Finance for entrepreneurs is not among the most trending topics, but if you got into the mess of setting up a business it was not just to do something you like. You also hope to make money from it and be able to live working in what you are passionate about, right?
However, for some absurd reason, business accounts tend to fall to the bottom of the list of priorities .
Does this happen to you too?
Periodically checking your numbers makes you lazy and terrified in equal parts. You don't know how much you'll earn next month, much less next quarter. You don't know where your money is going, or if you'll be able to make that investment you need. And using your business's income as if it were your own has become a classic ?
Let me tell you that if you are at that point you need to react NOW , before your business goes under.
By just paying attention to 3 or 4 concepts and establishing a series of routines, you will notice a huge difference in the control of your business finances and in the profitability of what you do .
In this guide, I'm going to explain everything you need to know to start managing your business's money (well). There are just 7 simple steps that you can implement right away. Are you staying?
Table of Contents
Step 1. Analyze your finances: what you have and what you owe.
I cannot stress enough the importance of adopting the habit of taking notes.
Keeping your "financial statements" in writing (it sounds super pro-wording, right?) will make you more responsible and you will see your money as what it really is: an asset that you must manage in a way that is consistent with your objectives .
We are going to make a very simple accounting balance (a list of what you have and what you owe), which will help you have a business vision of your finances, both personal and those of your business.
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What you have.
Make a list of what you have, including the monetary value of each item. For example, write down:
Your house (even if you still owe part of it).
Your car (ditto).
Computers.
Valuable tools/machinery to do your job.
The money you have in the bank/savings accounts/cash.
Any other valuables you have.
Etc.
Add up your entire list.
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? B. What you owe.
This list will make you less happy. It includes any debt you have right now, such as:
Whatever you have pending to pay for the car.
The mortgage on your house.
Credit card debt.
Personal loan from a bank or from a family member or friend.
Loan or grant for your business.
Any other loan or debt that you still have pending to pay off.
Add that up too.
As you can imagine, the ideal situation is that the sum of what you owe should be less than the sum of what you have . Any personal or professional economy should aim to achieve this state.
With this alone, you have already taken a giant step towards having your numbers clear.
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Step 2. Keep track of your expenses and income.
The previous section is very static because you will do the exercise once and you will hardly have to repeat it for a few months. However, the following exercise is much more dynamic and to keep good control of your finances you will have to update it weekly.
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What you enter.
This is quick to fill out, or at least you should be super clear about it, right?
Your payroll if you are employed.
What you charge your clients (without taxes).
If you have any income from renting an apartment, garage, premises, storage room...
The money you generate with your information products.
And to this, add any other extra income such as commissions from third-party sales (everything you earn from affiliation), advertising, interest from bank deposits, bonuses…
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What you spend.
And we come to the section that hurts the most, ouch!
We think we have everything under control mentally, but the reality is iraq whatsapp number data that we don't . A large majority of entrepreneurs don't know how much or what they spend. Or they prefer to look the other way.
If this happens to you too, think about it this way: knowing how your money moves will give you total control to make decisions that will only benefit you. It doesn't mean that you have to stress yourself out or stop giving yourself treats. Quite the contrary, stress comes precisely when we haven't planned our expenses and income well .
Try to do this exercise every day for at least two months: write down everything you spend. And don't forget anything: rent, gasoline, drinks with friends, office supplies, clothes, groceries, insurance, paying employees...
trick:
To make it easier for you to write down every expense you make, limit yourself to taking a photo with your mobile phone of each item you pay for during the day or recording a voice note, and in the afternoon, spend 5 minutes transferring those expenses to the tool where you keep track.
In this economic minicosm, absolute nirvana comes when you manage to earn more
