The Three Little Bank Accounts
Here’s a little story about three little bank accounts. I can’t express to you enough how much this little secret changed my life, changed my business, mental state, and physical being.
This helped me take my business from half a million dollars a year to twenty million dollars in revenue in under three years. I call it the three little piggies. Now this is something that takes most business owners a long time to figure out. It took me two years. But here it is:
The best thing you want to do when you’re running your business is set up three separate bank accounts.
1. Working Account
First, you want to have your working bank account. This is where all your income comes in. People are paying you into this bank account, all your sources of revenue come into this bank account, and all your payments come out of this bank account.
So you’ve got aged payables and aged receivables coming into this bank account
2. Regulations Account
The second one you want to set up is your PAYG/regulations account. Some people like to call it their compliance account. This is where you put away your taxes, put away your PAYG and any GST payable that you can foresee in the future coming up. Once you have this second bank account set up, you can then start to put away money every single week based off your turnover and based off your wages and internal PAYG. Put it away every single week so, when those nasty bills do come through, the money’s sitting there – it’s not coming from your personal bank account or your main account.
3. Profit Account
The third one’s my favorite. This one is the profit account. This is where you put away your money every single week – or at the end of the month if you’ve got a long turnover of bills being paid. This will then give you clarity around where you’re going.
Even if it’s putting away $500 for the week or $5,000. Always put something into this bank account. It’s going to show you how you’re slowly progressing forward. This is going to stop you from riding the emotional rollercoaster that most business owners ride when they’re judging their business looking at their bank account.
I used to be one of them. Every day I’d wake up and go, oh I’ve got fifty thousand dollars in my bank account. Then I’d be a happy person to be around. Then there’d be five thousand dollars in my bank account and I’d be a miserable person to be around.
Don’t run your business based off your bank account – like an emotional roller-coaster going up and down. Have these three little piggies set up before a big bad wolf comes and blows you away.