To ensure accurate and up-to-date financials, commit to regularly monitoring your numbers and ensuring proper allocation of funds and expenses. Implementing effective systems can streamline this task, requiring minimal time investment. However, if you approach it haphazardly each month, you risk relinquishing control over your time and money to Parkinson’s Law.
You’ve heard me talk before about Parkinson’s Law. I like to make it super easy and say, “We use what we’ve got.”
Don’t Let Parkinson’s Law Steal Your Time
With the 4th quarter upon us, your time is being pulled in many directions. How are you managing it? I recommend using time blocking in conjunction with your awareness of Parkinson’s Law. I do this in my own business, and it keeps me organized and sane!
If you have a project to complete, consider the amount of time it will take you. If you need 8 hours, then block the time on your calendar to work on the project. You may need the work to take place over 2 or 3 days. Don’t leave it vague and say, “I’ll do it this week.” Move the project from your to-do list to your calendar. If you want to have it done in 2-3 days, then add an appointment for 4 hours to your calendar for the next two days.
Let Profit First Protect You from Parkinson’s Law
The other way to put Parkinson’s Law to work for you is with your money, via your bank accounts. Profit First is based on a couple of behavioral laws and one of them is Parkinson’s Law. Profit First uses multiple bank accounts with specific purposes to help entrepreneurs understand their cash flow.
When it comes to understanding your cash, looking at one bank account doesn’t really tell you how those funds will be used in the business. In your one checking account, you probably cover payments for inventory, payroll, operations, etc. A quick glance at your online bank accounts doesn’t tell you much. If the account has a large balance, you may start thinking of how to use that money to pay for items on your wish list. If the balance is low, you might begin looking at bills to delay or cut or how you might sell more to boost the balance.
Simply separating your Inventory from your Operating expenses gives you tremendous insight. Creating accounts for Profit, Owner Pay, and Taxes round out the full implementation of Profit First in your business. In our quick start guide (make a link for this), We walk you through how to give purpose to your money.
The special opportunity that exists in Q4 for ecommerce sellers is all the extra sales revenue is coming in, but your operating expenses stay pretty steady to their monthly average. I recommend that you keep your Operating Checking account at a steady amount and take any excess funds that you receive and move them to your Profit Account. In this way, you have enough funds to cover your bills, but not so much that you’re letting Parkinson’s Law work against you. Remember, you use what you got. If you keep that account balance low, you won’t be tempted to spend money just because it’s there.
Use Parkinson’s Law to Your Advantage
Take a few moments now and get your calendar and your bank accounts set up to take advantage of Parkinson’s Law. You’ll find Parkinson’s Law can be a valuable ally if you put it to work for you.