I need to be upfront about this: once you start your online business, you’re burning cash. The reality is that while you can do it quite cheaply (definitely compared to a brick and mortar store), it will still cost you some money to begin and run your online business. I should also add: especially if you want to grow very quickly.
Look, you could set up a free website and start blogging. You can share the word through all the free channels you can but to build it up to a point to where it starts bringing in money will take a long time. It’s a crowded marketplace now – there are SO many bloggers, freelancers and coaches out there. It costs money to use a lot of great apps, like LeadPages, that will help you stand out. It’s really a matter of whether you want to spend money or time to build your business.
Let’s talk about going down the ‘spending money’ avenue. To build a little nest egg for your business, it pays to become diligent with budgeting. It pays to have a better relationship with money too. But let’s talk about budgeting because while you build your business, I’m going to assume you have income coming from a day job or your partner to support you. Or maybe you saved a bit of money to put towards your business. Or maybe you’ve just been handed a lush redundancy package. Either way, the money you do have needs to be managed effectively until you start to earn enough within your business.
Budgeting is really simple. We over complicate it because we are too emotionally attached to money. The simple aim of budgeting is to reduce unnecessary spending. Nothing more, nothing less. Here’s four things to start doing right away to improve your budgeting:
Fix your money leaks.
Where are you wasting money? Unused subscriptions? Take away coffees? Stacks of cheap clothes that you throw out after a month? Plug those leaks as soon as possible. Identify if you can simply swap for a cheaper option (e.g investing in a coffee machine instead of buying take away coffee every day). If it’s not even worth a swap, transfer that money to a savings account – one that you can’t touch without a little bit of a hassle.
Focus on investment.
This is a real mindset shift. Every time you spend money on something, ask yourself what return of investment you will get. It doesn’t have to be money, it could be energy, time or even knowledge. For example, if you hire a business coach, the return of investment would be all four. You would develop the knowledge to build a business that returns more profit, in less time and energy. A coffee machine may cost a bit of money upfront, but the amount of money you would save in the long run will be worth it. A high quality leather jacket may cost a pretty penny but it will be a staple that will last long in your wardrobe.
Keep track of your money.
I use Xero for business to do this. For personal expenses, Tim and I have a spreadsheet that we refer to but in all honesty, that’s a work in progress. We know how much we need to spend on our essentials – bills, mortgage etc – so we can factor that in when we set goals for our businesses. We probably spend too much on food but we don’t waste money on clothes or other things so it works out in the end (Note: I used to spend so much on clothes without realising it).
Ask yourself: do I really need this? If you’re an impulse buyer, set some guidelines around giving yourself a time frame to make a decision. For example, if you see a jacket you like, instead of buying it straight away, take note of the jacket and if you still like it the next day (or two), then buy it. This strategy has worked absolute wonders for me in changing my shopping habits.
But, please, treat yourself.
Don’t overdo the budgeting so much that you’re absolutely hating life because you haven’t budgeted in any money to treat yourself. You’ve still got a life to live. Don’t ignore that. Put some money aside to treat yourself with a new outfit, or a day spa or even a holiday.
Do you have difficulty with your budgeting? What’s your biggest challenge? Let’s get the conversation going in the comments below.