Managing your business finances is one of the more difficult parts of being a business owner. And doing it well is crucial for running a long-term successful business. While it might seem daunting at first, taking charge of your money as an online entrepreneur can be effortless when you know what you’re doing.
Find financial confidence
Step 1: Get a clear view of your financial situation
The first and most crucial step in taking charge of your money as an online entrepreneur is to understand the full picture of your current financial situation. So, do an audit and answer these questions:
- What’s my revenue each month?
- How much do I spend on all business expenses?
- What are my various income streams and what percentage does each contribute to my overall revenue?
- What percentage of the revenue do I pay myself?
- How much debt does my business have?
- When do I have to pay my taxes, and what is the percentage?
- How many bank accounts do I have, and what is the purpose of each?
Every entrepreneur’s financial audit will look different. (That’s perfectly normal.) Answering these questions is helpful to get a basic overview of your full financial situation so you can get organized and manage your money better.
Step 2: Seek professional advice
Depending on which stage your business is in and whether or not you have debt, it might be a good idea to seek out professional advice to help you take charge of your money. If learning about finances and money management on your own is hard, financial advisors can serve as the stepping stone to get a basic understanding of it all.
Good financial advisors can help you manage business debt and make sure that you have the best interest rates and are utilizing your money correctly. They can also advise on how to best invest your money within your business and even how to manage your personal finance through your business to get the best returns.
Utilizing features like Teachable Payments can help alleviate some of these financial stressors of course. But depending on the structure of your business, hiring a bookkeeper or a CPA can help you stay on top of your invoices and taxes. Plus, they can help you write off business expenses correctly to maximize your profit. In addition, having a professional at your side will help minimize the stress that comes with money management as an online entrepreneur.
Step 3: Get ahold of your business expenses
To get the most out of your business, you must track your business expenses diligently. You can write off many things, from office rent the equipment you use to film your online courses to business lunches and dinners you have with your team.
Create a spreadsheet in Google Sheets or use tools like FreshBooks to track your business expenses monthly. Tracking it monthly will make it easier when the tax season comes around, and it also ensures that you’re not accidentally missing something because you forgot.
Step 4: Cut out unnecessary spending
The hardest part of taking charge of your money as an online entrepreneur is looking at your expenses and deciding to cut out on everything that’s not necessary. The chances are that you need less than you think to fully operate and grow your business. For example, buying expensive set decorations or renting office space to film online course material might not be necessary if you’re just starting.
So, be ruthless when you look at where you’re spending your money and evaluate if every expense is necessary at this stage of your business. Also, look at any hidden fees you might be paying for services and tools that can be avoided. For example, if you use an email marketing tool like MailerLite, most often, it’s cheaper to pay for it annually than to pay for it every month. So, wherever possible, switch to cut out the extra fees.
Step 5: Invest in essential business tools and resources
A huge part of taking charge of your money as an online entrepreneur is investing back into your business. So, once you look at your expenses and determine which are needed and which are not, it’s time to look at tools and recourses worth investing in. Depending on what stage your business is in and what are your goals, you might want to look into investing in one or more things:
- Better equipment: if you have been using an old camera or a laptop for years now, it might be time to upgrade to a newer version to improve the quality of your content and make it easier for you to produce it.
- People with skills: hiring better people than you at certain things is the key to a successful business. Determine what skills you need help with and hire people that have them.
- Automation tools: tools that make your life as an online entrepreneur easier, like automated invoice sending or automated email subscriber onboarding, are worth the investment because they’ll save you time and effort you can spend elsewhere on your business.
- Training: masterclasses, courses, workshops, and conferences are worthy investments that can help you become a better entrepreneur and level up your business. The same goes if you have the team – investing in training can be beneficial for long-term business success and team satisfaction.
If something will make you a better entrepreneur, help you save time, and produce a better product, then it’s worth considering investing in it. And if you have done the work in cutting out unnecessary spending, then you’ll have the budget to make these good investments.
Step 6: Plan for taxes in advance
Tax season always comes around at the same time, so there is no reason to be unprepared for it. Depending on where your business is based, look up the tax percentage you have to pay according to your income and put aside that amount each month to a separate bank account.
Store your invoices for business expenses in one place and track the spending and the income to make it easier for you to do your taxes when the time comes. If you have a hard time managing your taxes and preparing for them, talk with your CPA to help you set up a foolproof system so you can take charge of your money easier.
Step 7: Create a system
And the last step in fully taking charge of your money as an online entrepreneur is creating tracking systems for your business finances. Being organized and disciplined with your admin will change your life and minimize the stress of managing your money and business.
So, utilize the tools you have at your disposal and set up systems that allow you to easily track where your money is going each month. It could be a budget spreadsheet or even a notebook if you prefer to write in hand. Anything works as long as it helps you be organized, keeps you accountable to track your money, and always makes sure you know where it’s going.
This article is for informational purposes only and does not provide any legal or tax advice. Teachable is not a tax provider or advisor. Please consult a tax professional for your personal financial needs.