Are you investing in your business and your future or just spending money in your business without thinking? Of course the old adage “You have to spend money to make money” still applies, but where you spend your money could mean the difference between business growth and business stagnation. Here are our tips on smart spending.
One of the “freedoms” of being a freelancer or solo practitioner is often also the “freedom from a regular paycheck”. As a freelancer, you will find it even more important to make and keep a budget for your business to help you ride the waves of irregular income payments. Although many people bristle at just the thought of making a budget and sticking to it, you will need to draw upon the discipline you have as a successful business owner to set up and follow a budget for your business finances.
When you run your income and expense reports for your business using your small business accounting application, you can easily see the line items for each account receivable and accounts payable. You can also see exactly what dates your regular bills are due, which will help you to manage your cash flow.
Some of the regular and occasional expenses are investments in your business. Others can be considered “spending” without a real business reason or actual business return. If the primary reason you spend your business money is to get a financial return in the short- or long-term, then you have invested wisely with your spending.
The situation for every business and every business owner is different, of course, but another good adage to follow is “pay yourself first”. Because you are keeping your business accounts and your personal accounts separate, paying yourself a salary or monthly stipend helps to ensure that your personal and family expenses are covered and that amount is factored into your business expenses.
Depending on your business and on how often you invoice your clients or make sales of your products, you can review and adjust your budget weekly, bi-monthly, or monthly. After several months of reviewing and revising your reports, you will have a much more accurate picture of how your budget is working for you and your business circumstances.
As hard as you work on your business, isn’t it worth it to make sure that your business works for you?
Kashoo Inc. (https://kashoo.com) develops easy-to-use accounting and bookkeeping software for small business owners around the world. Check out the company’s iPad app, ideal for entrepreneurs on the move. Founded in 2008, Kashoo is located in Vancouver, Canada. For more information about Kashoo, visit https://kashoo.com.