Starting a business is really easy.
Often, it’s as easy as declaring you have a business and starting to sell stuff. Easy, fast, no permission needed.
It’s amazing, when you think about it, how much opportunity is right at our fingertips. Changing your life is as easy as deciding to change your life and taking action.
The downside to all this opportunity is that it’s easy for people to avoid the boring yet so important stuff like budgeting, planning, and doing your finances. You know, the nuts and bolts of running a business.
Skipping the financials might work for a while if you have a really profitable business with low overhead. If you haven’t looked at the money side, if you’re profitable, you’re lucky.
In this 4 part series I’ll tackle how to set up your finances so that you can increase your profits and know your business inside out.
In this first section I’m going to tackle fixed expenses.
What are fixed expenses? They are the constant expenses in your business. Expenses that don’t change no matter how many units you sell month to month.
Some examples are the rent on your building, the salary of your employees who aren’t paid hourly, your website hosting, garbage pickup, electricity, a loan repayment.
Fixed expenses may eventually change, like when you decide to move to a bigger building, but your rent won’t double if your orders increase one month.
Let’s say you’re a life coach and you work from home. This is what your fixed expenses might look like.
Calendar system $10/month
Business community subscription $30/month
Virtual Assistant $400/month
Business coach $500/month
Bank fee $20/month
Website hosting $20/month
If you add that up it’s $1105/month. Those are the monthly fixed expenses of this life coaching business.
Print out your last few months of bank and credit card statements and go through them looking for fixed payments. Write them all down and add them up for your monthly fixed expenses.
If you missed any of the articles in the budgeting series, check them out below.