Guest post by Rebecca Lake of BossSingleMama.com
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Putting good money management tips to work in your business is just as important as taking care of your personal finances.
It’s not always easy to do though, especially if you’re growing a business as a busy mom. You might be juggling clients as a freelance writer or virtual assistant while trying to keep up with school schedules and meal planning and all the other mom things.It's challenging to say the least but money management deserves a priority spot on your to-do list. If you're ready to get a grip on your business finances, these tips can help! Click To Tweet
5 Money Tips Female Entrepreneurs Need to Know
1. You Need a Business Budget
You probably use a budget to manage your personal finances but it’s just as important to have one for your business.
A business budget helps you balance what’s coming in against what’s going out. To make your budget, first, add up everything you spend on your business each month.
For example, that might include:
- Blog or website hosting.
- Pinterest VA services if you pay for pro pinning help.
- Scheduling and automation tools.
- Accounting and tax software.
No expense is too small to be added to the list.
Now, compare all your monthly business expenses against your business or blogging income. Ideally, you’re making more than you spend so you have extra cash you can reinvest in your business.
But if you’re not actually making money yet, you might have a negative number. That’s okay. You can and should still make a budget to account for what you’re spending in your business.
Speaking of expenses, go over each one and ask yourself what kind of return you’re getting on the money you’re investing.
For example, if you’re paying for a tool like CoSchedule to drive traffic to your website, how well is it doing its job? Does the paid job board you’re using to find freelance or VA work help you connect with higher-paying clients?
Looking at each expense this way can help you decide whether it’s worth it to continue paying for it. And if something isn’t paying you back in any tangible way, you can cut it from the budget and put that money to work somewhere else.
2. Build Savings for Your Business
Having some cash set aside for your business is important because sometimes, being your own boss is unpredictable.
You might have a really great client who ghosts you out of the blue. Or the pricey laptop you bought to run your business dies and you have to drop $1,000+ to replace it. (Both of those things have happened to me in my freelancing business.)
Or something bigger could happen to put a damper on your business, like a recession. All of these are examples of things you have no control over.
Having some savings earmarked just for your business keeps you from having to pull money out of your personal cash reserves or worse, charge it to a credit card, in situations like these.
If you’re not saving anything for your business yet, here are a few tips to help you get started:
- Keep the money liquid and easily accessible. A high-yield online savings account is a great option.
- Add a line item for saving into your business budget and automate deposits to savings.
- Aim to save one month of business expenses to start for emergencies, then build on it from there.
If you’re saving for business emergencies, define what that means. Then stick to using your savings just for emergencies and avoid the temptation to dip into it for anything else.
3. Build Savings for Yourself
Besides having an emergency fund for your business, you also need one for yourself.
But as a female entrepreneur, don’t stop there. You should also be saving for something else: retirement.
Statistically, women tend to struggle when it comes to retirement planning. Here’s why:
- We earn less than men. (Boo, gender wage gap.)
- We’re more likely to take time off from our careers or businesses to care for kids or aging parents.
- We live longer than men, which means our savings needs to be able to stretch further.
So, getting your retirement plan together is one of the money management tips you can’t ignore.
Use a retirement calculator to estimate how much money you’ll need. Go over your business budget to see how much you can save for retirement every month.
Then pick where you want to keep your retirement savings. Your options will depend on where you live but it’s good to look for an account that offers some tax advantages for setting money aside.
In the U.S., that usually means an individual retirement or solo 401(k). But if you’re in Canada, you might save in an RRSP instead.
Once you open your retirement account, commit to adding money to it every month. Consistency can go a long way toward helping you build a solid financial future.
And if you still don’t know where to start, talking to a financial advisor can help. They can give you professional advice to figure out a retirement savings strategy for meeting your money goals.
4. Keep Good Financial Records
Running a business means you have to pay the taxman his fair share.
Keeping accurate financial records is one of the most important money management tips to know if you want to avoid tax trouble. It’s also helpful for understanding how financially healthy your business is.
So what kind of records should you keep for your business? Here are some of the key things to track:
- Business expenses, especially ones that may qualify for a tax deduction.
- Your income and net profits.
- Business debts.
- Invoicing, including which clients have paid and which ones haven’t.
- Sales trends, which can be really important if you run a seasonal business.
Pencilling in time on your calendar once a month to go over the books is a good way to stay on top of your business financials and see how your money management strategy is working.
For example, say you notice you have one client that pays late all the time. That’s annoying, right? Because you want to get paid for the work you’re doing instead of worrying when your next payment will arrive.
You could try using some incentives to get late-payers to make good on their invoices more promptly. If they pay early, for instance, you take 5% or 10% off as a discount. Or, you might add 10% as a late payment fee if they’re more than 10 days late paying.
It might feel a little uncomfortable at first but taking those kinds of steps can help you protect your bottom line.
5. Don’t Put All Your Income Eggs In One Basket
Diversification isn’t just for your investment portfolio. You also need it in your business.
Having multiple income streams means your business can keep going if one stream dries up.
So, say you’re a mom blogger. You can diversify your income by:
- Offering freelance writing services.
- Assisting others as a virtual assistant.
- Writing sponsored posts for your blog.
- Running ads.
- Promoting affiliate links.
- Creating your own digital product, like a course or e-book.
If you run another kind of online business that doesn’t involve blogging, you can diversify by working with different types of clients or having a few specialties you’re known for.
For example, I’m a freelance writer who focuses on finance. I have more than a dozen clients I write for and I don’t write about the same topics for all of them. If one client’s workload winds down, which happens occasionally, I still have plenty of other clients to write for.
So, think about ways you can create some variety with your business income. It might be offering a new service or taking the leap and creating your own product. Or it might be starting a completely different kind of business. (My main business is freelance writing but I’m also working on growing a blog as a second business.)
The more baskets you have, (and the more eggs you have to fill them) the better.
Bonus Tip: Know Your Worth as an Entrepreneur
So far, these money management tips have been actionable things you can do as you run your business. But I want to give you one more thing to chew on.
Ask yourself this question: Am I valuing what I do in my business appropriately?
Because here’s the truth, your clients or customers will only value your work as much as you do. Not to mention, that time is a limited resource and you have to make the most of it in your business.
So as you’re fine-tuning your money management approach, think about what your time, skills and expertise are really worth. Then consider how that lines up with what you’re actually charging.
Bottom line, don’t sell yourself short when it comes to how you price your products or services. Be confident and value what you do so that your clients and customers will, too.
Rebecca Lake is a freelance writer and homeschooling single mom of two. She writes about freelancing, side hustles and saving money on her blog.