Starting a business means freedom, a chance to develop your niche, and having more control over the money you earn. With this freedom comes the obligation to deal with budgeting issues without the luxury of an accounting department. Here are five useful tips that can help any entrepreneur or solopreneur manage their budget and make it work effectively.
Encourage Subscriptions or Retainers
It can be tough not knowing whether that star client from last month is going to propose another project this month. This uncertainty can put a strain on budgetary planning. Reduce this uncertainty by encouraging your clients to subscribe to your services or put them on a retainer. That way, you will have a clearer idea of how much money you will earn.
Incentivize subscriptions or retainers by offering discounts to clients who opt for this method or giving bonuses like eBooks, free webinars, and discounts for services provided by partners. Many consumers are more interested in a subscription if it carries a discount or offers something of value.
Separate Business and Personal Expenses
One way to avoid a budgetary mess is to separate business and personal expenses. This will make tax time much easier and will eliminate the need to search for papers or documents at the last minute. Have an account strictly for business purposes and use a business credit card for professional expenses only to keep things neat and orderly all year round and especially at tax time.
Keep an Extra Fund for Large Expenses
Many opportunities only come along once. It is important to have the funds available to take advantage of these opportunities, especially if they are potentially game-changing for your business. It could be a conference where you can drum up more clients and raise brand awareness or software that will improve communication with your clients. Putting a little money aside regularly for this fund will ensure you can make the investment when it comes along.
Automate Your Budgeting Tasks
If you are still figuring out your budget and expenses with a pencil and paper, it’s time to get automated. Entering income and expenses into a software accounting program on a daily basis will make budgeting easier and will provide metrics that will help you monitor your business’ growth daily. Getting rid of those notebooks and slips of paper will also make your bookkeeping more efficient.
Schedule a Monthly Budgeting Review
Every month schedule a time for a full review of your budget. If you have followed the steps above to automate and calculate your expenses and revenue as you go, these reviews will be as easy as looking at what you have earned, what you have spent, and deciding what areas of your business can be run more efficiently and with fewer expenses. Being pre-emptive and solving issues before they arise is much easier than solving problems later on.
Taking charge of your budget is one of the main elements of entrepreneur or solopreneur success. Automating tasks, keeping personal and business expenses separate, and taking stock of your business finances every month can make your business more productive and successful.
Are You Making Some Common Money Mistakes?
Now that you’ve got your business budget under control, what other money mistakes might you be making? Check out my YouTube call “The What, Why and How of Profit Margin”. Very often we fall into bad money patterns or habits and we don’t realize we’re making serious mistakes because this is how we’ve always handled money.