How to Use Your Money for Good
Most business owners start their business because they’re seeking out a kind of freedom, either time or financial or even the autonomy to be able to do business the way they want. I admit that all of these things make sense to me and I’m on board with them all.
As the business grows and CEOs start to see the financial freedom they want, it’s common to feel a nudge to give back and use your money to do some good. Business is easier for some, allowing growth because of connections or privileges not everyone enjoys. Or maybe you struggled and you want to help others who may come from a situation similar to yours.
However you decide to give back, it is possible to use your money for good. And that looks different for everyone. No one way is right or wrong, and you can decide how giving back looks for you and your business.
Giving to Others
Many businesses align themselves with a cause and give back a portion of their revenue or profits to that cause. Before you dig into your profits for a cause, I want to challenge you to use your operating expenses, not your profits, to give back. Let me explain.
To truly create a giving culture in your business, you need to build it right in. Say you want to create a scholarship program for people who wouldn’t otherwise be able to afford your services. If one of your expenses each month goes to paying the membership of a set number of people, you build that into your Profit First practice. And you can tell members who pay full price that a percentage of their fees directly supports a cause. This is something you consider when setting your prices for different levels of membership.
Giving to Team Members
The most important thing is that you pay and treat your employees and contractors well. Don’t rely on bonuses and gifts to boost their salaries; make sure they’re being paid a rate that measures up with industry standards.
If you’re already paying team members well and want to give back to employees some of your profit, be sure to create a system for this and stick to it. At Fit For Profit, each eligible team member receives part of a set percentage of the business’s profit. In order to be eligible, the team member must be employed for a certain amount of time and meet a personal growth requirement.
I’ve heard other businesses waiting three years before sharing profits with employees, then holding back half of it (Profit First style). But as the business owner, you get to decide what the giving back or profit sharing looks like. Just be sure to share that information with team members so they know what to expect and when.
Giving to Yourself
Yes, I said it. You can and should give those profits to yourself. Taking a quarterly profit distribution is your reward as the business owner. And you get to do what you’d like with those profits (we have lots of ideas).
From there, you can find a cause that aligns with your values and donate to that cause. Since your profits are part of your personal income, this is an opportunity to get your family involved in deciding where to donate the money.
Maybe you decide that your family will donate 10% of the profits from your business. Each child can choose where a portion of that 10% goes, or you can vote on where all of it will go. This practice will help create a spirit of giving in your children, which is priceless.
Before you use your money for good this year, I encourage you to talk to your Profit First coach about how to ensure you’re doing it in a way that aligns with your Profit First practice.
Need help? Let’s talk!