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Transcript Episode 38

Episode 38: What to Do with a Cash Windfall

 

Transcript Episode 38

Stephanie Skryzowski

Welcome to the 100 Degrees of Entrepreneurship Podcast, the show for purpose-driven entrepreneurs who want to get inspired to step outside of your comfort zone, expand it to your purpose and grow your business in a big way. I’m your host, Stephanie Skryzowski, a globe trotting CFO whose mission is to empower leaders to better understand their numbers to grow their impact and their income. Let’s dive in!

Hello, Hello, my friends! Welcome back to 100 degrees of entrepreneurship. I’m your host, Stephanie Skryzowski and I am coming to you solo today. I have a really good topic that I’m super excited to talk about. We are going to talk about what to do with a windfall of cash.

So, I’m not talking about what if you win the lottery? I’m talking about like, what if you get a gigantic tax refund? Or what if you have a huge launch and end up with a whole bunch of cash in your bank account? Or what if a client prepays for an entire year & you have a whole bunch of cash in your bank account? What do you do with it?

This may seem a little crazy, like… ‘Well, obviously, I know what to do with it.’

Well, actually… do you? What do you do with it?

If you have had this happen to you before? What do you do with it, right? Sometimes saving is the best thing. Sometimes spending is the best thing, and sometimes there’s other things to do with it. That’s what we’re talking about today.

I had this idea a while ago, & I’m recording this, I don’t know, probably like six months after I had the idea. I don’t really know what inspired it. I’m like, ‘did I get a windfall of cash like six months ago that I don’t remember? Or did a client?’. Maybe a client did and that’s what inspired this idea.

But anyway, I think it’s very applicable to all of us. And a windfall… actually defining what is windfall, right? For some of us, that might be like 1000 bucks. For others of us, that might be like $150,000, right?

We have clients that have done 150-200-300-$400,000 launches. Like running some sort of promotion, or some sort of launch of something, a new product, a new service, whatever. They will literally make six figures in revenue in cash in a matter of days. If this is not you yet, if you’re like, “Oh my gosh, my windfall of cash is literally like, $600”. Then, that’s totally fine. A windfall is a windfall.

But I’m just saying, if you’re like “Oh, well, what qualifies is a windfall”. I think that is up to you to define, right? So it’s a lot of cash, whatever a lot feels like to you.

So what do you do with it? I’m going to go over five different things that you can do, and should do with a windfall of cash.

I think this is important to think about, because what you focus on expands, right? So if you’re listening, & you’re like “Oh, my gosh, this episode is not for me, because I’ve never had a windfall of cash, I will never have a windfall of cash”. Listen up! Where your attention goes, the energy flows.

So, let’s think about this.

Let’s imagine together that you do have a windfall of cash that you did get a windfall of cash, right? Because it is on its way to you. So a little bit of mindset fun here, but that cash that windfall is on its way to you. So, let’s play on it right now. Let’s think about what we’re going to do when that happens, not what we’re going to do, ‘if that happens.’

What we are going to do when we get a windfall of cash? Okay, mindset work.

So, if you’re rolling your eyes at me, I want you to keep listening.

Okay, let’s do it!

Alright, the five things I want you to do when you get a windfall of cash.

First, I want you to pause. I want you to reflect. I want you to think about what got you this windfall of cash.

Maybe it was months of incredibly, incredibly hard work of you and your team. Think about… just take a moment to quietly think about all of the moving pieces – all of the little things that came together to put you in this place. And in that thinking, in that reflection, I want you to express gratitude.

So, often, and I am speaking about myself, something good happens, whether it’s a windfall of cash as a result of some really hard work, or whether it’s landing that big client, or whether it’s celebrating a particular milestone. We’re like, ‘yeah, cool, that sounds good. All right on to the next,’ like, that’s me. That is me.

I have hit some major milestones in my business that were really important to me. And I’m like, ‘sweet!’

I did tell my husband. Got a quick little high five and we’re like “Okay, what’s next?”’

This is as much to myself as it is to anybody else. But when you get this windfall of cash, I want you to pause for a moment. I want you to reflect on how you got there & I want you to express gratitude. So even if this windfall had nothing to do with you, right? Well, maybe you did win the lottery, maybe somebody gifted you like a whole bunch of money in their will or something, right? I just want you to express gratitude for that moment that got you to where you are.

Deep breath. We’ve paused. We are grateful for the position that we are in.

So, the second thing I want you to do is to not make any decisions based on your current bank balance, right?

That bank balance is going to look pretty sweet with this windfall of cash. But one of the biggest missteps of entrepreneurs is making decisions based on how much money they have in the bank. So things are looking pretty good right now, right? You’re like “Oh, I haven’t seen this number in a while” Or maybe “Oh, I haven’t seen this amount of money in my bank ever.” Do not make decisions based on that number.

What I want you to do. So number two, what I want to do is review your forecast, look at what is coming down the pike in the future, look at what your revenue looks like for the next 6-12-18 months. Look at what your expenses look like for the next 6-12-18 months. Maybe you did a huge launch, and you made a whole bunch of money. But now you’re going to have to deliver on that program. And in order to do that, you’re going to need to add maybe three people to your team.

So, if you made a big decision based on how much money is in your bank account today, you might not be able to pay those three new team members three months from now, because you made a decision based on how much money is in your bank today.

I want you to look at your forecast, I want you to look into the future, and use that crystal ball.

If you don’t have a template already, you’ve heard me say this a million times. This is something we do with all of our private clients, they all have a forecast. But if you go to 100degreesconsulting.com/profit, we have a template there so you can see exactly what I’m talking about. I want you to look at your forecast, look at what’s coming down the pike and do not make a rash decision. Okay, so that’s the second thing I want you to do slash not do.

The third thing I want you to do is save. If you have a windfall of cash, this may mean that there are some tax implications.

Now, before we get all like “Oh, I don’t want to pay Uncle Sam, this sucks. I don’t want to pay the IRS”. I hear you! It’s not that fun to shell out a whole bunch of money and feel like you’re not really getting anything for it.

That’s one of those things that like, anytime I have to buy new tires for my car, I hate spending that money. It’s like $800 or something or I don’t know, maybe even more. And it’s like “Oh, that’s so much money. And what do I even get for it, feels like I get nothing”. I mean, I guess I’ll get a safe car. But that’s not fun, right? It’s not fun to send that money into the IRS.

But I really like to flip the script because if I’m sending money to the IRS, it means I’m profitable. It means I have a solid, strong business, it means I have cash in the bank to pay the IRS. I’m not in a pinch. I’m not in a cash crunch. So I won’t go so far as to say I love paying the IRS like let’s be real. But it’s not that bad, right?

So, the third thing I want you to do with this windfall of cash that you get is I want you to save some. I want you to make sure that you have enough in the bank that you’ve got a cash reserve, so that when you need it later in the year, whether it’s for taxes or for hiring somebody or for future expenses, that you’ve got it there.

Now I’m not like Dave Ramsey’s scarcity mindset being like, ‘Okay, you know, you have to have like a million months of cash reserves saved up.’ I’m not saying that before you can do anything else in your life. I’m not saying that. But I just want you to again, look at that forecast, and make sure you’ve got enough cash to do what you want to do, not just now but in the future. Okay, so probably some of that windfall of cash that you receive, will probably be put away.

COMMERCIAL BREAK: One of the most frequent questions I hear is, “What’s the difference between a CFO, a bookkeeper and accountant? And which one do I actually need in my business?”  So I have created a quiz to help you figure out just that, pop on over to 100degreesconsulting.com/quiz, answer just a couple questions about your money management style and your business. And we will tell you exactly the right person that you need to help you manage your business money. Again, 100degreesconsulting.com/quiz

 

So, the next thing, number four, so I want you to invest strategically. What this means to you may be different than what this means to me. But if you get a windfall of cash, that is often a great time to invest in yourself!

For some people, that might mean okay, I’m going to put my money into the vanguard total stock market index, right? I’m going to actually literally invest my money into the stock market, that is a great option.

Or I’m going to finally hire that business coach that I’ve been wanting to hire for six months because I really believe that they can get me to the next level of income and mindset, and everything, that’s a great investment as well.

Or I’m going to invest in this new course to help me with a particular strategy for my business, great investment.

Maybe is I’m going to hire somebody to provide childcare for my kids and clean my house, so that I have got time to work on my business or take care of myself. That’s a great investment too, right? So, all of those things that I mentioned are really good investments. It depends who you are, where you are, at what stage in your life, and what you really need, and what is going to help you uplevel, not only in your business, but also as a person.

So think about what investing means to you. And this would actually be a really good opportunity to really dream a little bit and say, ‘okay, when I get my windfall of cash, whatever that looks like, when this windfall of cash comes, what’s really important to me, what do I want to invest in?’ That way, when it happens, you’re ready to do it, you are ready to jump in and invest it and hire the people, do the thing, buy the thing, whatever it is.

The fourth thing, like I said, what you’re going to do with your windfall of cash is you are going to invest. You are going to make that money multiply in one way or another.

And the last thing is give, I feel like we don’t talk about this enough. I feel like I don’t do this enough. If I’m being honest, I want to give more.

And so whether that looks like giving to charity, or right actually making a cash donation to a cause that you’re really passionate about, or whether that means maybe doing some work for free.

Okay, don’t get me wrong here, I don’t mean like under-pricing yourself or doing a whole bunch of work for free. I mean, strategically choosing one client or one whatever to give your services for free with the intention of ‘okay, I am intentionally doing this, this is my pro bono gift to the world. I’m doing this intentionally’.

So, maybe that’s what it is, maybe this windfall will help free up some of your time in one way or another so that you can take on like a pro bono client or service or whatever that is.

But I really believe that what we give comes back to us tenfold in a number of different ways.

And like I said, you know, it’s interesting for me, I have been in the nonprofit sector, that’s where I started my career. My company today, still works with a lot of nonprofits. And while giving is something that always has happened in my business, it’s something I really want to do more of and have more of a structured plan around it.

So, I’m literally just talking out loud right now thinking out loud. But one thing that we’re going to begin implementing is like a company matching gift programs.

I don’t know if you’ve ever worked for corporate before. But if you’ve worked for a big corporation, they often have a matching charitable gift program where if any employee donates money to a nonprofit of their choice. Like with an actual 501c3 nonprofit organization, the company will match that donation and donate to the charity as well.

Oh my gosh, if GE does this, my husband used to work for GE, if they do this, why can’t I do this, right? So I think I’m gonna have to put a cap on, I can’t like, match $25,000 for each of my employees or anything, but I’m going to do this in my business. And so that is really important to me.

For me, that doesn’t really take a windfall of cash, right? I’m going to match whatever my employees give to the charity of their choice, I will match it, as long as it’s like a 501c3 and a legit nonprofit. I’m really excited about that.

Anyway, giving is something that you can and probably should also do, if you are like me, and really focused on creating an impact, working with other purpose driven people inside and outside of your business. I think this is an awesome thing to do when you get a windfall of cash.

So, what do you think? Are you dreaming like me?

Are you like, “Alright, I’m ready, I am ready and waiting for this cash to come my way” and when it does, I know exactly what I’m going to do with it. I hope that’s the position you’re in, because that’s where I want you to be, I want you to be ready for this money. So, that when it comes in your door, when it is sitting in your bank account, you’re like, boom, I know 12345 I learned the steps that I need to do from Stephanie. And now I’m ready to go.

So, let’s recap!

The first thing that I want you to do when you get this windfall of cash is just a pause a moment. I want you to reflect and I want you to express gratitude.

The second thing I want you to do is review your forecast. Look into the future. Do not make any rash decisions based on how much money is in your bank account this very second. Look at your forecast, look at what’s coming down the pike, and then make your decisions.

Number three, I want you to save it, especially if there’s tax implications. Put that little tax bit away, pretend that it never entered your universe. I want you to make sure that you’ve got what you need in the bank to do what you want to do in the future. I’m not setting a rule that you need a certain number of months expenses although if you want a rule, I’d say like 3 to 6 months is like a really good target. But if you’re already there, it’s fine. You don’t need to live hard and fast by this rule. but I just want to make sure that you will have enough money in the bank to do what you need to do in the future.

Number four, invest strategically, I gave a handful different examples of what investing might mean to you. But think about that dream about that right now. As you are listening to this podcast, think about it in your head. Type in a note on your phone. Write it down on a piece of paper, ‘what are you going to invest in when that cash happens?’

 And then five, I want you to give, I want you to give because generosity just repays itself tenfold. And there’s no downsides of giving. So whenever giving means to you, right? It could mean cash, it could mean time, it could mean service, whatever that means, but give.

So there you have it, this is what I would do. This is what I have done whenever I have received and when I will receive in the future, any type of windfall of cash.

It’s gonna happen for you, if it hasn’t already. And it might be $500, it might be $500,000. I don’t know what that number is for you. And it really doesn’t matter. Thinking about it now & having a plan for what you’re going to do when it happens is the most important part.

I hope this was helpful. And I would love to know if you have anything to add. If you’re like, ‘Oh, wait, there’s one more thing that I have done when I have received a windfall of cash!” Send me a message over on Instagram, send me a DM. I would love to know what your like cash windfall strategy is. So I love it. Thank you all for being here so much. I’m so grateful for you, and I’ll see you next time!

Thanks for listening to the 100 degrees of entrepreneurship podcast. To access our show notes and bonus content, visit 100degreesconsulting.com/podcast

Make sure to snap a screenshot on your phone of this episode and tag me on Instagram @stephanie.skry and I’ll be sure to share.

Thanks for being here friends, and I’ll see you next time!

Transcript Episode 38

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