"In India, the third question people ask you is, How much money do you make?," says Kate Strathmann, founder and director of Wanderwell Consulting. Though Wanderwell is based in Philadelphia, Pa., Kate lived for a long time in India. She’s responding to a question about why we are talking about 'money and feelings' with one of her characteristic, gently challenging reframes.
"The first question is, where are you from? The second is, what do you do? And how much money do you make? It's not weird, either!" Kate says. "Here in America, it's so taboo to tell people your income, and there's a lot of shame and protecting other people's feeling that you imagine they will have about it. Because you don't know!"
In Kate's role as a coach and strategist for small business owners, she finds that we all carry around emotional, cultural, and familial baggage around money. “I see this play out lots of ways,” she says. “There’s a spectrum of control and avoidance. People go to either. Maybe they don’t look at the numbers, they have anxiety and avoid it. Maybe they look at the bank account sometimes but keep the ins-and-outs at a distance.”
Limiting beliefs about money can spring from a capitalist-critical perspective. When we see big, seemingly successful farms, the first thought is often that they must be exploiting their employees or cutting corners in some way. This attitude that too much success is a bad thing can emerge in your own business as underpricing, underearning, and lack of cash flow.
The first step in disentangling cash flow from feelings, stories, and stigmas is understanding how money moves through your business.
Because so many small business owners do not have a background in finance, Kate provides bookkeeping support as well as strategic consulting and coaching. “For most people, your first hire should be a bookkeeper,” she advises. “Just because getting the infrastructure set up right is super important. It gets more expensive the longer you wait, because you have more stuff to clean up and fix.” Don’t feel daunted or ashamed if your business finances aren’t clear to you yet–but do take action. Unsure where to begin? Start with Tips for Small Business Success blog post by Farmer Bailey director of operations Thomas McCurdy.
"Finance is more about storytelling than math,” says Kate. “Learning algebra and understanding how money flows through a business are very different things. Even folks who have gone to an agricultural college or high school haven't necessarily been taught finance. How to read a Profit & Loss report, what is gross profit... resources for how to understand financials aren't easy to find or aren't accessible and are often dry. There's a technical aspect to finance, but everyone has an emotion around money and those two things intersect and mess with you."
“Once you need to start making decisions around investment, growth, paying yourself or paying others, you may find yourself with sticky feelings,” says Kate. “Understand and talk about those feelings. Reach out to colleagues like other business owners to have honest conversations.”
Sometimes it's necessary for business owners to bring in a financial coach to help them dig into challenges, particularly surrounding growth and crisis.
“It's hard to get enough distance from it. It's really important to get mirroring from outside, to help to see,” says Kate. “Once you start talking about this stuff, and making decisions grounded in the numbers, there’s a feedback loop where you can see the positive effects in the numbers. You see those decisions show up in the money. Once you can tie the choices you made to actual change and impact on the business, it becomes less scary.”
Kate Strathmann’s Keys for Small Business Owners
Get the Objective Facts
“If you’ve been avoiding it, it’s easier to look at money with someone gently holding your hand. Look at it like neutral info to make choices, rather than a judgment of your worth, or a reflection of how good or bad you are at your business. It’s more like neutral info you can use to figure out what you want to do next, and what are your priorities.”
Do What You Want to Do
“Make sure your job is at least 70% things you like doing. Don’t give away all of the fun parts to employees! Twenty percent you are ambivalent about, and 10% you dislike. Everybody takes the trash out.”
Look at What You Pay Yourself
“Lots of folks don't pay themselves at all, ad hoc or intermittently at first. You are subsidizing the business with free labor, and that will catch up with you. If you go to hire someone to do part of the job you are doing, you have to make up money that's not there. Folks that have LLCs will forget that payments to themselves will show up as owners’ distributions and not on the P&L. Not everyone needs to make a full-time income from their business, but I think ultimately, we are all served better as a community if our businesses actually function and can care for the humans running it, and not be propped up with free labor.”
Your Topline Revenue is Not That Important; Focus on Your Gross Profit
“You buy plugs, seeds, shade cloth: these are inputs to come out with a bouquet of flowers. Understanding the money left over is what you are running the business on. A lot of folks get stuck on topline revenue, but that number is not as important as gross profit. That's how you figure out your margins, which is the proportion of money you keep, versus the money you run the business on, and pay taxes out of. It's harder when you have low margins because you have less money to run the business on.”
Streamline and Simplify What Exists
“’We need more money! Let’s add an offering!’ can create complication creep that isn’t good for an efficient business. Run the numbers on what you already offer, and refocus on what works, and how you can make more profit there.”
Untangling feelings about money from your day-to-day decisions as a business owner can have positive effects on your cash flow, as well as your peace of mind.
Additional Resources
[Im]Possible Business: Experiments Around the Edges
An exploration of the question "What else can a business be?" This zine explore various projects and businesses that model exchange outside of capitalist norms and provide templates and sparks for different futures that center care, repair, failure, and solidarity.