Femke Hogema is the founder of Profit First the Netherlands who makes finance fun and accessible to everyone as a trainer, author, and speaker. She is convinced that having a grip on your money is the way to success.
"I have always found money interesting and fun. As a child I was already busy with my pocket money and clothes money: I was calculating how much money I had, how long I had to use it for, and what I could buy with it. I kept all this information in a cash book. Every Sunday my father counted and sorted the money he had earned selling second-hand bicycles. I found it magical, the way he counted his money. It radiated joy and pride, and that impressed me. That's how I got a positive association with money at an early age."
Measure of success
"The urge to get the most out of life and be successful is very strong in me. Money is a measure of success. It's unavoidable. I know many entrepreneurs who think: I must do what I am good at, then the money will follow. They think that being busy with finances is stupid, and put their heads in the sand in that area. This leads to a lot of misery: businesses that take up time and money but don't produce anything. So people have to live in their partner's pocket. You can say that your business is not about money, but the harsh reality is that it is. To be successful you will have to manage your money matters well."
"The first time I read about Profit First, I thought: holy cow, I have to do something with this! Because it is such an innovative way of managing money. The old-fashioned thinking about business money was something like: you have to understand your bookkeeping and read your financial statements. But Profit First says: you don't have to, entrepreneurs don't do that at all. We should not force people into a money system, but we should make the system that fits human behavior. Profit First makes settling finances as easy as possible for entrepreneurs, by means of four different jars: profit, salary, tax, and costs. Because of that jar system, Profit First also fits Flow so well."
"The income you receive as an entrepreneur is divided over four jars. You do that based on well-considered percentages. You think beforehand: how much profit do I want to make? How much salary do I want to give myself? What do I have to pay to the tax office? And how much cost do I incur? If it turns out that these jars are not sufficient to pay for everything, then you have feedback.
With that feedback, you can make your business even more successful:
- Is my selling price right?
- Are my costs too high?
- What do I have to do to get out of it?
- Should I make more profit?
From those kinds of questions, I get very enthusiastic. And that's how Profit First Professionals help entrepreneurs with their business."
"If you divide your money neatly among your four jars, you never have to lie awake wondering:
- How much do I have to pay in VAT or income tax?
- Do I have enough?
I have seen entrepreneurs who made a turnover of 80,000 euros and thought they could afford a 50,000 euro car. Until the taxes had to be paid, and it turned out they didn't have enough money. Or entrepreneurs who keep saying: next month we are going to make a big hit, then all money problems are solved. They keep this up for years until bailiffs come along. I have seen it all. And it's really easy to prevent."
Ten percent (10%)
"For as long as my children have been getting pocket money, I have instilled in them that ninety percent(90%) of their pocket money is meant to be spent, or saved for something big, and ten percent (10%) goes into the safe (a separate piggy bank) for later. This method comes from the book The Richest Man in Babylon, which contains all kinds of money rules. This includes the rule to set aside ten percent (10%) for later investment: '10 percent is yours to keep'. For example, by investing or starting a business. I want to pass this money habit on to my children because if you set aside ten percent (10%) your whole life, you will always have a certain degree of financial freedom."
"A while back I explained to my oldest what Bitcoin is: digital and risky money, which can become worth a lot more, but also less. After much thought, he then converted ten euros of his safe deposit money into Bitcoin. I'm a big believer that sometimes you have to try things. Of course, within certain limits. That's why ten euros is a great start. Maybe a next step will be an investment account, to learn about what investing is in a playful way."
"I have a BV, a holding company, and a sole proprietorship. I already use Flow for my holding company, which works very clearly with the four jars. Of course, you can transfer money manually to different accounts, but that's quite a mess. The beauty of Flow is that you can automate your jars. I love the ease of it, it prevents you from going wrong with your money. Soon I will switch to Flow for my limited company and sole proprietorship as well."
Solving a problem
"I will never give my children a pile of money just like that, but I also won't say that what they want is impossible because it 'costs too much money'. You can't make time, but you can make money. Making money is a matter of solving problems. For example, last Christmas my children, with some help from me, collected old Christmas trees from local residents, for a small fee. They made 35 euros with it. In this way, I want to impart to my children that making money is essentially about delivering value by solving a problem for someone else."
"My tip: try to embrace money. Realize that we all need money every day. With thoughts like 'life isn't about money' and 'money doesn't make you happy' you are selling yourself short. You will get much further if you start to see money in a very neutral way. But first, you have to be able to embrace it. Money is a kind of fuel that we need to keep the machine - your business or your life - running."