How many times have you been told that saving money is a good thing? Financial specialists recommend that you save a bit of money every month, but that’s easier said than done, especially for entrepreneurs. After all, it’s not uncommon for people to live paycheck to paycheck.
However, if you want to start a company, you’ll need to break away from this cycle and start budgeting and saving. At times, this will be a trying task, but it must be done if you want to invest in your future as an entrepreneur & founder.
If you want to start managing your money more effectively and set yourself up to become an entrepreneur, follow the tips below. With these techniques in your arsenal, you’ll start to see immediate changes, and you’ll set good behaviors in motion that’ll serve you throughout your journey as an entrepreneur.
Set business goals when it comes to finance. Divide your goals into short-term (monthly profits, monthly savings, budgets) and long-term goals (net worth of the business). These goals should be realistic, based off of previous earnings and costs and will serve as your benchmark getting started.
If you’re anything like me, setting financial goals doesn’t come naturally. Now lifestyle goals is another story. I want to be financially stable, hire a team of 4-10 employees to help manage our clients and growth, go on vacation a couple of times a year to visit family, etc. You can start with these goals but they need to transform into financial goals that you can track and measure.
The book, You are a Badass at Making Money by Jen Sincero is a great place to start when building goals and mastering the mindset of wealth. We are giving away this book in our August WomenAmbition contest. Join the community to participate!
Write everything down
When it comes to managing your finances it’s very easy to lose track of your accounts and become disorganized very quickly. When it comes to managing your money you want to do whatever it takes to stay organized. That way you can easily track your progress and make changes wherever necessary.
First and foremost you should try and keep documented records of your expenses. A perfect tool is an expense tracker, which can connect to your bank account and categorize your various expenses. Check out a list of the best expense trackers in 2019 here. It is the perfect opportunity to get started with accounting and understand your current spending habits.
When your business grows, you should utilize digital accounting solutions like Holded to manage invoices and expenses. These platforms allow you to keep accounts receivables and payables organized and in the cloud. Once you find the right accounting solution then you should run quarterly check-ups on your finances. See what works what doesn’t and always look to improve.
Save Whenever Possible
Odds are your first venture won’t be a smashing success. That said if you’re an entrepreneur you’re going to have to delay gratification. Saving money is hard because it’s hard to know where to save. The best thing to do is look at your spending habits.
For starters, map out a typical week of spending for yourself and categorize expenses as “must haves” and “nice to haves”. For example rent and food are must haves. The newest pair of Nike’s is definitely a nice to have. After you’ve budgeted for your must haves try to save as much of the excess cash as possible since you’ll never know when you need it.
Moreover, here are some tips from experts:
“Diversify. Diversify. Diversify. I know that’s canned advice you would hear from almost every other “financial expert,” but it rings especially true for entrepreneurs. Here’s something you might not want to admit to yourself: your entrepreneurial venture has a greater chance of failing than succeeding (gasp!). By diversifying and placing funds into another side business, alternate investments, or just setting aside cash, you will give yourself breathing room in the event that you have to call it quits or need to pivot to another business. In my own experience, I have been able to diversify into other ventures that operate independently of each other and that has led to constant growth and more exciting opportunities.”
–Jeff Rose, GoodFinancialCents.com
Plan For Inevitable Rainy Days (Or Months)
“Since many entrepreneurs have to deal with irregular income, it’s important to budget your personal finances around that to make sure that you have savings that you can draw from in the leaner months. You need to know that you can cover the essentials like housing, utilities, insurance, and food. So add up those critical expenses and put aside enough to cover at least a couple months.”-
-Tom Drake, Canadian Finance Blog
While running your own startup can be thrilling, it can also create financial anxiety and stress, especially in the initial phases of beginning a company. Keep your stress to a minimum by following the tips above and joining a community like WomenAmbition, which is full of other women entrepreneurs facing similar challenges.
You’re not going through this startup journey alone, if you have a question related to managing your finances then chances are many others do. Join the community for free now to connect with likeminded women and grow together!