Are Your Finances In Check?

Keeping your financial resources in check is the key to running a successful business. We often don’t realize just how much we spend until we look at our bank account and wonder where the money went.

I strongly encourage you to buy business accounting software like Microsoft Money Small Business or Quick Books so that you can keep track of your income and expenses on a regular basis. Both software packages link into your bank and credit card accounts so you can quickly download your expenses directly into the software.

If you’re like most small business owners, money was a main reason you went into business for yourself. You have the potential to earn more than a salaried position while managing your time as you see fit.

Perhaps you dream of making $100,000 in your business. That’s fantastic and a perfectly reasonable goal, but if you don’t know where you stand financially - how much you’re spending and where the money’s going - you may have a difficult time saving up any portion of that.

In this exercise, consider what your income is compared with what you’re spending for this past year. Write down any hidden costs and estimate how much you spend monthly for each of these items. For big purchases that you’ve paid off in a lump sum, take the total amount and divide by 12 to get your monthly expense.

Business Expenses

• Business income (client fees, product sales, affiliate and referral fees)
• Office rent, utilities, phone, internet, office supplies
• Technology (computer, PDA, cell phone, camera, printer, etc) and software
• Professional fees and membership dues (NAR, MLS service, local organizations)
• Education and training
• Insurance
• Marketing materials
  • Advertising
  • Direct Mail (printing costs and postage)
  • Web expenses
  • Trade shows and events
  • Online marketing (e-newsletters, search engine marketing, online advertising)
  • Other marketing for listings (lockbox, etc)
• Credit cards and loans
• Suppliers (Designers, Virtual Assistants, Lawyers, etc)
• Travel
• Taxes

Average Monthly Income: $_____________
Average Monthly Expenses: $_____________

Personal Expenses

• Personal income (salary, other income)
• Rent/Mortgage, utilities, phone, water, cable, internet
• Credit cards and Loans (car, education, etc)
• Insurance (home, car)
• Food
• Clothes
• Entertainment
• Large purchases - furniture, electronics, computer equipment
• Vacation/Travel
• Other monthly expenses
• Taxes

Average Monthly Income: $_____________
Average Monthly Expenses: $_____________

Whatever your financial goals are, you probably need your business income to cover the costs of the business + at least some (if not all) of your personal expenses. Does your business currently do this? If not, how much must you increase your income or reduce your spending to make the numbers work?