This is sponsored advertising content by State Farm®.
You’ve been dreaming of your side hustle for years. The plans you’ve laid out in your mind or your journal are what keep you motivated through your nine-to-five, your full schedule of classes or whatever else has been sustaining you up until this point. But let’s say you’re ready to finally launch that business, invest in yourself in a proactive way and throw all of your efforts into believing in your vision. Before you dive headfirst into entrepreneurship, let’s go over a few essential financial tips that every aspiring entrepreneur needs to have in their back pocket.
1. Create a budget and stick to it
A budget will keep you in check and on top of your cash flow with your business. It’s important to closely track where your money is coming from and where it’s going. Finances are critical for leveraging your resources as your business launches, as well as building healthy habits before your business really takes off. A strong foundation supports a strong business, and this is step one.
2. Track your spending and prepare for taxes
It seems like tax season is something people either love or hate. But if you’re proactive about tracking what you spend and preparing for any taxes you might have to pay for your business, it doesn’t have to be a big task looming over your head. Keep your paperwork filed and organized so you don’t have to dig through it aimlessly next year. Use online bookkeeping software to start off on the right foot. Again, starting your business with healthy habits is key to instilling great routines in your workplace culture later down the road.
3. Be honest with where you are
No, your financial state is not everybody’s business. But it’s something you need to be open and honest about with yourself, any co-founders you have, and potential and current investors. In order to get to the place you want to be financially and overall as a business, you have to know where you are and start making realistic goals on the path to your ultimate goal. An easy way to keep yourself accountable in this is to schedule quarterly meetings, keeping everyone informed on the state of company finances.
4. Lower your fixed expenses
Until you’re making a significant amount of revenue and seeing consistent growth, having a large overhead is ill-advised. Be smart and realistic about offices, equipment and more. Check out shared office spaces, consider starting remotely, and avoid contracts that include costs exceeding what’s realistic for your budget now, and for the long-term. Don’t get ahead of yourself; start conservatively so you can grow consistently.
5. Get paid what you’re worth
If your business is centered around your services as an individual, make sure you aren’t selling yourself short. Determine your need and your realistic capacity for work per week and divide that monetary need by your capacity. This will help you budget what you will spend weekly to get by and maintain a balanced life. You can then distribute that amount of money between clients and the amount of experience you have to figure out your hourly rate or your rate per job. Selling yourself short can be a major step toward failure or at the very least, can hold you back from achieving great success. Although you might just be starting your business, it’s important to set the tone and be realistic about your worth.
6. Never mix your personal and business finances
Again, this is about starting off your business with healthy habits. Keep and track all your personal and business expenses separately and consider finding an accountant to help get your tax requirements in order. Open separate bank and credit card accounts for your business. And, meet with your insurance agent to ensure all the right coverages are in place for the business, including any additional life insurance and disability insurance needs you may now have.
Neither State Farm nor its agents provide tax or legal advice.
This is sponsored advertising content by State Farm.