Whether your business is big or small, new or old, finances are an area you can’t afford (see what I did there?) to let get out of control.
Cultivating a mindset where you keep an eye on your business expenses is crucial. Too often I see yarnpreneurs ignoring their finances because they can be scary to look at!
There are a few tools you can use to not only help yourself cultivate that mindset, but to get crafty about your business finances and how you manage them.
The first step is to be aware. If you don’t have one already setup, make sure you get some sort of financial report going. Keep this report up to date, and look at it at least on a monthly basis, but preferably on a weekly basis.
Make sure you’re covering all the basics with your report: gross sales, net profit, expenses.
Your next step is to budget. Once you’ve got awareness, you’ll be able to plan your finances a bit better.
Your first budget categories can cover the monthly/yearly bills and expenses, and then you’ll probably want to start to build up a bit of a savings buffer for any unexpected expenses.
At this point, you’ll likely want to take a hard look at your current expenses. This is the category that can most easily get out of hand, especially when not addressed or kept top of mind.
Be really critical of any current expenses, and if you can, get creative about solutions so you’re not racking up giant monthly expense bills.
If you’ve heard the term “bootstrapping”, that’s the mindset you’ll want to be in.
Wherever possible, look for financially healthy alternatives to tools or services you’re using.
Just be sure not to sacrifice quality!
There are a few tools I use to conduct research into software and save on necessary expenses.
First up: if you know you need a tool or a piece of software, but you’re having trouble finding an alternative that is in your budget, you can use sites like AlternativeTo or Capterra to get recommendations for similar software.
You can even break down your searches by your budget, so you know you’ll only see options you can afford.
Another amazing option for Yarnpreneurs is lifetime deals.
Lifetime deals are fantastic because they allow you to take advantage of tools that might normally charge a hefty recurring fee!
AppSumo is the best place to find quality, trustworthy, lifetime deals. Pay $39-$59 just once, and you can have access to tools that could normally cost anywhere from $29-$49 a month.
If you need more in-depth financial tools that will set you up for long term success, I recommend the book Profit First by Mike Michalowicz.
At the end of the day, finances can be overwhelming, scary, and downright confusing. The only way to make them less so is to dive in and stay on top of them.
So to recap: keep track of your finances with reports you can actually understand. Keep those reports up to date and check them often.
Then, setup your budget and stick to it. Ensure that you’re able to cover operating costs with your income, and plan for the future with a small emergency or petty cash fund.
Lastly, be careful with your expenses. Save wherever you can, so you can keep your operating costs as low as possible. There will always be some cost to operate, but with careful management and the help of lifetime deals and other tools, you can save more for your profit!