One of the great things about being your own boss is being the owner of the piggy bank. Every single hard earned penny you slave to earn is yours to spend. But are you spending what you actually own or are you spending on the never never??
You see, one of the things I hear a lot from my coaching clients is that they struggle with cash flow. Managing your cash flow is a really, really important part of being a successful boss in your business. Making sure your piggybank has enough pennies in it for the day to day stuff is a no-brainer (or it should be!), but also making sure you have a rainy day fund, the ability to pay annual bills, the tax man etc is also a really important part of being a successful boss.
This is where you need to engage your planning skills and be brave.
It is so easy to look at an incoming invoice and think – yippee!!! I have all this money to spend!! I’m going to go wild and buy lots of stuff!!
The trouble is, it isn’t actually your pocket money yet.
To be a successful boss in your business, you need to look at the bigger picture and make some grown up decisions about that pocket money when it comes in. You need to make good decisions about where and how you spend your money to make sure that piggybank stays full enough for the important stuff.
The quickest way to kill your personal brand and your professional reputation is to not pay your bills. OK – I know that every now and again you might need to rob Peter to pay Paul, but if you are always doing that, then you need to stop & take a look at where your money is going.
The very first thing you need to do when you get paid is make sure you put something away to pay the tax man at the end of the year. No skipping this bit. It’s really important. I use Starling Bank for my business and have a savings space set up for just that purpose. I move a percentage of each invoice that is paid to me into that pot. What is great about that is that I don’t see that pot when I look at my bank account, so I am not tempted to spend it. Which is also really important.
The second thing you need to do is then put a little away for a Rainy Day. I have another savings space for that.
Now we get to the third grown up bit – budgeting.
I know this stuff isn’t exactly sexy – but it is a vital part of managing and growing your business – you need to know where the pennies are going to make sure they are going to the right things to help your business grow.
I have a third savings space where I put a bit of money to pay for my annual business bills & subscriptions, so I know I can cover them when they appear.
So – to break it down, if I get a payment for Elite Coaching, this is how I split it out:
- £149.00 payment
- 15% put away for the taxman
- 10% put away for a rainy day
- £12.00 put into my annual bills fund
That leaves me with about £100 of that invoice to put in my piggybank. Now I can start to think about spending my pocket money.
But – because there always is one – then I am looking at monthly expenditure too – and this is where people get caught out. They do the big grown up stuff like I describe above, and then spend the remaining pocket money.
But it still isn’t all yours yet.
There’s your mobile phone bills, networking subscriptions, productivity apps, etc, etc still to sort out – all of a sudden that £100 doesn’t look all that much does it?
So – before you start panicking about changing your pricing (although I can help you with that), or cancelling stuff willy nilly – take a good look at what you are spending and where you can change things. Here are some ideas to start you off:
Mobile Phone – do you really need a new handset every 18/24 months? Or a massive data plan? When was the last time you reviewed how you use your phone & looked at the cost of your plan? If you are on contract, you are hiring your phone from your provider – you could save some money by looking to change your plan or go sim free. Worth a look – I did this just before lockdown and saved over £40 a month!
Instant Ink Plans - £4.99 a month doesn’t sound a lot, but £59.88 a year does. How often do you change your print cartridges? If you replace them all more than twice a year, stay on your instant ink plan. If you change them once in a blue moon, you are probably not saving anything.
Productivity apps – I use Microsoft 365. This costs me £112.90 a year. That’s £9.40 a month. For that, I get all of this:
- Outlook – email, calendar, task & contact management
- Office – Word, Excel, PowerPoint, Publisher
- OneDrive – online cloud storage & collaboration space
- OneNote – personal digital notebook & collaboration space
- Teams – online meeting & chat collaboration space
- Forms – online survey & feedback tool
- Bookings – online appointment booking tool
- SharePoint – online intranet community space
- Stream – online video collaboration space
As well as all kinds of other things like PowerBi, Visio, Sway, Yammer and a whole host of other stuff to get things done in my business.
My point? If you are spending money on things like Calendly, Survey Monkey, Zoom etc but are using Microsoft 365 to create documents, spreadsheets, you could save yourself a shed load of money by using what you already have with your 365 account.
If you want to be a successful business boss – invest in the stuff your business needs to grow:
Reduce your outgoings where you need to by looking at all the little things you are spending out on and thinking about if you really need them, could change them or simply get more out of them.
Only then will you be able to know exactly how much pocket money you have to spend. And then you can spend it how you like!