You’re welcome back to my blog, it’s good to have you here. Today we will be talking all about money management. This has honestly been one of the frequently asked question “how can I save money now that I’m an entrepreneur?” Money looks so much different than it used to be when you are working a regular 9-5 job. What are my spending habits? How do I save? when is the best time to credit my account? All of these questions, I’m going to try to give answers to in this article.
Money Management Tips for Start-Up Entrepreneurs
1.) DIY or Hire?
The first question I’ll be answering is should I pay someone to do this or should I try to do it myself even though I really don’t know what I’m doing? Well It depends and I’m going to give you my rationale. When you first start, do it yourself and save that money because it is a pretty heavy expense.
Another thing is you have to choose whether or not it’s worth spending on. Contracts and different trademarks and other legal stuff, I’ll say that is worth spending on. You can kind of DIY contracts if you want, I would never suggest you go into business decisions without some sort of agreement, even if it is casual agreement that you typed up. That explains the scope of work, expectations and the price. You always want to have something written down but once you do have more of a grip on your business, you’re starting to get more clientele, you’re starting to work with bigger budgets or things are starting to take shape, I would recommend getting legal counsel and investing in that.
These are things that are worth the investment because you don’t want it to backfire on you, you don’t want someone to steal your business idea, you don’t want someone to basically steal your brand or business that you’ve worked hard to build. So those are expenses that I think are beneficial to incur sooner rather than later.
3.) Pay in Full Upfront
This is another thing I recommend, pay in full upfront because you don’t know when the money is coming back and it could save you a lot of money. When it comes to smaller softwares like social media schedulers or different automates that you use within your business, you could test them out before you pay the annual price. When it’s something you know you’ll be using for sure, pay upfront so you can eliminate as many bills as possible.
4.) Low Spending
The next thing to do with managing your money as an entrepreneur is cut back on a lot of frivolous stuff. My mindset has changed completely when it comes to money. Time and money aren’t like equal exchange like they are when you are clocking in and clocking out or you work a salary Job.
Check Out: Easy Steps to Starting a New Business
It’s a different mindset that you begin to take on when you’re an entrepreneur especially a startup entrepreneur. You could save hundreds of dollars just by cutting down and condensing some of those expenses.
5.) Separate your Business and Personal Finances
The next major tip and this is probably the most important tip, is to keep your business and your personal finances separate. Track your expenses, whether you make an excel spreadsheet and you track what’s coming in from your business.
So if you do a big project or if you are selling something and you track how much is coming in every month and then you track what is going out, what are you spending on? Do you have fees for your website? Do you have equipment fees or whatever you are spending on your business? Keep those accounts separate because it makes life so much easier during tax season and even if you’re not at the point where you have a bookkeeper or any major bookkeeping or accounting software, you do want to have some systems in place to keep your finances organised and this method works really well.
6.) Pay yourself
The biggest question is how and when is the right time to credit my account? Well, fun fact is I still don’t really pay myself. I have a monthly allowance which helps me pay for my expenses. Paying yourself is rewarding because you know that the work that you did is what is able to create the lifestyle that you are creating.
7.) When to quit
Another thing I want to stress which is mainly to people who are working a traditional job and they want to become a full-time entrepreneur is don’t quit just yet. Take your time and dig deep if you are wanting to quit your job and become a full-time entrepreneur. I will say that it does something to your brain when you see your money going away and you don’t see any coming in. It puts you in a sense of high pressure, it makes you act on impulse. It’s just very uncomfortable and it causes you to make very irrational decisions in your business. I do recommend transitioning out of your job as long as you can do both at the same time.
When you just plunge into entrepreneurship, it’s kind of like getting married to someone you just met on your wedding day. It’s like you are planning into this thing that you have no idea what you are getting into and it can be very daunting. So I always recommend you date your business, get to know your business, get to know yourself as an entrepreneur because it is completely different. It creates a completely different type of you because you are now operating in a way that you’ve never operated before.
So if you’re thinking of quitting your job, I’m not telling you not to quit ever or don’t quit at all, but figure out a way to create some sort of financial stability in your life because entrepreneurship does not guarantee any sort of stable financial structure and so that will really help alleviate some of the pressures you feel on making your next dollar which can cause you to act or do irrational things, that is make irrational business decisions. It does take money to make money, just really access your time with your money.