Lesson One
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Lesson One
We all have ambitions to be our own boss, but we have to start somewhere. Whether it is through a side hustle or diving straight into a start-up business, we don’t want our goals and success to fail due to a lack of cash flow. Keeping track of your Side Hustle’s cash flow is so important in the early stages as this period is critical for your growth and liquidity (Cash on hand to spend).
All of the money management practices you will learn here are simply budgeting and managing your Side Hustle’s income and expenses to allow for greater growth.
First thing is first, Open a bank account! In our current world, not much of your income and expenses are going to be paid with physical cash. You need a dedicated business account to facilitate these transfers, the benefit is that it provides you with an immediate form of tracking your money. Remember, in the beginning you want to minimise costs, so find a business bank account that has minimal fees. As your business grows then you can take on greater costs for the benefits they offer.
The purpose of your Business account is to separate your personal finances from that of your Side Hustle. Payments made for expenses and payments received from clients all need to be facilitated through your Business account. This makes tracking your finances much easier and provides a clear record of your Side Hustle’s cash flow from the start of your operations.
Get set up with internet banking or a banking App to have instant access to your business account.
The purpose of managing your finances is to allow you as the owner, to view the profitability of your Side Hustle and your financial position. This information helps you decide on your next goals and steps. Therefore, you need to know exactly what money you are making and what you can afford to be spend within any given month.
Any money you make from selling your products/services. You need to keep a record of every sale for each month so that you can always be aware of what you have made for that month in sales. Ensure you keep the payments received and those still due to pay you later separate, you can’t count money that is due to you as cash on hand until it is repaid.
This accounts for all of the payments you have made out of your business account for costs involved with your Side Hustle. This can include your internet needs, ingredients for products, advertising, transport, and any other cost you need to keep you Hustle going.
The trick in managing Cash flow, is to make sure the above two elements always balance each other out. You always should be making more money than you are spending each month. If not, then you need to seriously find ways of cutting costs or bringing in more sales. What you make minus what you spend is your current Cash flow balance and needs to remain positive to keep you going.
A payment made for product supplies falls under which category?
