The other day I shared some tips on organizing your family’s money {part I and part II} and it’s my biggest fear you thought it was a horrible idea and aren’t even reading my blog now.
Today I’m doing a follow-up on how to organize your business’ money. This mini-series is my advice & my experience — I’m no professional, however I do use these techniques with my budget.
The idea here is that you’ve practiced first with your family budget so you’ll have some experience when you set up your business’ budget. But don’t be afraid — setting up & sticking to a budget will provide you so much freedom. And if anything, please allow me to encourage you that YOU CAN DO THIS and it will be worth your time. You might go cross-eyed though. Sorry! ;]
I’d like to share as encouragement to you that it IS possible to run your handmade business on cash and keep it debt-free. There are times when I think, LORD, how do you expect me to do this on cash?
But He always provides, and it’s like a little hug when I see His plan put into action here on earth.
5 tips on why Gussy uses a budget:
- 1. Organization — I know exactly how much I spend each month, quarter, year
2. Peace of mind — Never do I want to be surprised over my finances
3. Education — I’m a gal that likes to learn!
4. Intelligence — To be honest, it doesn’t make me look good when I don’t know my numbers. However, do not assume intelligence for cool-ness. I don’t think it’s ever “cool” to do something to make yourself look better, but I do think that being educated with your business is cool. Get the difference?
5. Because. Because what reason {note I did not write “excuse”} do I have to not have one? Excuses are for kids. Reasons are for adults.
{photo credit}
Having a cash-only business…
meant that I had to invest {in the beginning} a lot of my business’ income back into the business, but once I figured out my buying patterns, selling patterns, and built up some working capital this became a lot easier. Be patience and have faith in yourself :]
In my previous post I shared how to gather your numbers {expenses & income} and turn them into a family budget. You can use essentially the same method described in that post to write your business’ budget, but there’s a serious difference:
- This post is going to teach you how to organize your expenses and income to come up with a monthly minimum that you’ll dub as your SALARY! ♥
So if you were wondering last time “How do I know how much I bring in with my business each month?,” now you’ll know :]
* You may find yourself revising your budget every month as your business grows. Consider this something to be proud of instead of an annoyance. Growth = success, right?
Proverbs 13:11 (NIV)Dishonest money dwindles away,
but he who gathers money little by little makes it grow.
but he who gathers money little by little makes it grow.
What to do {first}:
Here are some things you need to do to write your business’ budget:
- 1. Compile a list of all monthly expenses. It’s a good idea to take the last few months and figure out an average for each expense. For me, sales vary each month and I assume that’s the same for you, too. Remember to think of those expenses that occur ever few months and gather a monthly average for them {think shipping supplies}! You may also notice a pattern, maybe your business is growing so expenses increase each month? {If so, yay!}
2. Add up all sources of income {but enter them as separate lines on you budget} for your business to reach a grand total. This includes sales and advertising, etc.
3. Figure out your weekly income from sales by dividing the amount you make in sales/month. Remember this is an average and it will change. Some weeks you’ll actually sell more; others you might sell less.
4. Put it all together. Here’s a sample of a business budget. I used Google Docs — I recommend using some sort of spreadsheet program so you can enter in your expenses/income, then type in that fun code to have it automatically populate a grand total in another cell. Here’s a little cheat sheet for writing the formulas.
Jeremiah 46:3 (NIV)Prepare your shields, both large and small,
and march out for battle!
and march out for battle!
What to do {second}:
OK, now look at the Sample Business Budget sheet again. Do you see how I’ve organized my expenses into like groups? This is mainly because I’m OCD, but also because it helps me to make sure I have everything listed. I have another section for income, including how much in sales I make a month {this is in the Avg. Overall Income column}.
The Overall Expenses number {in red} is found by adding the Monthly Materials totals {in orange}.
Then I subtract my Expenses from my Income and I have a BALANCE, which is my monthly salary once all bills are paid. *Unlike the family budget I shared on Monday, you DO NOT want this number to be $0. You want to {eventually} have something here so you can enter it in your family budget sheet as YOUR monthly income.
OK, now let’s do a little happy skip…
And… we’re done skipping ;]
Put your budget into practice:
Make sure you check on it weekly and monthly so it’s up-to-date, because in the meantime you have things to track of:
- 1. Advertising Income: Advertising is a part of my monthly income, and since I accept sponsors 2x/month I’ve created this little sheet to easily track my advertising income. Because my salary is dependent on my income, I need to make sure I’m pulling my weight. Having a chart to easily review helps me know that my budget is on track. Note: I wrote “min” on this sheet because this sample budget requires a minimum of $650/month in advertising income to keep the rest of the budget on track.
2. Materials: Are you spending what you are supposed to be spending? To keep track of your materials, make note of your purchases with a sheet like this. Each time you make a purchase, update your materials sheet. It sounds time consuming, and it will be at first, but once you make it a part of your weekly routine it’ll be easy-peasy.
3. Actual Weekly Sales: This one is my favorite — I looooove to see what I’ve sold each week and if the number was greater from the week before {competitive, are we?!} Every week I add up Sunday-Saturday’s sales and write the total on this sheet. Remember how earlier you found your average monthly income for sales? You can take that number and divide it by 4 to find your average weekly requirement. You need to know your weekly requirement so you can stay on track for the month as a whole. ALSO: if you are getting behind you’ll know! This way you aren’t waiting until the end of the month to know that you needed to sell more product.
Yeahhhhhh. That wouldn’t be good :]
Final thoughts :]
* Dream high! Seriously. If you have an idea, write it down no matter how big or crazy it seems. You can start to achieve it by writing small to-do lists; simple steps are better than no steps. Do not be afraid of dreaming + listen to yourself!!!
* When working your numbers you want to work up to having enough money to cover your bills for your family’s budget but also to build up overhead for your business. Make sure you start a savings account to purchase a new sewing machine, computer software, spruce up your office as you grow, etc. Even if you ONLY put $50/month in this account it’s still $50 you have now that you didn’t have before? {Anyone agree???}
* One of my business mentors told me that not taking risks are risks in them self.Do you think not having a budget is safe? Having a budget will allow you to foresee business growth, which will help you with your questions, like the “when” and “where”, of risk taking.
{photo credits}
Final post: {Budgeting your business’ money, part II} — simple tips you don’t want to overlook regarding your business’ budget
