong. In fact, you've done everything right, you learned how to think about money in a way that created success for you in your corporate career. If you're listening to this, I know that you're someone who's a high achiever. And you figured out how to play the game incorporate by having all of these thoughts about money, and the way money works incorporate, so nothing has gone wrong, you succeeded in thinking about money in a really successful way as it relates to corporate. Now what we want to do is see how those thoughts are going to hold you back as it relates to moving forward and creating a new mental model as a business owner is going to help you to accelerate those results. So with that, in mind, nothing has gone wrong. Think about these five areas that I'm going to share with you here in a second. And in order to put what I'm telling you into the action, all you need to do is be aware of these five things, these five traps. Notice, either today as you're listening or going forward that when you think these thoughts that are your old corporate kind of residual, and then shift into the business owner replacement mental model that I'm going to share with you for each of those five. Okay, so we're going to put this work into action, as we always do every week. And now that you understand how this could be impacting your way of thinking about money, I'm going to share with you the five most common traps that I see other independent consultants fall into that we're going to help you avoid today. Okay, so number one, our old employee way of thinking is that we need the approval to spend money, right? We have budgets, or we have internal approval processes, or we have pre-approval processes, all the things right all the bureaucracy that is set up in order to lead to reaching a certain corporate goal. At the end of the day, we are then therefore tight, and create a thought in our mind that a way of doing business that we're not allowed to spend money without permission from someone else. That is just the ingrained way of thinking like an employee, and kind of that construct, right of how we succeed incorporate. However, as I shared with you at the beginning, if you continue down this road thinking you're not allowed, no, you're not allowed to spend money, you don't have permission to spend money unless someone else grants it to you, you end up stalling out your ice business. And it's kind of funny, right? Logically, you know, there's no one else to give you approval. I know you know that logically. But underneath the surface, I see so many times, other independent consultants like you waiting for approve someone's approval, whether it's our spouse's approval, maybe a client's approval in some way, maybe a former colleague we seek advice from, or even a coach if you have a coach or if you work with me, like seeking out awaiting for approval of someone else. But you own an independent consulting business, the word independent is in there you decide. And so like I said, recognize where you are not even realizing you're waiting for permission from someone else. And then shift that into the business owner quality thinking, which is something along the lines of I decide how and when to invest in my business. And if you're not in a position to take notes right now, you can always go to the show notes and grab this later, I'll give you a little table so you can see exactly the five ways of thinking that are by default employee thinking and what we offer you suggestions like I just did about how to shift that in a business owner quality thinking. So again, number one, the default thinking is I need the approval to spend money and the business owner quality thinking is I decide how and when to invest in my business. All right, number two Old employees' way of thinking is that any outgoing money is an expense, quote-unquote, we're trained to think of outgoing money as an expense, right? I mean, every report we see as a, you know, a leader in corporate has the word expense on it, whether it's salaries, or travel costs, or business meals or training, whatever it is, you know, it's categorized as an expense. And why I point this out to you, this corporate way of thinking is that it means that it's very rare to think of outgoing money as an investment. By default, we think of any money that goes out of our bank accounts, our business bank account as an expense, versus looking at it as an investment. And how is the money that you're distributing out an investment? And what should the return on investment B that you're looking for? It's that shift in thinking about what money is, that can give you such a different result, right? If you're thinking about this as an expense, like almost a punishment, versus this as an investment, how am I going to reap the benefits of this investment, either in a monetary way or in a time-based way? Whatever that is? So think about the way you look at expenses? Are they positive or negative? Are they good or bad? Are sunk costs the investments, and then put it into the action of start to think about expenses in a higher quality way, as a business owner versus an employee? Alright. Number three, our old employee way of thinking that's ingrained in all of us as corporate employees, his expenses should be controlled. Right, it's kind of really a little bit related to the first two, we're taught to keep expenses under control, we should limit them, we should contain them, we should justify them, we should bury them, or we should avoid them. Right? Those are the concepts that were taught as employees. And if we master those were really good employees, were given more responsibility. However, as a business owner, if you're by default thinking, you need to always limit your expenses such as your go-to and have thought about spending money on even expenses, right, based on the last topic, it's about spending money, investing money, if by default, you automatically think the principle is that you should limit the money going out, you're not thinking like a business owner. And as a result, there's a very good chance you're suppressing your ability to earn more money. So notice, where you're thinking automatically, I shouldn't spend money, I shouldn't have expenses, I should keep these expenses under control. Not saying just start spending money like a crazy person. What I am saying, though, is notice where by default, you think the rule should be that you've got to contain or limit the expenses, money going out. And then after that, your business owner's level of thinking is a sentence like as a business owner, I strategically plan how I will invest my money. I don't see cost containment as the best choice by default. Do you see the nuance there? The default thinking as an employee is I better control these expenses versus as a business owner. Spending money can be a very strategic way to grow my business and a great thing. It's not a negative automatically. Okay, number four, the next employee, the way of thinking that's ingrained in us is that expenses should be reimbursed, right? We're taught as employees that our expenses are reimbursed. And if they're not going to be reimbursed, then we shouldn't definitely spend the money, right. We expect basic expenses to be reimbursed without question, airfare, hotels, whatever it is. And we are thinking about ways to get reimbursed for expenses that are more optional, right. For example, I remember one time at Accenture so early in my career, that a colleague and I wanted to go to this Women's Leadership Conference. And I think it was like $275, maybe whatever, 400. I don't know how much it was, but it was definitely less than 1000. And we decided that we would love for Accenture to send us and we probably spent three or four hours writing a business case about why the company would benefit from us going to this conference. And you know, it ended up getting approved and we went to the conference. However looking back as an employee, that was our goal. Well, we Should Never spend this $275 or whatever it was out of pocket, we should definitely get reimbursed for this. And we went through all these hoops to get it approved. And, you know, the ironic part of it is, I don't know what my actual bill rate was at the time, but it was probably $300 or something. So it was like, you know, let's just say we spent $1,200 $1,000 Total on $1,200 of billable time writing this business case to get reimbursed for $275. Right. As an employee that made a lot of sense. At the time, it's like, how do I, how do I get whatever I want to do reimbursed is kind of like a game in a way. And as a manager, it's kind of like a constant thing we've got to keep our eye on the right. When you were a manager incorporate, if you were like, how do you make sure that someone on your team isn't on some form of a boondoggle? I know, I was always having to try to catch that kind of stuff. So anyway, my point in sharing those stories is like as an employee, our goal is to get our expenses reimbursed. Our thought is, and the way of doing business is that we shouldn't need to pay out any of our salary toward costs that are associated with doing our role to doing our job, that benefits the company we work for, right. And a lot of that, again, this is not about thinking something's gone wrong. As employees that work out really well. It helps us protect the money that we're bringing in, right. However, as a business owner, if you think that every expense should be reimbursed, like for example, by your clients, or you won't do it, then you're really missing out on the opportunity to invest in your business, in order to increase your revenue, in order to increase your free time, in order to increase your skill, and therefore your value and therefore what you can charge in the future, in order to scale your business and potentially create revenue when you're not working. Right. It's just a very different way of looking at things. The default, if we think about expenses should always be reimbursed and live in that mental construct. It's going to prevent the creativity and the way of thinking about your business in a way that will allow you to invest so that you can accomplish your business goals. So again, just question that employee's way of thinking. And notice that it's happening by default, if it is, and then start to shift that into thinking about outgoing expenses. And whether or not they're reimbursed should say outgoing money. And whether or not it's reimbursed as something that could be an investment in something that could get you to your goals further, faster without it being reimbursed by a client. All right. And then the fifth and final way that we have been taught to think about spending money as employees is that it's negative, right? This is kind of another flavor of some of the ones we've already talked about. Expenses are negative. They're bad. I mean, can you think about a time when you as an employee or someone else raise their hand and as a proud moment to describe how they've spent money? No, never. It's usually the opposite. We're taught that expenses are bad. And we should manage perception around all of our expense lines as employees. So again, notice for you now, as a business owner, how you could be thinking by default, that your expenses are negative, automatically, just it's a fact, Melisa, my expenses are a negative thing. Spending money is a negative thing. And again, those rules of the game work really well when you're trying to play the corporate politics. However, as a business owner, again, that's going to limit your growth, it's going to create underearning and overworking. So the business owner quality thinking that all offer to you for this particular topic is that outgoing money can be incredibly beneficial to reaching your business goals. Think about it that way. Your default thinking should always be as a business owner, does it make sense to invest in this area in order to increase or gain or accomplish some goal versus by default, automatically? Spending money is bad, I shouldn't do it.
Okay, so now you know the five most common traps that we have in shifting into a business owner as they relate to money. And so I want to be able to help you put all of this into action. I'm going to give you four steps to put what I shared with you today into place in your business. So number one just set a high level. Always know what your business goals are. What are your business goals and is this topic related to money and revenue, and profit margin? Know that and then back into what are your Where do you have opportunities to invest, also known as spending money, or time to accelerate or protect or scale to those business goals? So kind of take all of those preconceived notions off the table and ask yourself, Where does it make sense to invest, so that I can reach my business goals like virtual assistants, marketing or advertising or subcontractors, or paying out referral fees? Or, you know, spending money to go to events or conferences, or hiring a coach like me? Whatever it is, right? What are the opportunities for you to invest to reach the business goals? And then the third thing here is as you make this plan, notice where you're feeling resistance about spending the money, because of those five traps that I just shared with you. And then finally, work very purposefully. Now that you know what those default ways of thinking are right? Work really purposefully to shift into the new business owner, higher quality, more appropriate ways of thinking about money. And when I say appropriate, I mean, you're a business owner now, right? You're not an employee. So shifting into the way that a successful business owner thinks about money is going to help you not fall into that trap of underearning and overworking. Right. It's going to help you accelerate the achievement of your goals as an Icee. And really feel strongly that you know exactly how to be successful. Right. Hopefully, this was helpful, a new way of thinking about money. I look forward to continuing this series next week. So stay tuned, and I'll see you again next Thursday. Thanks for joining me this week on the Grow Your Independent Consulting Business podcast. If you like today's episode, I have three quick next steps for you. First, click Subscribe on Apple podcasts or wherever you listen to make sure you don't miss future episodes. Next, leave me a review in your podcast app so other independent consultants can find it beneficial and finally put the ideas from today's episode into action. Head over to Melisaliberman.com for the show notes and more resources to help you grow your consulting practice from your first few projects into a full-fledged business. See you next week.