Article by: The Yarnpreneur Society
Whether your business is big or small, new or old–finances are an area you can’t afford (see what I did there?) to lose control of. Cultivating a mindset where you keep an eye on your business expenses is crucial. Too often I see yarnpreneurs ignoring their finances because they can be scary to look at!
There are a few tools you can use to not only help yourself cultivate that mindset, but to get crafty about managing your business finances. The first step is to be aware. Set up a financial report. Keep this report up to date and look at it at least on a monthly basis, but preferably on a weekly basis. Make sure you’re covering all the basics with your report: gross sales, net profit, expenses.
Your next step is to budget. Once you’ve got awareness, you’ll be able to plan your finances a bit better. Your first budget categories can cover the monthly/yearly bills and expenses. Then you’ll probably want to start building up a savings buffer for any unexpected expenses. At this point, take a hard look at your current expenses. This is the category that can most easily get out of hand if you don’t stay on top of it.
Be really critical of any current expenses and get creative about solutions so you’re not racking up giant monthly bills. If you’ve heard the term “bootstrapping,” that’s the mindset you’ll want to be in. Look for financially healthy alternatives to tools or services you’re using. Just be sure not to sacrifice quality!
When looking for alternative tools or software, I use sites like AlternativeTo or Capterra to get recommendations. You can even break down your searches by budget, so you’ll only see options you can afford.
Another amazing option for yarnpreneurs is lifetime deals. Lifetime deals are fantastic because they allow you to take advantage of tools that might normally charge a hefty recurring fee! AppSumo is the best place to find quality, trustworthy lifetime deals. Pay $39-$59 just once, and you can have access to tools that could normally cost anywhere from $29-$49 a month. If you need more in-depth financial tools that will set you up for long term success, I recommend the book Profit First by Mike Michalowicz.
At the end of the day, finances can be overwhelming, scary, and downright confusing. The only way to make them less so is to dive in and stay on top of them. So to recap—keep track of your finances with reports you can actually understand. Keep those reports up to date and check them often. Then set up your budget and stick to it. Ensure that you’re able to cover operating costs with your income, and plan for the future with a small emergency or petty cash fund.
Lastly, be careful with your expenses. Save wherever you can so you can keep your operating costs as low as possible. There will always be some cost to operate, but with careful management and the help of lifetime deals and other tools, you can save more for your profit!
Written by Jess Mason, the founder of The Yarnpreneur Society