Small businesses are started with an intent and design for growth. To impact more people. To serve a larger audience over time. That’s why entrepreneurs start businesses, right? More growth typically means more money. Another reason we start a business. Keeping your finances organized for growth can be tricky. Particularly if your business grows quickly. Growing businesses mean growing expenses. Perhaps the addition of a new team member or increased wholesale or raw material costs. So, how do you keep track of it all? Here are five tips for organizing your finances for growth.
- Make sure you have all of your bills and expenses in one place. You should never have to go looking for a bill to pay it. Write down who you pay, what it’s for, account numbers, contact information, and online login info in a notebook, on a spreadsheet, or just on a list in a Word document. Keep this list updated anytime you make a change to the business expenses.
- Be intentional with your payments and take all your bills off autopay. If you aren’t already, this is the time to manage cash flow very carefully. You need to be in control of your cash. Holding the water bill for a day or two while you are waiting for your invoice to be paid keeps cash in your pocket just in case. Cash flow issues cause sleepless nights in around 60% of entrepreneurs. Control yours.
- Track all money coming in, in writing, and leave it in the holding account until you pay bills, payroll, or write yourself a paycheck. Don’t use any money coming in before it’s time. When you are growing you may have intermittent bills or newer expenses that are due in a time period that is new for you. Don’t try to rely on memory to tell you where that $65.00 cash payment went. It doesn’t have to be a complicated system. You can use a sheet of paper. JUST WRITE IT ALL DOWN.
- Have categories for your “extra money.” Miscellaneous is the category of money that runs off and spends itself, and we don’t want this. I am a firm believer in “profit parking lots” that have names, and a purpose attached. You need to have a separate bank account from your operating account for holding these profits. Use a fee free checking account, and don’t forget to look online for a bank. My clients have had great success using an online bank for their holding account.
- Don’t forget to put money in your emergency fund to protect the business you have as you are growing. Three months of your breakthrough, or B-Number, is a wise amount to put aside in case of emergency. Giving yourself a full quarter’s worth of money to cover expenses as you pivot or launch something is a smart move. To figure your B-Number use the free worksheets on www.entremoneycoach.com and the free videos on the Entre Money Coach Facebook page.
You don’t have to make money organization and management complicated. You just have to maintain control, track it all, and protect yourself with categories and purposes for profits. Use these five tips to prepare your business for growth. Happy Entrepreneuring!