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An important element of business money management is controlling costs. I know there are times when we’re going to have to spend money in our businesses. I also understand that at times those purchases are planned and then there are times when they are not. However, there are also those moments when we spend our money in the wrong places or we just go on a spending spree, with no method to our spending!
Unfortunately, the result is negative cash flow or barely breaking even. Typically the number one question asked of women entrepreneurs by small business finance coaches is “What is the number one finance or money challenge you face in your business”? About 95% report some sort of cash flow challenge or not having enough income to meet their needs. Through further evaluation I usually find that, those cash flow issues are often a by-product of improper spending habits. Now, I don’t want you to think that you can’t do any spending in your business, that’s definitely not the point I’m making here. I do though want you to be aware of your spending and take control of your business by telling your money where it needs to go. I also want you to alter the way you think and the way you spend “your business’s” money.
Here’s how to spend the right way:
Think investment and/or increase to the bottom line – any expenditure that is outside of normal business operations expenses should be a cost that will provide a return on investment. Before making a purchase always consider if what you’re about to spend money on is expedient, necessary for business operations, or if the benefit of the purchase will add to your bottom line over time.
Put your money in areas that will improve you and/or add to your bottom line – simply put make wise investments in yourself and in your business. Some examples are business coaching, financial consulting, certain marketing and advertising costs, putting a certain percentage of your business income in savings, seminars/training which provide strategies that will help add more cash to your business, etc.
Always know where you’re going to put your money, how you’re going to spend it, and when you’re going to spend it. You do this by planning how you’re going to generate revenue and how you’re going to allocate that income to ensure that you hit your profit and cash goals. Remembering that every dollar in your business should be accounted for – create a budget and create a spending plan.
If you’re not experiencing the level of income you desire in your business, it’s not always about getting more clients or selling more products. Simple changes to how you spend the money in your business can prove to infuse more cash in your business. Spend the right way and you’ll be able to keep more of the money that you earn!