Money is an invention, a distinctly human invention. It is a total fabrication of our genius. We made it up, and we manufacture it. It is an inanimate object that has appeared in many different forms in its more than 2,500-3,500-year history, whether we're talking about shells or stones or ingots of precious metals, a paper bill, or a blip on the computer screen. From the very beginning, money was invented to facilitate the sharing and exchanging of goods and services among individuals and groups of people. Money still facilitates the sharing and exchange of goods and services, but somewhere along the way, the power we gave money outstripped its original utilitarian role. 

Lynne Twist, The Soul of Money

Welcome to Week 5—Financial Planning. This is the fifth and final week in the first section of the miniMBA: Discovery. And financial planning is certainly all about discovery. From our mindset to our personal needs to our definition of what is *enough*, money can be one of our greatest teachers if we allow it. And in this time when chances are high that we are headed into a deep recession, meticulous financial planning is more important than ever. 

 If you are just joining us, you can catch up on the previous lessons here

Have you been finding these lessons valuable? This is a note to let you know that Early Bird Registration for the full Business Growth Program will open up on November 7th, but you can email me early to be put on my personal outreach list if you're interested in joining us in 2023. Looking forward to continued learning in 2023! 


In our first four weeks together, we reviewed our entire company history, identified our culture, defined our leadership, and set our vision & goals. It’s time to dig into our financial planning. The key to being able to do this successfully is to have clean data, to begin with. Invest in your bookkeeping software setup and maintenance to have this data accessible and ready to be analyzed. Financial planning starts with looking back, just as we did with this program.  It includes top-line (Income) and bottom-line analysis (Profit/Loss) as well as your key numbers. 

But before we dig into any financial planning, we must first become one with our mindset about money. Approaching financial planning with a scarcity mindset will always result in perpetuated scarcity, no matter how much money we make. Our personal history with money informs our business planning. How did we learn about money as a child? What projections are we unconsciously bringing into our financial planning? What is our comfort level with discussing money and numbers with our accountant, bookkeeper, or financial planner, and most importantly, our team? Do we judge people with money even though we secretly wish we had more of it? All of these questions are important to bring to the surface and, as Sarah McLachlan said, make the dark side light.

We must also bring our values front and center when we start our financial planning. Rev. William Barber II said that every budget is a moral document. Now as a Reverend, he's referring to his faith in God, but regardless of your identification with religion, your values are your moral compass. They inform your financial planning as much as they inform your marketing. We can often think of defining our values, and as soon as money comes into the picture, we have no idea how to use those to build out our financial planning and set our projections for growth. As I said in an upcoming episode of Buffer's Small Business, Big Lessons podcast, people will say, oh well I can either make a lot of money, or I can make a really good impact. And I say, well, the first problem that we have is that divided mindset, that those two things can't coexist together. And so if our mindset is divided, that it has to be one or the other, then the results of our impact are certainly going to be divided.

Reflect on your values first; how do you allow them to inform your financial mindset and financial planning? 


Once we're one with our money mindset and have our values present in our process, we turn to ourselves and our personal financial needs. As a founder, it is imperative that you do a personal budget before you do a business budget. Your business exists to support your life, and if we don't know our expectations for our own piggy bank, we can often feel frustrated and disillusioned when that business doesn't deliver. We can unknowingly go into a business without realizing it may never have the potential to fulfill our financial dreams. This applies if you're a self-funded start-up, solopreneur, or CEO of a 20M+ company. 

When I say personal budget, I'm talking about everything you need to live your life, from paying rent or a mortgage to groceries, childcare, your vacation fund, retirement, and everything in between. Some people might call this the profit-first model, which is also a great resource. Entrepreneurs too often take "what is leftover" or notoriously write off (LOL!) so many of their personal needs as business expenses. But growth as an entrepreneur is about clarity and clean accounting. 

At this stage, we also consider how our personal needs might change in the future. Are we planning on moving? Having kids? Becoming a caregiver to an aging parent? Save even more for retirement? And yes, even if you're planning an exit, you should have a backup retirement plan. 


Once we're in the right mindset and understand what our *enough* is as a founder, we start with our business financial planning. To begin, we can look at the income of our company as a whole and for each revenue stream—just like we did in the previous week when we set our goals. Each revenue stream must have its own projections to understand how they contribute to the whole of the company. We are always seeking to break our totals down into the smallest building blocks, and our revenue streams are our first steps. 

Before we set any projections, we want to understand the seasonality and growth rates of both our income and profit/loss that have already existed throughout our company's history. Without mapping our past seasonality, we are likely to misunderstand our cash flow patterns and bring fear to our process. Without understanding our past growth rates, we’re blindly choosing growth rates for our future. 

Once we have our historical data, we need to set our projections. We always set 3: cautious, likely, and optimistic. If we work off of only one set of projections, we’re setting ourselves up with blind spots. It is imperative during a recession to have three models of projections you're working from, not just one. Every year is an unknown, but we are potentially entering a global economic crisis that no one has ever navigated

The format of projections should mirror the format of your Profit and Loss statement generated by your bookkeeping software. This makes analysis easier to do and keeps your planning aligned with your actuals. 

How much growth we choose for each model depends first on what we’ve seen historically, then on what we plan to add to the mix, and how we think the larger landscape of the economy will impact our business.

  • Maybe we’re adding new SKUs or services in our Product Planning (Week 8). And also, how much inventory are we currently holding or willing to invest in? 
  • Maybe we’re planning on increasing our marketing & sales efforts in ways we’ve never done before (Weeks 9-12). 
  • Maybe we’re expanding our org structure and will be able to produce more of our current product (Week 6 & Week 8).
  • Maybe we're contracting and only focusing on our core offerings to ride out the recession. (Week 8)
  • Maybe we'll restructure our org chart and become hyper-focused on our core customers. (Week 6 & Week 9). 
  • Are we looking to grow in Income and or grow our Profit Margin? 
  • Do we not plan on growing our Income during this time but only want to work on growing our Profit Margin? 
  • What revenue streams will grow? Will some grow while others plateau? How do we think our customers will respond to the pending recession? 
  • Most importantly, how are we using our values to answer any of the above questions?

All of these questions impact our income and our expenses. They will impact our top-line projections as well as our bottom-line projections. Though projections are theoretical, there’s a lot of concrete information we can consider that will influence why we choose the numbers we do. If we haven’t taken the time to clarify our goals, it’s almost impossible to improve our accuracy with our projections. 

The key numbers we want to gather include the following: 

  • Seasonality 
  • YOY Growth Rate/%growth for the entire company and each revenue stream individually - top line Income & bottom line profit or loss. 
  • Months as a % of income seasonality for the entire company and each revenue stream individually
  • Each Revenue stream as a % of total revenue
  • Avg order/customer for each revenue stream. Why is this important now? Because as I mentioned above, we always want to know the smallest building blocks to our goals. And when we get to our marketing and sales planning, that's when we connect the dots between our total income and the marketing efforts needed to make that income a reality. 

This is what I mean when I say know the nuance of your numbers. If you're not hyper-focused on the nuance and specificity within your business and just following "industry best practices," I guarantee you're not getting the most out of your planning.

When we set our projections, we want to set them by the following framework:

  • By Month for year 1, following the seasonality trends of our business.
  • By Quarter for years 2 & 3, following the seasonality trends of our business.
  • And anything beyond year 4+ should be an annual sum. 

That's a lot to consider! Here's a quick summary: 

  • Know your specific revenue streams as well as the total company income goal.
  • Gather your historical information (for both Income and Profit/Loss) first, such as seasonality, growth rates, rev as % of income, and customer. 
  • Set a framework that mirrors your P&L.
  • Set your business goals, and use your values to determine your choices about the future and why. 
  • Create three sets of projections: cautious, likely, and optimistic. 
  • Plan long-term: Year 1 by month, 2&3 by quarter, and 4+ annually. 
If you did this, you'd be well-positioned to navigate the tumultuous economy ahead of us. 



  • Are my books set up properly, and is the data maintained monthly? 
  • Do I know the annual growth rates for my company and each revenue stream and for the profit/loss of those revenue streams? 
  • Do I  know what % of the total each revenue stream is for my company?
  • Do I have an understanding of my seasonality?
  • Do I know what my avg customer spend is? 
  • Have I set clear enough goals (in Week 4) to be able to build more accurate projections and understand why my company might anticipate growth?
  • Have I set 3 sets of projections, cautious, likely, and optimistic, so that I can adjust my actions in real-time as I see which model I'm tracking towards? 


Want to hear more? I was recently welcomed back to Buffer's podcast Small Business, Big Lessons. This episode is all about funding. If you're in a place where funding is something you're considering, this is a really helpful episode that details about how to decide what type of funding is right for your business. 


Accounting Principles Your Small Business Should Know

Courier's NL series about the economy 

The Finance & Economics Section of Ask Holly How's Page

Zingerman’s On Open Book Finance

What’s a write-off

Grain Design Values-Based Pricing

Cash Rules Everything Around You

Good luck! We'll see you here next Wednesday for the first lesson of the second section, Connection. Week 6: Personnel Tools. If you have a colleague who should join us, they can sign up here


How is it the end of the year already?! This November, we'll read Emergent Strategy: Shaping Change, Changing Worlds by Adrienne Marie Brown. This free event will be hosted on Tuesday, November 29th at 7PMEST via Zoom. Please email me to register. 

This email may contain affiliate links via such as our page. If you purchase through these, AHH may receive a small commission.


Have you listened to our latest episode with Mike Duesenberg of Blank Studio? If you're just joining us, be sure to check out Ellie Lum of Klum House, St. John Frizell of Fort Defiance and Gage & Tollner, and Alex Daly of Daly


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