Business Money Management

There are several factors to making a business successful in the long term.  One of them is understanding and managing your business's money.

Take a deep breath!  It doesn't have to be complex.  And I'm here to help you!

Let's start with the basic equation:

Income - Expenses = Profit

Your business's income is all the money your business makes… Everything. 

The expenses are your business's bills for insurance, supplies, training, website, and such. If you have subcontractors or any direct materials, they’re included here too (technically they go under a separate section called Cost of Goods Sold, but we’re keeping it simple here and this works out the same).

Ta-dah, see that wasn’t too complicated was it? But….keep in mind that this ‘profit figure’ is actually all the money you have to pay yourself, pay taxes, and put some in savings and investments. 

Your profit level can be increased by expanding your income and sales or decreasing your expenses. 

^^This is where you have so much power!  You can make informed decisions about your business and goals based on these numbers. 

But remember, the profit includes the taxes you will owe - I can’t stress this enough!

There is an alternative.

Under a system like Profit First, you can deduct your tax amount (using some clever calcs and business sense) before you ever see the profit, meaning you know that the figure you see if it’s truly all yours - no worrying about making sure you save enough for taxes, it’s done automatically. 

It also encourages you to decide what your income level is, then see how much you have available for expenses.  Yes, that means prioritizing paying yourself first!! I see you out there not paying yourself, you know how badly you need this. 

I love this theory, as I believe in bootstrapping and not overspending (or unnecessarily spending) in your business. It’s a proven fact, that if the money is there, you will use it. If you don’t see it available, you will still find a way to accomplish the task, just with less available funds. 

Let’s start talking about what the true profit figure means for you and what your true income goal is so you know how much income you need to aim for.  Together we can create a system that works best for you and your business!