GPWA Times Magazine - Issue 31 - February 2015

Case study: Control of the money flow Two small affiliates have just received their first big payment, $2,000 each. The first affiliate quickly buys something he wanted for a long time but couldn't afford. He doesn't see the line between him and his business; what his business earns, he spends. The second affiliate is more clever and stores the $2,000 in the company initially, understanding it's the company that made it, and eventually pays himself out a total of $1,800 for personal expenses. The first affiliate lost the $2,000 without even knowing how. He needs another payment, as soon as possible. The second affiliate spent a lot of the money, but even if he spent all of it, at least he had control over what's going on and his company had a chance to keep some of the money for future growth. In this example his company managed to hold onto $200. It's not much, but it's the principle that matters: These two guys aren't only $200 apart, but their businesses are heading in two completely different directions. Keep track of all revenues accurately It's vital to know exactly how much mon- ey the business earned, so every payment needs to be written down as soon as it comes in. As opposed to keeping track of profit – the money you have left after you pay all expenses – keep track of every cent of revenue. This is very different from just monitor- ing the bank accounts and online wallets and saying, ''I know how much I'm mak- ing; I can just go online and check.'' You can also check Coca-Cola's yearly revenue while you're at it, but it doesn't mean you know what's going on inside the compa- ny. It's a bit more complicated than that. For starters, you don't need to use fancy terms or download some fancy balance sheet. Just write down the date, source and amount every time you receive a pay- ment. This simple routine is the founda- tion of everything else you'll do with the money you've received. This is the equivalent of using Google Analytics to track visitors to your site. There are many things you can do with the stats once you have them, but it's im- portant to actually install the Analytics code on your site at some point so you start gathering visitor stats. It's the same here; just keep writing things down and soon you'll start seeing patterns and get- ting ideas. Don't steal from the company The business must be independent and protected from outside influence, mean- ing you can't just walk in and take money whenever you need it. Your company needs the money more than you do and is better with money than you are, so don't steal. Come up with a flat salary or a percentage of earnings you're paying yourself and stick with it. You can change the deal if you need more money, you can borrow money from the company, and you can even take everything when the moment is right. But don't be sneaky about it. Document it and know why you're doing it. Rule No. 1 Rule No. 2 11