Today I want to share my 15 minute routine that I do every single day in my business. I can honestly say that all of the things I’m going to run through will really help you to manage money in your business with ease. These are simple and uncomplicated tasks.
This time of year many of you are in the process of doing your tax returns and feeling stressed out about finding all the relevant information. In my first year of business, I didn’t do a great job of keeping on top of this either! The one thing I did do was to keep track of my receipts. Once a week I would gather all my receipts and pop them into an envelope marked with the month. Then each month I would transfer those into a spreadsheet. But this still wasn’t quite right, and it became a bit of a headache!
5 Steps to Better Manage Money in Your Business
I want to share with you 5 key things that I now do, and you can too, every day to manage money in your business. These all apply whether you are a sole trader or limited company. I like to call this my 15 minute money date.
- Check your bank balance. I usually do this when I’m brushing my teeth in the morning. Doing this at the same time each day is what is called anchoring. Anchoring is really great way of developing a new habit, with the idea being that you anchor the new habit to an existing one. So think of one thing that you do consistently every day – it could be that the first thing you do is put the kettle one, then anchor your new habit to that activity. Total time: 1 minute.
- Move your money. The next thing that I do is put 20% of any money in my account into a separate tax pot. I use two banks in my business; Tide and Starling Bank. Both of these accounts allow you to have your money in separate pots, although in my opinion I find Starling Bank easier. The reason this is so important is that the last thing you want to happen in your business is for a tax bill to arrive and the money not to be available. One of the most common challenges in new businesses is cash flow, and it’s one of the biggest reasons that many new businesses fail. So if you can embed this habit from day one, it’s a game changer. You might think that 20% is slightly too much for you. As a sole trader, you can earn up to around £12500 without paying any tax, but it’s still a great idea to get into this habit. The worst that happens is that at the end of the year you’re left with a little pot of money that can then either become your financial foundations pot, kept aside for the next tax year, put towards personal development, or used for growing your business.
Once you’ve done this, sense check your business account balance. After I’ve moved my tax money into a tax pot, I then do a sense check of the rest of my pots. I have several pots set up in my business account, one of them being profit. This is the pot that I pay myself from, and this is important. Remember, if you’re not paying yourself from your business, then it’s not a business its a hobby. I like to keep the balance of my main account fairly low – around £1000 – so after I’ve moved tax money I then move any surplus over the £1000 into a profit pot. If you haven’t read the Profit First book by Mike Michalowicz, then I highly recommend it, as well as this podcast episode and blog.
Make sure that your main account balance covers your operating expenses. I know every month what it costs to run my business. There are, of course, the odd variables, but in terms of all the subscriptions I have for things like Active Campaign, Zoom, my Virtual Assistant costs, and all of the other things it takes to run an online business, I know how much that all is. It’s important to ensure that the main account balance has enough in it to cover all of these at all times. Total time: 5 minutes.
- Manage receipts. The next thing I do is check all the receipts that have come in, either via email or physical receipts. I recently started using Receipt Bank which is great. When I receive an email invoice or receipt, what happens is that email gets forwarded to an address connected to my Receipt Bank account. So I go into my emails, forward any email receipts, then I move that email into a receipt folder so that I know it’s been actioned. I scan in any paper receipts via the Receipt Bank app, and then discard them. Once a month I then reconcile my receipt bank account. Total time: 2-3 minutes.
- Do a body check. It’s really important to check in with how you’re feeling about money. Sometimes you just wake up with that feeling of fear or dread around money. It could be that something for your business is going to cost a lot of money and it just makes you feel sick. So do a body check; where in your body are you feeling the fear. Is it in your stomach, your head, your throat, do you feel sweaty? Just connect with that feeling, and then go and do something to get that out. Have a conversation, write it in your journal, or sit with a candle and think about it. Get into a place of calm and ask yourself if you’re being realistic. Is the cost going to drive your business? And if you just can’t shake the emotion, then make the decision that today is not a good day to make financial choices, then leave it for tomorrow. I personally find it very difficult to make big financial decisions during the week because the week is so busy. So I save the biggest decisions for the weekend when I can make them from a place of calm. Total time: 5-6 minutes.
- Celebrate! If you have money coming into your account, celebrate that! If you’ve saved some money in the business, then firstly actually save it, then celebrate that! When I say actually save it, most people feel really great when they save money but if you haven’t redirected that unspent anywhere else then you haven’t actually saved it. So move the money into another pot, whether it’s your personal development pot, treat pot, or financial foundations pot. Make sure that you invest in yourself, pay yourself first, and celebrate!
The 5 Steps to Manage Money in Your Business in just 15 Minutes or Less a Day!
- Check your balance
- Move money into separate pots
- Get on top of your receipts
- Do a body check
- Celebrate and pay yourself
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