You’re working on creating a profitable business, now it’s time to start working on the one area you've been avoiding, your finances.
I know you don't have any idea where to start or what to do first. No worries! I've got you.
Just like you’ve self-taught yourself marketing, sales, and all those other areas, finance is just another area you need to learn. Trust me, you want to know where your money is coming from and going. This will allow you to make better-informed decisions and to determine just how profitable your business is.
1. Set up a separate bank account with a debit card.
If you’re a sole proprietor, this will be super easy since the account will be in your name. If your business is in a name other than yours, aka doing business as, it should be in the business name. If the business is incorporated or a limited liability company, a separate bank account in the business name is required. Don't forget the debit card.
2. Don’t commingle funds.
Commingling is when you mix business and personal money together. A big bad no, no is when you make a personal purchase out of your business account. Use the business account for what it’s for, BUSINESS. Purchase your personal items out of your personal funds. Make sure you deposit all business cash into your business account.
3. Determine the accounting software or revenue expense tracking system you’re going to use.
There are so many new accounting software systems available, you want to take the time to research what you need, and if it will grow with your company. You may want to make sure the software interfaces with the payment processing company (Stripe or PayPal) or the bank you use. This will allow the software to pull the information directly from your bank and processing company directly for you. All you'll have to do is make sure it's going to the right account and post it. If you are just starting out, you may be able to use paper and pen or excel, until you’re ready to start collecting money.
4. Determine how often you’ll work on managing your money.
Set up a day, time, and organize your task or create a checklist, so you’ll know what you need to do each time. This will make it easier to go through everything and you won’t dread it.
5. Create your revenue goals and a one-month budget.
You need to be specific about your revenue goals. Don’t just say you want to make $1,000 a week. You need to know how many products you’ll need to sell to make that. This may be easier to keep up with if you’re reviewing your finances weekly.
For example: If your product is $27 and your goal is $1,000. Then you know you need to sell 1000/27 = 37 products.
Create a monthly budget; make sure you include all those monthly costs, especially those auto debits taken directly out of your checking account. I suggest a monthly or quarterly budget so you make sure they align with your goal and any new amazing products or services you’re going to introduce.
If you're still having issues be sure to purchase this Finances in Formation webinar replay or Finessing Your Finances Guide HERE. Educate yourself to be able to know the financial aspect of your business.