Entrepreneurship and good money management are two DIFFERENT skillsets. Many people fail to realize this.
Just because you’re a good businessperson and can rake in the profits doesn’t necessarily mean that you’ll make good financial decisions which are in your best interest.
There are countless stories of millionaires who went broke because of poor money skills. Overspending, a lack of savings and no planning can culminate into a perfect financial storm that wipes you out – and even the successful marketers can end up broke if they’re not financially savvy.
Below, you’ll find a few money management pointers to help you stay on the right track.
Eliminate all debt
This is the first and most important point of the lot. Always strive to be debt-free. We’re talking about credit card debt, personal loans, student loan debt, etc. These types of debt are NOT good debts for Online Entrepreneurs . Eliminate them.
If you’re taking a business loan to scale up, that’s fine. Just make sure you can make the monthly payments on time.
Follow a budget
Make sure you have a personal budget for your own expenses, and a budget for your business. You must know where your money is going.
Sell more than you buy
Ultimately, the goal of any business is profit. You must maximize your profit. The best way to do that will be to sell more than you buy. As simple as this sounds, it goes over so many marketers’ heads.
They keep buying tools, courses, coaching, etc. and they don’t focus on selling. As a result, they end up in debt and have nothing to show for it. You must sell!
Study your numbers
This is especially important when using paid advertising. Study the numbers to see if your conversions are high enough to profit. While you don’t want to throw in the towel too early, you also don’t want to be too emotionally attached to your ad campaigns and so on.
Discard what’s not working and cut your losses. You can always create a winning ad later and recoup your losses.
The same applies to your business expenses and so on. Study the numbers like a hawk so you know exactly where you stand financially.
Trim your expenses
The Japanese have a practice known as ‘kaizen’. It means continuous improvement. You should apply kaizen to your business and constantly look for ways to reduce costs and become more efficient.
Eliminate expenses that are unnecessary to the business. The more costs you reduce, the more profit you’ll make.
Outsource where possible
There are several sites such as Fiverr, Legiit and Upwork where you can find tons of cheap freelancers to do work for you. In fact, it might be cheaper to hire them than to do the work yourself.
Do the math and see if it makes business sense to outsource the mind-numbing tasks to freelancers and free up your time for the more important work.
This is actually an indirect way to manage your money better. Time is money… and when you manage your time, you manage your money.
Hire a CPA
Hiring a certified public accountant (CPA) to advise you on taxes and other issues will be a one-time cost that yields rewards many times over. Taking advantage of tax breaks and other legal loopholes will save you thousands of dollars in the long run.
Use free tools when you can
There are countless free tools online that you can use instead of buying software. One example are free meme generators. You can easily use them rather than buying some clunky meme software that does the same job.
Another example would be using images from royalty-free sites like Pixabay, Pexels or Unsplash rather than paying money to stock photo sites such as Shutterstock.
These are just two examples. There are many more out there. Google is your best friend here when it comes to discovering these free tools.
Improve your financial literacy
Pick up a few personal finance books from your library and learn about investing in stocks, funds, etc. Planning for retirement is another important topic not just for Online Entrepreneurs but everyone else as well..
The more financially literate you are, the better you’ll be at managing the money you make in your business. The pointers in this article are just the tip of the iceberg.
There’s a lot more to learn. Get started today and know that an investment in your knowledge will yield the best returns over time.