When I was at a conference in San Diego last month, I had an epiphany about most new business owners and their business money stuff. Typically, when I work with a family on personal financial management there is a history of making financial decisions that became habit. When we work together, we have to often change years of money habits so my clients can reach their goals.  Business money management is different. Entrepreneurs are not generally “taught” how to manage their money. Rather than a habit to change, there is some learning that needs to happen.


In personal finance we are generally dealing with a set amount of money that consistently comes into a household as a regular paycheck on regular intervals. So, we can start from the income. Knowing how much you have to work with makes planning easier. You know how much it will take to cover all of your expenses.  When we have a deficit, a second job can be a solution, and once again we adjust to the new income.


Business isn’t that way. You may have income in the first week of the month and nothing in the second. We may have extreme income differences each month, and we may not know how much we will have to work with when the month starts! This difference is what often leads to cash flow emergencies in business, and stress when you are running negative cash. You must know how much you need to make to cover all of your expenses, but you may not know exactly which week you will make what you need.  Business money management is more dynamic and requires at least a weekly look at how things are going. 


Here are three simple steps to managing your business income as it comes in, and to keep cash on hand.


  1. Know your B-Number. You must know what you need to make, and you must prioritize the B-Number expenses first. Pay these above all other expenses to keep the business operating and able to keep generating income. If you do not have it, get your free worksheets at www.entremoneycoach.com.


  1. Track your income as you make it. You don’t need to obsess over your money each day, I had a client who did that, and she never enjoyed being an entrepreneur. Just write down what you make every day you make money. For simplicity, go ahead and write the totals on a calendar the day it comes in.


  1. Pay your expenses when cash flow is positive. You can pay the bills weekly or bi-weekly but know when you have made your B-Number, and when you are funding other things such as marketing, debt, and growth. Other coaches may disagree with me, but I have held the water bill for an extra week to ensure that my cash flow was positive, meaning I had more left over after I paid the bill, and didn’t let it run dry. I tend to be a little nervous about not having cash on hand, so I wait until I have sufficient cash to pay my expenses.


Finally, as you are making more and more over your B-Number each month, make sure you are funding an emergency fund. A good rule of thumb is three times your B-Number to keep on hand to protect against cash crunches. Just open a free checking account and start to put some money away.

I’ve developed the concept of the business 4 walls from the Dave Ramsey 4 Walls approach, which makes sense, since I started my practice as a Ramsey Financial Coach. Imagine the 4 walls are the sides of a box, and you will consider the things on the inside of the box more important and needing protection than things on the outside of the box. That is how you need to view your business. You need to protect the things that keep the doors open and keep you able to continue to make money. The inside of the box.

We protect those walls by prioritizing what gets paid when. You control the money. You also decide who gets paid, “how much” because the reality is that many times businesses have to juggle when invoices are paid late, or cash flow is tight. More than once I paid the electric bill in two halves instead in one payment when we first started UNEQ consulting. And it saved our cash flow.

Here are three simple steps you can take now to secure your business 4 walls.

1. Take the bills off auto pay. I am a huge proponent of intentional business money management. I want you to pay your bills intentionally. And limit electronic access to your operating account so you can control all of your money, and pay halvsies if necessary.

2. Prioritize your expenses. Organized into the four walls, you pay the bills in this order:

Wall 1. Rent or internet, and utilities, your access to your buyers
Wall 2. Critical Operating Expenses that are required to keep doors open
Wall 3. Inventory or products to sell or provide services with
Wall 4. Payroll and payroll expenses

This includes paying yourself. And not out of the till, writing a paycheck and withholding taxes. For more on this approach, and calculating your B-Number, grab the free e-book at www.entremoneycoach.com

3. Start an emergency fund. You need to protect your four walls and pay these expenses every month, even if the sales are slow or money is late to the table. This is the quarter where many businesses make a bulk of their earnings. Hold some back for the slower months of January and February. Try to hold back the amount you need to cover your four walls, so you continue to be able to get a personal paycheck in 1st Quarter 2020.

If you take these few steps you will be protecting your business, your ability to make money, and your personal income.