This post is part 6 of a series I am offering to coaches that are new to entrepreneurship and are setting up an online business for the first time.
Next Step: Set-up a system to manage the financial aspect of your business
Did you know that lack of profits and poor financial strategies are two of the top reasons why 40-49% of online businesses fail within the first 4 years? Spending time on this aspect of your business is one of the best gifts you can give yourself to get your business started right!
4 Steps to Get You Started:
- Conduct market research
- Talk to industry experts – find out what their challenges and successes were when they were starting out
- Create a budget
- Make a list of costs associated for all the things you will have to purchase for your business. Write them down, in case they are needed later on for business, accounting and/or tax purposes.
Ways to do this:
Step 1: Get information
Successful business owners frequently tell me that setting up a system for managing their finances correctly and efficiently from the start save them time and money. The good news is there is so much information out there today between websites, books, consultants and industry experts, it’s easy to get started. And basic information is readily accessible.
Step 2: Consult when necessary:
I am not an expert in business management, law, finances or accounting. This are areas I strongly suggest consulting with an industry expert about.
Tip: If you are on a budget, there are consultants in various industries that offer workshops or even reading materials (like on their websites) for free. Some offer consultations for free or at a discounted rate. Check speaking engagements or classes in your area. Professional organizations are also great places to gather information, meet industry experts and find leads for a variety of topics.
Step 3: Decide when to invest time, energy and money into an area of your business
Invest in a good program if it will help you manage one aspect of your business while providing ease and support. This will free up your time up for other things. For example: Quicken now has an online monthly membership program for bookkeeping. Every month you pay a fee and with the click of a button you can manage all sorts of aspects including budgeting and bill pay.
3 areas to set-up: budgeting, invoicing and basic accounting
“A budget is a financial plan for the future concerning the revenues and costs of a business. However, a budget is about much more than just financial numbers. Budgetary control is the process by which financial control is exercised within an organization”. -Tutor2U.net
How do you create a budget for an online business?
When I was researching start-up costs, there was quite a variation in reporting how much money it would take to start an online business. To me, that’s good news because it means you can create your own budget and cost structure and decide how much money you want to invest in your business.
Overhead can include things like: website hosting fees, marketing services, costs for advertising and marketing materials, professional training, outsourcing services (like consultants), licenses, and taxes.
What I know from experience is that you can get a website up and running for fairly cheap. Additional costs will depend upon a variety of things like: the goods and services you are offering, the market need, the competition, and additional business expenses you may have to spend money on.
For example, for online services (like coaching, writing, or consulting), initial costs can be lower because you don’t have to buy, store or manage inventory, but you may have to pay for online advertising, online directories or join professional organizations which can add up. Compare that to a business that sells online products, there are different costs associated like manufacturing, shipping, sales, staff and inventory management.
I also found that things moved to another level of detail when my company became an LLC and I had to set-up a business bank account (specifically regarding reporting, profit, loss, and taxes). Again, I recommend taking time to gather information and learn what the options are for your particular business.
Written Exercise: If you have already created a business plan, you might have some idea about how much this venture will cost you. If not, click on the link below and complete the questions and then create a simple business plan.
TIP: Try a start-up calculator like this one from BusinessKnowHow.com.
Take a look at the numbers. Just remember: this is a “dry run”, things can change, so be flexible and creative. Start small if you need to (for example you may not need a huge social media campaign to get started, perhaps that type of PR launch could happen a year of two down the line). Once profits start coming in, it’s much easy to allocate money in your budget to specific things. Keep strategizing and looking at options. Be creative!
Basic accounting options for a new online business
Here are some helpful posts:
Invoicing and record keeping options for small businesses
3 simple ways to do this invoicing and record keeping for small businesses include:
- Do it yourself
- Hire a book keeper
- Find online programs or software that are great for small businesses. For example:
PayPal Invoicing offers invoicing convenience.
Quickbooks is another program that is very successful and has products for small businesses. They offer a monthly membership.
Tip: practice positive self-talk daily!
Your affirmation checklist:
I am allowing money to come into my business for success.
I have a smart financial plan in place!
I can create a cost structure that is doable and achievable.
RECOMMENDATION: If you find, after reading this, that you are stuck or just frustrated with your idea, or don’t’ know how to get started, you might want to think about hiring a Life Coach. I know, it’s yet another thing that costs money, but I’ll share something with you – surprisingly I have found it to be the one thing that has been invaluable in building the foundation and success of my business. My personal coaching is what has made my business successful. As a coach I have worked with many coaches to either them turn their idea into a viable business or help them launch their business. I can offer you a working relationship where you gain insight, accountability and a can develop your own strategies to build your business. Don’t be afraid to invest in yourself, even for a short time. You are your business!
- In case you missed any of the posts in this Entrepreneurship for Coaches series, here they are:
- Part 1: Visualize Your Dream Business
- Part 2: The Importance of Goal Setting
- Part 3: Deciding What You Need
- Part 4: Keep Coaching Clients!
- Part 5: Creating Your Business Plan
- Part 6: Set-up a System to Manage the Financial Aspects of Your Business
- Part 7: 5 Starting Tools for an Online Business
- Part 8: 10 Ways to Build Your Online Business
Blog Posts and Articles:
Five Reasons Why Market Research Matters (and Five Tips to Using It) on MarketingProfs.com.
Start Up Statistics – The Numbers You Need to Know on SmallBizTrends.com.
How to Identify and Engage with Industry Experts on Seapoint Digital.
Budgeting for Your Online Business on SelfGrowth.com.
10 Online invoicing services for small business owners on Entrepreneur.com.
10 Essentials for Setting up Your Accounting Function on EarlyGrowthFinancialServices.com.
Best Small Business Accounting Software 2017 on BusinessNewsDaily.com.
Inventory Management 101: How to Manage Small Business Inventory on SquareUp.com.
SBS.org: How to build a small business on SBA.gov.
Posts for the Self-Employed on MileIQ.com.