Oh? You want more? Okay.
In case you haven’t guessed, a budget is a MUST if you want to grow your business. Or even make a profit. If you just want a hobby, then you can skip this post. But if your goal is to have a business that generates a profit, enjoys growth, and is able to compete, you need a budget.
Handily, I’m going to show you exactly what you need.
This is Business Budgeting at the most basic level, so in your case you may need to supercharge this or go with a more robust option. If you are making six figures a month, you may not need to go this route. But I have four different budgets set up with this system and it has met all my needs and helped me ensure that overspending is NOT an issue!
I gave you a hint earlier. The program I’m advocating here is You Need A Budget* or YNAB for short (’cause typing all that out each time can be a pain, lol).
There are four keys to budgeting with YNAB. And they’re not what you think.
The first key is that Every Dollar Has A Job. And it’s not the dollars you expect to earn, but the dollars sitting in your bank account at this very moment. All of them. And not a single dollar more.
The second key is to Recognize Your True Expenses. Also known as Save For A Rainy Day. You know you have to renew your website hosting every year. You know how much it will be. Put aside a few dollars each month toward that expense and when you get the reminder email (or the automatic charge goes through) you won’t panic! All ready to go.
The third key is to Roll With The Punches. This is my favorite as Things Happen. A course you’ve been saving for goes on sale and you only have 2/3 of the amount saved. But it’s now half off and you know your return on the investment will be huge. You buy it, and now have a negative balance in your Continuing Education category. Not to worry! You can cover the cost with leftover bits from other categories, or pull in $10 from Supplies (since you rarely need printer paper!) or whatever. Or, what I do, is have a “Stuff I forgot to Budget For” category that I keep flush with $100. That is my buffer to help cover one-off “can’t miss” transactions that would otherwise blow my budget out of the water.
The fourth key is to Spend Last Month’s Money This Month. Let me explain. Each day you spend money, you spend the earliest dollar you’ve earned. YNAB tracks this for you using their special calculations that I can’t fully understand, much less explain. They call it the Age of Money. So basically, your goal is to have the Age of Money be over 30. So the dollar you spend today, was earned 30+ days ago. This gives you a bit of a cushion as well.
While the system was designed for personal finances, I’ve found it to work AMAZING for my business finances as well. I have a category for New Tools and once I have enough to cover the cost, I can upgrade from free versions to paid versions! And I know I’ll be able to maintain the program. As my income increases, I can grow the business. Want to hire a VA? Start a category. Once you have enough saved for a couple months, and you are confident you can keep up with it, send out an RFP. You got this!
You can totally set this up yourself. And YNAB has great training on their website and in live workshops that are scheduled constantly.
Prefer to have help? Budgeting with YNAB is a great add-on service I offer to those with Premium or Preferred packages. Let’s talk!