HSH 080 How to Manage Your Business Income – Show Notes
Do you feel like there’s more month than money? Or you’re hustling to get paid, only to then wonder where the money has gone? I get asked a lot how I manage my business revenue, and on today’s episode I’m going to share what I do to create financial stability in both my personal life, and for my business.
1. Create a personal budget
This first step is key! Most people want to build a successful business, but they don’t actually know what their life dictates. Figure out your “Freedom Number”, as Tim Ferriss recommends. This figure is how much you need to make in order to live the life that you want to live. Most importantly, avoid keeping up with others and live within your means! There are different apps that can make monthly budgeting very simple to do digitally.
2. Get clear on our personal goals and debts
Where will your money work harder for you? Should you pay off your student loans, or invest that money? By knowing the debt that you have (and whether it’s “good” or “bad” debt), you’ll be able to answer these questions and adjust your personal budget accordingly.
3. Develop your business goals
We use the Profit First model, from the book by Mike Michalowicz. Remember, even with a 6-figure launch it’s not uncommon to take home only 20-30% as pay off of the gross revenue. By working backwards, you can figure out how much your business needs to generate each month to create that lifestyle you’re after.
4. Do an internal audit of all expenses every 3 to 6 months
This review can be super-simple, in that you just review everything you’re buying for your business. I recommend keeping a separate credit card, debit card or bank account for your business, so you can keep everything in the exact same location. Ask can then ask yourself if the expense is worth what you’re spending, and if it’s saving you the time (or headaches!) that you want it to.
5. Review everything every 3 to 6 months (and/or when you make a big life change)
Before making a big life change, like moving into a bigger place or buying a new vehicle, you absolutely need to know where you stand in terms of your finances.
If you have recurring revenue sources, you can also do a cash flow projection of the money that you plan to collect. However, cash flow won’t do anything if you don’t know what your costs are.
I hope you can see that by getting really clear on all of your finances, it’s only going to serve you business in a much better way. I encourage you to re-listen to this episode to take notes, and set aside a day when you can really work on figuring this all out. Don’t forget to let me know how you make out with it over on the Facebook group at www.HeartHustlers.com!