Running a business as a solopreneur or part of a small team can be incredibly rewarding. You get to make a difference in your client’s lives and create something you are passionate about. However, for many women in business, managing the finances can be daunting.
To navigate your business finances more confidently, you need to be clear about the importance, the processes, and the value of understanding your finances.
Let’s look at some areas you can focus on:
Education – most entrepreneurs don’t have a background in finance. The last time they looked at a profit and loss sheet might have been in a college class. FEAR is simply false evidence appearing real. The stories you have told yourself about not being good with finances or numbers probably came from a lack of knowledge or old limiting beliefs.
“Knowledge itself is power.” Sir Francis Bacon
Educate yourself on basic financial concepts such as cash flow, profit and loss, and budgeting. Look for online courses and workshops you can take. Be open to discussing money and finance within your networking events. Learn from other people who have resources you can use to learn more and build your confidence in this area.
I learned the hard way… so I know how important it is to educate yourself before you make costly mistakes (I call them learning curves).
Budget – establishing a clear budget is essential for any business, regardless of its size. Creating a well-thought-out budget can help you track your income and expenditure, enabling you to make more informed business decisions. A budget will also help you identify any fixed and variable costs within your business, such as rent (fixed) or stock (variable). Using this information, you can be more strategic with your resources, especially when you review your budget regularly so it stays aligned with your business growth.
Personal vs Professional – it’s vital that you separate your personal and business finances. Start by opening a dedicated business bank account so you can track your income and expenses accurately. Doing this will help keep self-assessment tax documents simple, but it will also help you get a much clearer picture of the financial health of your business.
Cash flow – without good cash flow, your business will flounder. It doesn’t matter if you have the world’s next best thing and an amazing sales forecast. If you’re paying out more than you have coming in, it will create cash shortages. It’s important to monitor the flow of money in and out of your business. Set up a system that lets you invoice clients promptly and get paid quickly. Be sure to follow up on overdue payments. Negotiate payment terms that work in your favour wherever possible. It’s essential for your business survival that you can meet your financial obligations.
“In this world nothing can be said to be certain, except death and taxes” Ben Franklin
Plan for taxes – paying taxes is an inevitable part of running a business, and proper planning can save you time, money, and unnecessary stress. Be sure to understand your tax obligations fully. Keep accurate records and set aside funds for any tax payments you will need to pay. I have a separate account and transfer money into it for tax and VAT payments. Working with a professional bookkeeper/accountant can help you stay on track without any nasty surprises in the way of a hefty tax bill.
What financial records do you need to keep?
When you are self-employed or run a business, you are obligated to keep certain records. These include:
- A copy of all your sales and income
- A copy of your business expenses
- VAT records if you are registered for VAT
- PAYE records if you employ staff
- A copy of any grants you claim
Why must you keep these records? Although you won’t need to submit all this information when you do your self-assessment/tax return, you need to keep records to calculate your profit or loss and present them to HMRC if requested.
Start as you mean to go on and keep your records organised and up to date. You may wish to explore accounting software such as Xero, FreeAgent or QuickBooks. When it comes to keeping track of your receipts, you may prefer to use an app like DEXT.
Whatever system you use, ensure you keep proof copies of your receipts, bank statements, and invoices.
Build confidence around money and finances
Understanding your business financials is an essential aspect of achieving long-term business success. By embracing a basic understanding of your finances, establishing clear budgets from the start, separating personal accounts from business accounts, and monitoring your cash flow, you will build up your level of confidence when navigating your financial future.
A lack of confidence around money and a struggle with your money mindset can impact your relationship with your business finances. Try these tips to help you:
Find out where your money is going each month – if you seem to be paying out all the time in your business, it might be worth spending an hour to look at what you are buying and why. Do you grab a coffee on the way into the office every morning? A medium latte from Starbucks is £4.25. If you’re buying one every day, that adds up to around £85 per month! What else can you buy for £85 per month?
Set realistic money goals – realistic is a big keyword here. Figure out what realistic means to you – it’ll be different for everyone and every business.
Talk to others – do you know anyone in the Woman Who Community who works in the financial sector? Could you meet for a coffee and ask them to help explain your finances so you fully understand and can build more confidence?
Empower yourself with the knowledge and skills necessary to make more informed decisions and attract more money into your life.
“What we really want to do is what we are really meant to do. When we do what we are meant to do, money comes to us, doors open for us, we feel useful, and the work we do feels like play to us.” Julia Cameron
So where can you find out more?
The Woman Who Inspires Network now takes place on the first Monday of the month in the Woman Who Community. This month we’ll be chatting all about your financials and you can share your tips too. Simply join the Community on Facebook.
Do you want more visibility for your business?
If you want to become visible fast, then the Let’s Get Visible® Visibility Bootcamp on Sunday 25th February is definitely for you. It takes place over one full day in a small group to immerse yourself in your surroundings and the content.
You will learn different ideas on how to become more visible and come away armed with a Visibility Strategy and the tools, tips, and techniques you need to be everywhere, even when you’re not!
This is a full-on public Visibility Bootcamp and a day to spend time doing something for you and your personal development.