So you’ve decided to plan your freedom.
You’ve spent time reminding yourself of all the reasons you started your business in the first place. And you’re feeling excited again about owning your business, which is great!
After all, freedom is why you got into business in the first place. Being your own boss, the opportunity to choose your own path and do things your own way. When you’re just starting out, it’s an adventure.
But once you’ve owned your business for a while, you know that the adventure can consume you if you let it.
We lose sight of the fun and excitement. We see it more like drudgery. Become an employee (or worse, a slave) to our own business.
We need to remember that, regardless of industry or experience, most of us are in business to make enough money and have enough time to live out our dreams,
To be free.
But to make “enough” money, you have to put dollars and cents to those dreams. Yikes, talk about a buzz kill…
Know how much is enough
Building a plan starts with knowing how much money you want (need) to make from your business. To do that, you need to understand what you need for your business AND what you need for your personal life.
As an owner, you want to be sure that you not only have a profitable business, but a way to pay all your personal bills as well.
Start simple, by thinking about the ways money gets out of your pocket:
- What does it cost to run your business?
- What does it cost to run your personal life?
Draw two columns on a piece of paper: Business Costs on one side, Personal Costs on the other. Then think about the bills you pay each month. Some of the key categories you want to include for BOTH columns are:
- Rent and utilities (home or office)
- Telephone / communication (include cable and internet here)
- Travel / Entertainment
For your business, you’ll also want to include the cost of producing your product or service, salaries / subcontractor costs, and advertising expense.
For your personal life, you’ll want to include food, clothing, education and savings. Don’t forget about any expensive plans you have coming up, like weddings, big trips, kids’ college, etc.
This stuff won’t pay for itself, so you need to understand what you need to earn in order to do everything you’d like to do.
Does this mean I have to do math?
So yes, Virginia, you do have to do some math.
But not just for the sake of doing math – and that can make all the difference.
Because when you start to add things up that have meaning, you stop worrying about the math and start focusing on what the numbers are telling you.
But I still have a life to run!
There’s nothing magical about planning, but it has to be done. Otherwise, you’re not free, you’re on the road to nowhere…lost in space…you get the picture.
It doesn’t have to be complicated. Decide what direction you want to go, and make sure you’ve got what you need to get there – and that’s a plan. Sure there’s plenty to think about as you flesh out your plan, but for now, start with the big picture.
Take the time to define (or remind yourself):
Must-haves are things like housing, food, and transportation.
What are the “good to haves”?
What are the “nice to haves”?
Instead of trying to cut out your whole “nice to have” list, choose to let go of your least favorite item.
So what’s the bottom line?
Over the next two weeks, choose to spend 30 minutes identifying how you spend your personal income.
Overwhelmed by the thought of looking thru receipts or bank statements? Use a free personal financial software program like Mint, You Need A Budget or BudgetSimple to import all of your bank, credit card, loan and other financial accounts into a single interface.
Each of these programs allow you to categorize spending in ways that make sense to you. Once you’ve categorized an expense, the programs can automatically put similar spending into the same category.
You can’t decide which direction to go if you don’t know where you’re starting from!
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