Let’s face it, unless you are independently wealthy, if you want to sustain yourself as a holistic, astrological business owner, you have to earn money. Unfortunately, many holistic business owners shy away from financial discussions. In this article, we’re breaking the taboo.
Understand Your Income and Expenses
The first step in creating a financial plan for your business is to understand your sources of income and expenses. You’ll need a list of your sources of income and expenses to begin building your budget.
Your primary income will come from the services and products sold by your business. For a holistic business, examples of products and services may include:
- Providing services at special events
- Workshop or class registration
- Speakers fees
- Writing Articles
- Sales of goods
While calculating your estimated income, if you are a holistic practitioner you’ll soon realize that the number of service hours you can provide is fixed — there are so many hours in a day. So, if you plan to increase your revenue, you’ll either need to raise your prices, or diversify what you provide by hiring additional staff to provide services, or by selling products.
In addition to understanding your business’ income, you must understand the expense side of the ledger.
As the owner of a small business, your business should pay you a salary, your payroll taxes and benefits. Budgeting to pay yourself a salary is essential to the sustainability of your business.
Your business will also have a variety of fixed and variable expenses related to the operations of your business. Common operational expenses for a holistic business include:
- Advertising (includes website, business cards, paid advertisements, etc.)
- Bank Service Charges
- Certification/Continuing Education
- Licenses & Permits
- Loan Interest
- Office Supplies
- Professional Services
- Taxes (Federal/State/Local)
Depending on the nature of your business, you may have additional expenses that affect your business balance sheet. These may include:
- Capital expenses (Computers/software, fixtures/renovation, furniture, office equipment, etc.)
- Inventory/cost of goods sold
- Loan principal
- Owner’s Draw (when the owner withdraws profit from the equity of the company)
Creating a Financial Forecast
Once you’ve mapped out your income and expenses, you’re ready for the next step: estimating your cash flow over time. It takes time to build a business: you’ll need to build your client base, set up your business processes, and develop your marketing campaigns. In order for your business to succeed, you’ll need to be realistically estimate the speed of the growth of your income, as well as control costs.
If your business is just starting up and your income is still small, you’ll need strategies to reduce your expenses. Cost-cutting measures to consider while you are just starting out:
- Keep your day job. Work on your business start up as a second job until it’s financially sustainable.
- Work out of your home, or share office space with a similar holistic business.
- Use no frills business cards and other marketing materials
- Lease or buy used furniture and equipment
- Market to people you know and avoid large advertising expenses.
- If you sell products, sell on consignment so you don’t have to invest in inventory.
- Do as much of the work for your business as you can yourself. Hire professionals only when necessary.
Depending on the nature of your business, you’ll want to create a financial plan to cover the first 1-3 years of operations. You may break down your income/expenses on a quarterly or monthly basis, so you can plan for your growth, and track your progress toward meeting your goals.
To help you with your forecasting download the Budget Worksheet excel spreadsheet to help you. Just add and subtract income and expense lines to match your own list.
Set Up and Maintain a Bookkeeping Routine
To manage your small business finances and determine whether you are meeting your income and expense targets, you will need to create an accounting system that allows you to collect, aggregate, report and analyze your financial transactions.
There are numerous software solutions on the market to manage accounting for small businesses. QuickBooks, one of the most commonly used accounting packages, offers a free version (Simple Start QuickBooks) for new businesses. There are also online software-as-a-service products such as Kashoo. Take some time to do some internet research to find a product that meets your business needs and budget.
Once you have chosen your accounting platform, you’ll need create a schedule for keeping your business books up-to-date. A simple calendar may include:
- Weekly – At the end of each week update deposits and expenses, file receipts
- Monthly – At the end of each month reconcile bank statements and pay monthly bills
- Quarterly – Check in where you are on budget goals and estimated taxes
- Yearly – Close out your annual books and pay taxes
If you keep track of your finances as you go along (as opposed to saving everything up until the last minute), you’ll be able to quickly assess how well you are staying on track toward your financial goals, and make adjustments as needed.
Seek Professional Financial Advice
While this advice can help you get started with your business financial planning, it’s no substitute for professional financial advice. There are books available on small business accounting. A bookkeeper or an accountant can advise you on local or state regulations affecting your business, help you set up your financial recordkeeping and advise you on tax schedules.
One of the best ways to find a financial professional is to talk to other members of your holistic profession and ask for a referral. Many cities also have a small business assistance center, which may have a list of bookkeeping/accounting professionals who specialize in small businesses. Business coaches are also another source of referrals for financial professionals.
Even if it is an additional expense, hiring a professional, especially in the start of phase of your business, can help you avoid pitfalls and errors that can cost you far more later down the line.
Questions for Consideration:
- If you’ve been a holistic business owner for a while, how long did it take you to get your business off the ground? What advice would you give a new holistic business?
- If you own a business, what financial recordkeeping system to you use? Do you have a special routine? Would you recommend it to others?