financial – Getentrepreneurial.com: Resources for Small Business Entrepreneurs in 2024

January 2005 was a turning point in my business. It was the month I incorporated my business.

Before then, I had operated as a sole proprietor. I started my business in 1998 as a freelance copywriter.

However, in 2003 I started getting that restless feeling. I knew I was destined for bigger and better things. I started researching how to take my freelance copywriting business to the next level. And part of that research included me looking into how my business was structured.

Even though my local CPA thought it was a waste of time and money for me to incorporate, the rest of my research told me otherwise, so I went ahead with it.

That was the year I finally broke 6 figures. Once I did that I never looked back.

Now, I’m not going to say that was the sole reason why I broke 6 figures nor am I going to claim all you need to do is incorporate and it will happen to you. But what I WILL tell you is when I incorporated, it caused a huge mental shift around how I viewed my business. Suddenly I was a serious business owner, not just a freelancer. And as such I started making decisions from a different place, a place that would ultimately cause my income to significantly jump.

(Also, there is a school of thought that your business will only grow as far as your foundation will take it. In other words, if your business only has the legal, financial, tax and insurance structure for a $50,000 year business, that’s all you’ll end up with. If your business can handle 7-figures and beyond, that’s what you’ll end up with.)

So what about you? If you’re anything like me, you started your business because you were “good” at something and/or you had a big message or dream to change the world. You didn’t start a business because you were in love with owning your own business. You may have been drawn to certain aspects of owning your own business, like being your own boss, calling the shots, working when and where you wanted, etc. But you weren’t driven by the “business” part of it.

The problem with that is it only takes you so far. You may be making money but you probably aren’t doing it very smartly. You don’t know how to plan or map out your finances so you tend to live in a very stressed out money place. You may be paying WAY too much in taxes with how you’re structured (I certainly was). And you may not have protected yourself or your business adequately so there’s always the chance you could lose everything you worked so hard for.

So what do you do? Well, it’s time to take a good hard look at your business and make a decision once and for all how serious you want to be about it. Here are 3 questions to get you started:

1. What are your goals for your business? Both long- and short-term?

2. Is your business currently set up to support your goals? And when I mean set up, I mean more than just your business structure. What about insurance, finances, taxes? Also are you taken care of legally (i.e. you have contracts where you need them)?

3. If the answer is no or you’re not sure, then take a deep breath and see this as an opportunity. Look, unless you ARE a lawyer or CPA, you probably find this as enjoyable as marketing your business. (Hey, I get it. Not everyone is a marketing geek like me.) But you have a chance here to put a solid foundation under your business so it can be supported as you build it.

Take this opportunity to do your own research on what you need. Interview business advisors to see if the ones you’re currently relying on are still the right ones for you or if you need new ones. Put together a plan and then execute that plan. You may be pleasantly surprised on how your business responds.

What You Can Do About Managing Your Budget And Cashflow Starting In The Next 10 Minutes

I bet just the very title of this article is enough to make you run for cover! Along with paper piles, budget and Cashflow is another area that can drive solo business owners over the edge! In your corporate days you would have had a bookkeeping/accounting department that took care of all of this for you – they paid the invoices, they tracked the receivables, they tracked the income, and they told you the bottom line!

Now that you’re running your own business you are also the Chief Financial Officer, and it can be very overwhelming. However, it needn’t be… let me share with you three simple steps that you can put in place to manage your budget and Cashflow.

What is a Cashflow projection?

One important area of your Financial Management System is that of a Cashflow projection. Put simply, a Cashflow projection shows whether your anticipated income will be able to cover your expected (projected) expenses and this report is very beneficial to you in your business.

It is an annual report and, if set up correctly, will show you how cash will flow through your business throughout the current financial year. I’ve been using a Cashflow report in my business for many years and find it invaluable. Just recently the chance to participate in a high-profile teleclass series came up, and because I have my systems in place, I knew straightaway that it was something I could take part in!

Step 1 – Create Your Cashflow Report

This is very easy to do using a spreadsheet. Create a column that lists all of your expenses, i.e. office supplies, legal & professional fees, membership, advertising etc. and a column for each month of the year. You will need to create formulae that will tell you your total income, total expenses, and subtracts the expenses from the income, and also carries forward any amounts from month-to-month. This is so you can see how your finances are ‘flowing’ throughout the year.

Step 2 – Input Your Data

Taking your financial data from your bookkeeping system input your actual income and expenses, and list any projected expenses in the appropriate row/column. Your Cashflow report will now show you at-a-glance any time periods for which you will need to be especially aware of. For example you may have a lot of expenses in one particular month so you’ll know that the previous month you’ll need to make sure that you have the funds kept back in your bank account to take care of those upcoming expenses.

It will also show you if you can afford to make an investment in your business, whether that’s signing up for a new service or membership club, taking out an advertisement, or buying new equipment.

Your Cashflow projection can also be used as a budget planner. You can plan out when annual memberships are due and put those in ahead of time. You can also add in an amount for when your taxes are due. This will provide you with a really good feel of how cash is flowing through your business, month after month, throughout the year, and you can also tell how much you can take off for owners draw, but still leave enough to cover the anticipated expenses.

Step 3 – Schedule In The Time

Now that you have your Cashflow report in place, it’s important that you update it regularly so that you can stay aware of how cash is flowing through your business, and take any actions necessary so that you have enough to cover all of your anticipated expenses.
I recommend scheduling in at least 30 minutes once a month to update this critical financial management report.

A Final Thought…

Having an annual Cashflow projection will provide you with all of the information you need so that you can keep on top of your business financially and know where you are.

If you have a bookkeeper taking care of all your financial records for you, ask them to prepare your monthly Cashflow report for you.