When you started your business, you probably dreamed about flexible hours and highly profitable, stimulating work.
Ideally, you would’ve adopted best practice and documented those dreams in a one-page Business Plan. The plan would specify how much cash you need from the business, your role, and the hours you’d be working. In other words, what the business was going to deliver to you personally as an owner.
But that was all before the world turned on its head and most plans went out the window.
Whatever you previously dreamed of or planned for must be reconsidered in light of the current situation. It’s likely that what you want personally from the business has not changed, however, getting it may take longer than expected (depending on the type of business you are in).
Here we’ll discuss how personal budgeting can help you take less from from business right now, so your business survives, and you can take more in the future.
Now is the time to reinvent your business to deliver what you want.
Trimming what you need personally from the business for the next year or so, will give your business a better chance of surviving the Covid-19 crisis. Consider the following:
- Can you still have the lifestyle you want with less cash strain on the business? Perhaps you could switch some costly leisure activities for cheaper or free ones! For example, walks in the countryside, games/quiz nights, home cooked meals etc.
- Are there personal costs that can be avoided? Things like takeaway coffees, or anything you feel comfortable living without for now, until you get your business to a point where its profitable enough to allow you to take more from it.
- Can you refinance your personal and/or housing debts to achieve lower interest rates or reduced principal repayments?
- Can you spend less on holidays or travel in the next 12 months?
- Can you modify your role in the business to reduce stress or workload?
- Will these needs be different in the medium term? I.e. can you hunker down for 12-months or until the business’s profitability and cashflow improve?
The best way to reduce the cashflow strain on your business is to revise your personal budget. Your budget will identify potential savings you can make and provides a benchmark against which your actual spending can be tracked in the future. The Business Plan and budget can then be built around how the business can deliver the level of personal cashflow you need.
There are no shortcuts here. The discipline of personal budgeting with ongoing monitoring of your expenditure is essential. The good news is that the process is both empowering and enlightening at the same time. You’ll be amazed at where personal savings can be made and will feel much more in control of your business.
Don’t want to/can’t reduce your personal spending?
Of course, this all depends on what you want, and the lifestyle you want to live. If you don’t feel like you can or want to reduce your personal spending, then there are other ways of getting your business back on track, such as gaining control of your cashflow by getting paid quicker, reducing overheads, and reviewing pricing. Get in touch with us by emailing firstname.lastname@example.org if you need help getting your business back on track. We can arrange an online meeting to discuss your goals and the services we have available to support you.
Free personal budgeting template
We also have a helpful and free personal budgeting template available. Contact us for a copy!