Ep 06 Transcript: Business Expense Planning – Quick Fix Friday

Andrea Vahl: Hello, late starters. I’m your host, Andrea Vahl in today’s episode of Quick Fix Friday, I’m gonna dive a little bit deeper into what it really takes to calculate your business expenses. We talked about this a little bit in episode04 with Gina Schreck where she really needed to calculate those expenses to quiet the mind of her spouse and herself.

Intro: Hello Dreamers. Welcome to the Late Starters Club, giving you the inspiration mindset and tools you need to start something midlife and beyond. Remember, it’s never too late to follow your dreams.

Andrea Vahl: So let’s talk about some business expenses and what you really need to get a handle on before you start your business.

One thing I would recommend is just listing all of your expenses like I mentioned in episode 05, but, you wanna maybe calculate what’s going to be a startup, one-time-only expense, a yearly expense, and then monthly expenses so you have an idea of how the cash flow is going to work. You also wanna take a look at essential startup expenses, things that you cannot live without in order to start your business, such as registering your business as an LLC or an S corp so that you’re protected. Maybe a domain name and web hosting. Maybe you need to calculate the fact that you’re going to have to open a business bank account with a minimum balance and keep that balance in there, and maybe even have a savings account as well to adjust for fluctuations in income.

You’ll break these down into essential expenses, and then you might have some optional expenses that you would like to have but maybe aren’t necessary right away. Things like a better webcam or a microphone, for example. You might decide if you are going to create your website yourself or hire a designer, so you wanna look at some good, better, best pricing there as well.

You also wanna pay attention to how some of these tools or things that you need are billed. Because some things like web hosting talks about like $8 a month for hosting, but that’s only if you commit to the yearly price. So you actually do have a larger upfront cost. Then what you wanna do is have a column for what you budgeted and what you actually spent, because you may decide that you go with a free tool or you go with something a little more upgraded as you get deeper into investigating that particular tool.

So I’ve put together a really handy spreadsheet that you can use with a lot of expenses that I’ve outlined that way you can get a good start on this. You will have to obviously put your own expenses, based on your business, in there, but it gives you a good starting place to think about things that you may not have realized before.

I’ve got this for a virtual business and then also for a brick-and-mortar business. Now, brick and mortar’s a little more challenging because depending on what you’re doing, there might be a lot of different things for, say, a restaurant compared to an in-person consulting practice that just has an office.

So take a look at that, download that, use that. If you are thinking about starting things up, it might help you see how easily you can get started. I know when I first started my business 13 years ago, I had budgeted $200 a month in expenses to really start my business. And so I was bootstrapping it, and you can definitely do that and get started pretty easily.

The other tool I wanna recommend to you is Profit First. Now this is an overview on how you can rethink the way you are getting the profit out of your business. The traditional model has been sales, minus expenses equals profit. But Mike here talks about how you can reframe that into sales minus profit equals expenses.

So I highly recommend this book. It’s really helped me rethink my business and the way I view my expenses to make sure that I have enough cash and enough profit to continue weathering different storms in the economy and other things that might pop up unexpectedly in my business. So enjoy that Google spreadsheet.

Remember, you don’t have to be a master accountant to get things going in your business.

Now, where did I put that receipt? Oh yeah. Here it is. Okay, carry the one and the two, and also the three.

But definitely make sure you get a handle on these expenses so that you can continue to give your gift to the world and start your new venture.

Outro: Hope that was helpful, and make sure you grab the free guide Top Tools for Late Starters on the website latestartersclub.com. And let’s turn dreaming into doing.