Financial Planning for your small business

Lots of people in my generation were taught that money was baaaaaad and only greedy people care about it.  That it ruins relationships and makes people forget what life is really about.

Well that’s BS.

I mean, it can be destructive – but so can chocolate cake – and as a a business owner you need to love your money.  Love is a willingness to pay attention and spend quality time with it.  To plan your future together and make decisions that are in the best interest of your money (without dicking other people over, of course.  I shouldn’t have to say that.)

The bottom line in your business is that, in order to keep running it, you have to turn a profit.  And in order to do that you need to know how much you make, spend, take home, want to make, want to spend and how you can make it all happen.

That’s called Financial Planning.  And it’s quite possibly the most overlooked task in small business.

Because let’s face it – finances can be boring.  And if you are new, or not profitable, it can also be scary and suck.

I have to confess that for a long time I avoided ‘dealing’ with my personal finances.  I knew I was in debt so what did it really matter? My business was making money but at the end of the day I was still tied down because everybody needed a piece of whatever I made.  Why bother reminding myself about it all the time…that would just make me sad.

So I trolled along, paying minimums and waiting to double or triple my income and then I would totally pay something off.  I think we all know how that works out.

Along with the obvious problems of unexpected expenses and no fallback plan, not feeling in control of my finances took a major toll on my self-perception.  I was the perpetually-broke girl, the one who couldn’t attend yoga or take weekend trips with my hubs.  Even though my business kept growing, I was personally in the same place as I had been when I got laid off and worked as a holiday elf for $9/hr. (Yeah, that happened).

And when some parts of you grow but others are stuck, eventually you hit a wall.  My business successes became frustrating because they didn’t mean anything – it’s totally awesome to work days, nights and weekends and still be late on your car payment.  I couldn’t just pay myself more, because when you own a business you have to manage your cash flow very carefully.  And then there are some legal ramifications to consider when you siphon all your money to yourself…

I want you to realize how important it is to look those numbers in the eye and say “I’m the boss.”

The weirdest thing to me is that, after running away for so long, when I finally took things seriously I found it to be really liberating! Those numbers that I thought would make me feel hopeless actually empowered me.   And with a clear idea I knew exactly what I needed to do next.  And it wasn’t very long at all before things really started to turn around.

Like this post?  Share it with your friends, family and that neighbor who keeps complaining about his job (and says he’ll totally be starting his own business soon…).  And be sure to Sign up for 52 Business Lessons I Learned the Hard Way.