Business Lessons in Money
The last time I wrote about finances for Grow was exactly a year ago. As I re-visited that article (which you can do by clicking here), I got completely blindsided by the student loan section. I have an undergraduate degree and, thanks to interest rates you won’t find anywhere else, a student loan debt which has grown from £50k in September 2019 to £57k in September 2020.
As a self-employed person, the way I pay back my student loan can be complicated. That’s on the Government. Thankfully, much of the rest of how I manage my business finances, is up to me.
For a while this wasn’t a good thing: I hadn’t had any financial training and was very much making it up as I went along. Nearly 5 years into my business, however, and things are very different.
Last September, I took readers through four personal financial shifts I’d made, so this time I’m going to talk about business shifts from the past 12 months.
1 – Investment pays off
Every time I’ve spent money on my business it’s been worth it. Whether that’s software, hardware, group programs or individual coaching, the time saved, or new ideas generated have more than covered the money I spent.
2 – Don’t charge hourly
I admit this is a shift I haven’t yet completed! I’m working with Jo Hooper on this: an hourly or daily rate doesn’t make sense. Why should I get paid less as I get faster at writing? There are so many other ways to charge for work which is more respectful to all parties involved.
3 – Cushion fund
I don’t think any business owner ever completely shakes worries around clients leaving, recessions looming, or whether to drop prices. One step that has really helped is having a cushion fund. I now have 3 months-worth of living expenses saved. This gives me the confidence to turn clients down when I’m at capacity, or if their aims don’t align well with my ethics.
4 – Adapted profit-first
I pay myself a set amount per month (using the cushion fund if necessary) and when an invoice is paid, that money is portioned out before I pay myself. Percentages are saved for tax and expenses and the cushion fund. It’s an adapted version of the profit-first system.
Business owners – have you made any helpful discoveries which helped you manage finances? Or are you still going from month-to-month?
Share your ideas by tweeting me at @RebeccaComms. I’d love to hear from you!
Written by Rebecca Broad
Image Credit: Megan Elle Photography