The most daunting part of a business is the finances. But it’s also one of the most exciting parts of owning your own business–the idea that something that you create on your own is worth actual money to other people is really pretty awesome. No need to wait two weeks until your next payday—depending on how you structure your business, almost every day can be a payday.
Finances: Things to Figure Out
Where you’ll put your money, i.e. a bank account
How people will pay you
Do you want to accept cash, checks, credit cards? If you accept credit cards, what POS (point of sale) system will you use? Example online payment platforms are Stripe, PayPal and Payoneer. Here’s a list of 15 popular online payment systems.
You’ll also need to determine payment terms. As in, do you want people to pay you within 30 days of receipt of the invoice. Here’s how you write an invoice that gets you paid.
What people will pay you
As in, what will you charge for your services and products? Here’s a great worksheet to help those of you with service businesses.
How you’ll keep track of your income and expenses
Money in, money out. You can use a spreadsheet, or you can use cloud accounting software like Freshbooks. With Freshbooks you can link to my bank accounts and credit cards, and it automatically brings in expenses. And it makes it extremely easy to create and send invoices. Freshbooks has reporting features so you can easily get profit & loss (P&L) reports and balance sheets.
What your financial habits will be
Make finances a habit. This one is hard, especially if finances are not your forte or if you feel overwhelmed. But make at least one day a week the day you sit down and go over your finances. You’ll need to figure out your own financial habits—this includes when you’ll review finances, and how.
What your goals are
You’re not starting a business just for the fun of it—you’re starting a business because you have dreams of what you want to achieve. Making financial goals is part of that dream.
Check out Profit First: Transform Your Business from a Cash-Eating Monster to a Money-Making Machine by Mike Michalowicz to learn about why and how to make profit your primary financial goal.
Who will help you
You can certainly do everything on your own, including learning about business finances. But you can also enlist help. There are plenty of professionals out there who can help you handle your books!
Just some of the people who might be able to help you are:
- Bankers. Having a good relationship with a banker is so critical! Especially if your bank is huge—you need to have a personal connection with someone who can help you when the red tape gets in your way.
- Insurance Agents. Protect your business with insurance! Get an insurance agent you trust to determine which policy is right for your business.
- Bookkeeper. A bookkeeper keeps track of your income and expenses—if you know you won’t be able to handle this aspect of your finances, then check out a service that can do this. You can find local bookkeepers or find one online, like Reconciled.
- Accountant. An accountant takes charge of all accounting processes, like analyzing financial data. A Certified Public Accountant (CPA) is an accountant who has met state licensing standards and can represent a taxpayer before the IRS.
- SBA counselors. The Small Business Administration (SBA) has local offices where they offer free (free!) business counseling. They also have a TON of resources to guide you as you start your own learning business.
Don’t Ignore Your Finances Because Money Makes You Uncomfortable
For some of us that come from teaching or other education jobs, it can be hard to think about the money when we really just want to think about serving our students or customers. But here’s the thing: you need to get paid and be smart with your money if you want to continue serving those students/customers as a small business owner. It’s in your, and their, best interest to focus on finances, even if it’s hard or the numbers aren’t what you want them to be.
We all have to start somewhere.
Up next in the series is operations! Stay tuned!