Today’s solo episode is an honest look at my journey as a business owner, especially concerning finances and business expenses. I always try to be transparent with you about my successes, and I think it’s equally important to be honest about the struggles, too. As we take a look back at how I structured my business to pay myself and track my expenses, you’ll see that I became less cautious with my spending. It was the principles set forth in a popular book that set this personal finance junkie on the happy path to saving money, managing profit, and finding peace.
What We’ll Learn
- One of the biggest lessons learned for me was that generating income brings excitement, but leads to false security in justifying costs here and there
- My 2018 goal was to be more thoughtful as a business owner and more honest about finances
- Steps I took to put things in order:
- I became honest about every expense, instead of taking the “ostrich” approach
- I created a spreadsheet that listed every expense, so I could get a grasp on where the money was going
- I used the principles in Profit First (see Resources) to pay myself first, and then cover expenses
- I looked at my expense and profit percentages in order to evaluate my choices
- I visited my bank to divide up my business accounts
- I planned ahead for taxes and set aside that money, separate from other accounts
- I categorized expenses as luxuries and necessities—and then decided if there were cheaper options for the necessities
- I set a goal of saving 3 months’ expenses, then 6 months, then 9 months . . .
- I hired a bookkeeper to help keep things straight
- My takeaway lessons:
- It’s easy to get lost in expenses and justify them as necessities
- If you don’t control your business expenses, then your business will end up running you
- There is an unbelievable amount of peace when you get your expenses down to the ideal 30%
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