One of the hardest things to get a handle on as a business owner is your finances and how you can support your business and your personal life. You have to have a good plan in place in order to be able to still handle all your expenses consistently without any issues.
So the first thing I would suggest to you is to make a budget. And you’re probably asking “how can I create a budget if I don’t know how much income is coming in the door.”
Remember a budget is simply a plan. Nothing else. It’s not The Constitution. It can change. That’s called forecasting and we will talk about that another time. One of the main purposes of creating a budget is so that you can know how much expenses you have to pay out every month. When you know how much you are going to pay out it helps you better strategize about how you are going to bring more money in the door.
The second thing I would suggest would be to include you savings plan in your budget. We as business owners sometimes forget about savings because we don’t have a steady paycheck coming in. But just like when you were working as an employee and you had to “pay yourself first” by putting aside money in your savings account or 401K, you have to do the same thing for your business. Open a separate savings account for your business and set 5%-10% aside from each payment you receive from a customer. So when those slow periods arise, and you don’t have any income coming in from customers, you have that money set aside for you to be able to still pay your bills on time and consistently.
The third thing I suggest is, for that credit card that you are dying to pay off early, don’t do it until your cash flow is consistently at the level you need it to be at in order to support your lifestyle. Unless you can make a large lump sum payment and pay it off in full, don’t make that large payment so that you can better manage your cash flow. Wait until you have money coming in the door consistently before you try to pay it off. Right now while business is still fluctuating for you, put that extra money in the savings account I mentioned before so that you can have it during those times when business is slow.
How do you handle your cash flow when business is slow? What tips and tricks can you share to help better manage your monthly cash flow?
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