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Where should the money go?

By October 2, 2020December 2nd, 2021No Comments

(This is not a blog. This is a codex – raw, unpolished and brutally frank.)

In this codex entry, I’m exploring my thought process around how my company should spend its money at this particular stage – what I can delegate or outsource, what I can’t.

For a recap, I’m running a services company with one employee (myself). At this time, I don’t even have enough in profits to pay myself a salary.

Right now, I’m doing every single thing myself. Here are all the things that need to get done:

  1. Accounting / bookkeeping
  2. Sales and direct outreach (emails, phone)
  3. Marketing: content creation (writing, audio, video, graphics)
  4. Web development
  5. Providing the service (teaching)

Out of these, let’s remove the ones I CANNOT outsource anytime soon, even if I had the money:

  1. Accounting / bookkeeping
  2. Sales and direct outreach (emails, phone)
  3. Marketing: content creation (writing, audio, video)
  4. Web development
  5. Providing the service (teaching)

That leaves us with accounting, direct sales and web development.

Finance Philosophy

I look at the “three shoeboxes” picture. There’s money coming in, money going out, and then whatever’s left. Dead simple.

If the third box has no cash in it, something’s wrong – the company will die soon.

Now, cash represents two things: growth, and safety.

If invested in the right things at the right time, it can free up my time and lead to faster growth. At the same time, simply by sitting in the box, it is a buffer against unforeseen events.

To think about the whole thing, I’ve made some fundamental decisions about how SANPRAM will be run.

Decision Number 1: If we ever have to shut down, furlough or lay off people at SANPRAM, we’ll give them at least 2 months pay to act as a buffer. Therefore, the company must ALWAYS have that much “emergency money” stashed away. No exceptions.

Decision Number 2: A business needs a trusted ‘system’, to make money in a fairly predictable manner – we need to know what works. Until this system is figured out, we don’t have a business, and all actions of the company must be directed towards figuring it out.

Current Situation

In light of these 2 decisions, I ask myself the two corresponding questions:

Q1: Do you have enough money in the bank, to lay off a person after 3 months and be able to give them 2 months of buffer?

Q2: Do you have a line of sight on where your next few customers will come from?

At the moment, my answer to both questions is NO. I’m still figuring out my market, and don’t have enough data to be confident about my marketing plans.

Therefore, I cannot afford to hire anybody or outsource anything. I will need to continue to grind and do everything that I can by myself.

Planning Ahead

As soon as I make a few more sales and test my marketing funnel, I’ll be able to hire people to help set that funnel on fire and GROW at all costs. I’ll hire a VA, an accountant, and also outsource web development.

Until then, just gotta keep grinding? If I’m not confident about where my business will be in 3 months, how can I expect someone else to be?

The money I have in the bank right now should be set aside as the emergency fund – don’t want to touch it. But of course, I could be completely wrong about how I’m thinking.

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