Whenever the season changes, I always suggest a financial cleanse to the entrepreneurs I coach. Entrepreneurs are notorious for getting wrapped up in their businesses and making mistakes like co-mingling personal and business accounts, making large purchases they can’t afford, and racking up credit card debt. By taking a break from their everyday (usually crazy busy) routine every quarter and focusing strictly on finances, entrepreneurs can spot red flags, make necessary adjustments, and put themselves in a better position to succeed for the next quarter. As fall approaches, it’s time to schedule your cleanse. Here’s what I suggest it includes:
Track Your Spending
The best way to track your spending is to do it for an entire month for both your personal and business expenditures. Yes, I know it’s a big pain in the ass, but it’s really important. It’s so easy to lose track of your spending and get into trouble when you aren’t tracking it. When you see it all in black and white, you’ll likely find expenses you can cut without affecting your lifestyle. Part of running the business end of your business also involves keeping your personal and business spending separate, so make sure you’re tracking both. If you find that some funds have co-mingled, now is the time to separate them.
It’s likely you’re paying too much for services in both your personal and professional life, so now’s the time to address that. Take a look at your vendors you use for your business. This includes suppliers, vendors, subcontractors, and those you use for your office internet, cable, and phone services. Also look at these services at home as well as the service providers you use for lawn care, cleaning, etc. Can you renegotiate with any of them to secure a lower rate or better service? If you can, you cut expenses without sacrificing service.
Check in On Your Emergency Fund
There’s no better time than now to get your business finances in order and check in to make sure you have money in the bank should you need it. Entrepreneurs should have two emergency funds: one for the business and one for personal use. If you don’t have a fund or if it’s small, it’s time to re-evaluate your monthly spending and find a way to free up more savings.
Assess Recurring Charges
What services are billed to you monthly on a personal and professional level? Do you have any recurring charges you no longer need? Meal delivery services, gym memberships, video streaming apps, magazine subscriptions, and wine clubs are just a few examples of services you could cut to free up more cash. Trying to decide what to cut and what to keep? Ask yourself if you’d still join each one now if you weren’t already a member. If the answer is no, it’s likely something you won’t miss.
Record Any Charitable Giving
Tracking all your charitable giving – large and small – is an important part of your regular business practice. Setting up a process to track all your giving is the best way to remember all your deductions once tax time rolls around. Tracking also helps you be more mindful of how much (or how little) you’re actually giving. Not only is charitable giving good for your bottom line, it’s also good for your community.
Check Your Credit
As an entrepreneur, a healthy a credit score is important for all kinds of reasons. If you need to take out a small business loan, rent an office, buy anything on credit…the list goes on and on. Checking your credit regularly helps you stay on top of any inaccuracies, spot potential identity theft, and understand what you may be doing that’s lowering your score. A good credit score means lower interest rates, higher limits, and more freedom. Checking it once a quarter at minimum is a good rule of thumb.
The change of season is the perfect time to dig a little deeper into your finances and make sure you’re on the right track. Interested in learning more? Check out our Finance for Entrepreneurs course!