A lot of people might think that a budget is necessary to manage their business finances. But I’m here to offer that budgeting often leads to negative feelings, restraint, and being boxed into our numbers.
In contrast, I like to approach the numbers in a different way, one that feels more expansive and free.
Rather than just setting strict budget lines, I help my clients look at what is actually happening in their business. Your numbers are your data and that tells a story.
In any business, there’s a flow of money coming in (income) and money flowing out (expenses). At a minimum, your income should be covering amounts spent to generate your income. This is typically referred to as “cost of goods sold”. For example, if you are making a cake, the ingredients that go in the cake and the time it takes to make the cake (time is money, ladies!) are your cost of goods sold. Your income should also cover any variable costs outside of the ingredients and time, such as the electricity to run the store, rent, supplies, etc.
The goal is, after all of your costs of goods and overhead expenses, your business would have money left over and you would profit.
There are two ways to maximize profit: increase income or decrease expenses.
Real growth and ease in your business happens when you optimize both income and expenses so that you are making the money you want while being able to finance your business adequately, so it thrives.
This is the opposite of an arbitrary budget, fueled by scrimping and cutting corners or operating from a scarce place where you don’t feel you have enough and are spending money for the sake of spending it, and not being intentional with the amount of income you want to make and how to get there.
So how do you get there?
Ask yourself the following questions:
- Are you utilizing everything your business is paying for? Often we are spending money and not using what we’re buying (think subscriptions, services, etc.)
- Are you charging enough for your product or service/is your pricing optimized? This goes back to what I said before about your income needing to cover the cost of goods and the overhead expenses in your business.
Once you have these areas covered, you can determine the path for your growth, whether that is new offerings, higher pricing, or even bringing on new staff to support new income sources.
Numbers are where I thrive. If you are ready to start looking at your business finances, book a free discovery call below and we can discuss how you can optimize your numbers.