As an entrepreneur, budgeting can be overwhelming.

And as business owners ourselves, we understand the challenges you face when it comes to budgeting and managing your business finances. It’s incredibly common to feel overwhelmed and unsure when you think about money – you’re expected to just “know” how to organize your personal and business expenses effectively.

But, if you’re like the majority of our clients, no one taught you any of that. The good news is that we have some valuable insights and actionable tips that we hope empower you to look at your finances and develop a budget that works for you.

You Don’t Know What You Don’t Know

When you started your business:

• Did you know your business budgeting basics?
• Or anything about business finances?

If you’re like most entrepreneurs and small business owners, you’re focused on making enough money to cover your operating costs and basic monthly bills like internet and rent. Not to mention the weight of deciding if you should invest in that awesome-sounding networking group, or hire someone to handle the marketing, or what to charge customers or clients…the list goes on and on (and on).

At some point, it may feel like your bank account controls you, not vice versa. It’s time for business budgeting basics to get you on track for financial success.

The Challenges of Budgeting as a Business Owner

For many small business owners, budgeting can feel overwhelming and disorganized, so it gets pushed to the back burner. It’s no surprise that looking at your bank accounts causes stress – in fact, many of our entrepreneurial clients come to us and share that they’ve “just” been transferring money between personal and business accounts without a set schedule or routine, which creates, well, a kind of chaos.

When you lack clarity in determining the difference between your personal expenses and business expenses, it’s no wonder that so many business owners feel like they can’t afford to actually pay themselves a salary or issue a paycheck with their name on it.

Business Budgeting Means Knowing Your Numbers

Business budgeting basics boil down to knowing your numbers. Here at Fiscal Fitness PHX, we help business owners understand the difference between their income, revenue, and expenses, which makes paying themselves far easier (and eliminates the headache of just transferring money when you “need” to.

To start, you need to understand a little bit about budgeting terminology; more specifically, you need to understand the differences between income, expenses, and profit.

Your Business Income

Your income is the amount of money your business takes in each week, month, quarter, or year from the sale of products or services.

Your Business Expenses

Your business expenses are the money spent on anything related to your business — accounting services or marketing and networking costs, for example.

Your Business Profit

Your business profit is the net amount or difference between income and expenses.

In a perfect world, you would be reviewing income, expenses, and profit on a regular basis (like monthly or quarterly).

This allows you to see things that you might otherwise miss, like outstanding customer balances, late payments, and which of your products are selling best.

Knowing these numbers allows you to make more strategic business decisions. For example, if you have a pile of outstanding invoices, you may need a different contract or agreement that addresses your business’s steps for unpaid invoices.

Really knowing your numbers will also help you strategize and target your efforts by answering questions like:

• How much does it cost to onboard a client?
• What are the costs per client for taxes, accounting software, Paypal or another billing site, marketing, networking, etc.?
• How much money are you spending on networking groups? Are your networking efforts converting leads to sales?
• What’s your BIG income/profit goal? What do you need to do to reach that goal? How close are you to that goal?
• What do you need to charge for your services to get you to your income/profit goal?

How to Begin Budgeting as a Business Owner

You will love this next part if you’re ready for financial clarity in your business! I’ve broken down business budgeting into five things that most of our business-owning clients have found eye-opening, as well as immensely helpful.

Organize Your Personal Finances

Trust me; I know how overwhelming it can be to track every penny. But believe me, it’s worth it!

Write down your personal expenses so that you can clearly see what you’re spending on the personal side of things in an average month.

By calculating your monthly personal expenses, you’ll clearly understand what your financial needs are for your current lifestyle, making it easier to align them with your business earnings. This step is like laying a strong foundation for future success.

Start Paying Yourself

I totally get the hesitation to pay yourself when the funds are tight. But here’s the magic: even starting with a small paycheck, like $5 every two weeks, sets the stage for big rewards down the road.

It’s an act of valuing your hard work, and it will cultivate a positive habit that leads to greater financial fulfillment. Plus, the motivation of actually missing yourself a consistent paycheck will reap so many rewards.

Review the Sources of Your Business Income

Figuring out which income streams are most profitable is a real game-changer…but it can be challenging. It’s worth the insights you’ll gain though, as you need this information to set achievable financial targets when you dig deep into your business income sources, like project-based work or retainer agreements.

It’s like uncovering hidden treasures in your own backyard.

Look for Growth Opportunities

Opportunities are all around us, but we have to be able to see them (and if you’re avoiding looking at your money, you may actually miss a few!).

Look for opportunities that will allow you to attract more customers, increase average sales per client, and boost the frequency of purchases. When you embrace these growth avenues, you’ll see your profitability soar, and you may even want to pay yourself more. It’s a win-win!

Remember, looking at your business’s finances can be overwhelming if you try to do everything all at once, so we recommend taking small, deliberate steps toward a future filled with abundance and success.

Budgeting as an entrepreneur may be challenging, but with the support of Fiscal Fitness PHX, you can overcome the financial chaos and achieve real financial stability.

When you take specific actions to organize your personal finances, pay yourself regularly, and identify growth opportunities, you can make room for you and your business to thrive.

Our financial coaching programs have been carefully curated and structured to empower you to make informed decisions, set realistic goals, and track your progress. If you’re unsure where to start with a business budget, we would love to help you – get started by scheduling a Money Masterplan Session today!