Mind Your Money

Mind Your Money is the second post in a series of five posts about Must Dos for Self Starters.  The first post was yesterday, on how to respond to requests in a reasonable amount of time.  Today we’ll focused on money matters.

Too often what we want is not the same as what is sensible.  Nowhere is this more dangerous than online shopping  in your own venture.  Here are five simple ways to watch over your short-term goals and long-term possibilities when you’re starting a new business yourself.

1.  Make a Spreadsheet

You’ll want to have a few spreadsheets, actually: 1) for  the year – with separate lines for the amount you think you’ll make each month & 2) for the month – with separate lines for the amounts you think you’ll make and spend that month.

So for example, if you were starting a pottery business and aimed to sell $1000 a month in pots every month, first make a yearly spreadsheet with 12 lines and add that column up to a projected $12000 in sales.  Keep a column open for actual sale amounts to be filled in later.

Next up make another spreadsheet for each month of the year include both the money you think you’ll spend and the money you think you’ll make – like this sample.  Keep three months of spreadsheets ready and waiting with projected sales and expenses.  The actual balance each month carries over to the next spreadsheet.

2.  Rest and Review

Carve out a little time each month to review the spreadsheet with you and your executive team.  Numbers don’t lie – but every so often we humans make mistakes.  Use this time to catch any misconceptions, misunderstandings or mismanagement before disagreements or disappointments arise.

Check back in with your yearly spreadsheet and enter your actual balance for the appropriate month.  You’ll review the yearly spreadsheet no more than four times unless you are making big changes to your projected monthly revenue frequently.  Your yearly sheet will tell you how well you did after, say, three months, six months or twelve months of operating.

3. Change where necessary

You may love the turquoise glaze you bought in September, but if you haven’t made more sales as a result you may decide to stick with the basic materials for October or until you have some decent cash flow.  Spent less trekking your wares around the city than you expected? Treat your buyers with hand printed thank you cards for their purchase.  Make changes to your spreadsheets for the following three months of projected expenses when adding or deleting line items.

4. Be Realistic

It’s not important for your actual $$ amounts to be the same as your projected $$ amounts.  The projected number is just there to give you a basis for analysis.  What you want is to blow your projected $$ amount away; but that takes some time.  Even if you find yourself way below projected amount one month, don’t worry – as long as you have enough in the bank to cover the next three months of expenses, you’re in the clear.

5. Ask an expert

These documents are good for discussions.  Don’t be afraid to show other people the numbers – being visible in an essential part of making money.  Other people experienced in reading spreadsheets may see opportunities or oversights.

note to the reader: I did not go to business school and as such do not know proper finance terms.  Richard Branson learned the difference between net and gross with a fishing metaphor.  I just like to think of what goes in and what goes out and then what’s in the bank after I’m through.

got your own business?  tell me how you keep your numbers happy without obsessing over how much is in the bank at any given time


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2 Responses to “Mind Your Money”

  1. Alex Dogliotti Says:

    You know what? If there is one thing I learned the value of, is asking an expert. Every single time I hired a pro to do what I struggled with I ended up saving so much money that I always wondered why I didn’t hire the guy earlier. And this is valid doe anything, from work and important money stuff to learning how to play tennis. Follow the pro and you’ll save time and money. Good advice.

  2. Emily Kramer Says:

    thanks for highlighting the last and most important point. and still i hesitate before i make my appointments! it’s tricky to find the right person but you have to start somewhere.

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