The first year is critical
Your own finances? At some point you will take care of it again. Not on the to-do list for now. For the first year of your self-employment, it may not be such a big problem that financial planning falls by the wayside, provided that you can make a living.
But after that it gets critical. Many start-ups get used to feeling their own finances annoying and limit this topic to the necessary tax return. Do you recognize yourself?
This is how successful entrepreneurs act!
Successful entrepreneurs act differently. You take care of that Company AND about their finances. They know not only the operating expenses, but also the private ones. They know how much the private emergency reserve is and how they will pay the next tax advance.
With this knowledge, they know their investment opportunities and take advantage of investment opportunities. Successful entrepreneurs do not put all their assets into the company (at least after the start-up phase :-), but create a risk balance by investing in other areas. They generate a cash flow that is independent of their use.
Specifically: keep a budget book
So I want to persuade you to do something completely old-fashioned: keep a household book!
Yes, you shake your head or can't help smiling. That's okay, but keep a budget book. You absolutely need to know your numbers, not only in the company, but also privately. This is the only way to know how high your emergency reserve must be and how long-term your “minimum profit” must be for the company to support you (and your family).
And so it goes:
- Think about whether you want to note your expenses by hand, by Excel, by computer program. I have clients who use a large blackboard in the kitchen for notes. Take your time and look at the different options.
- Collect receipts from the first of the next month. All receipts! Also the receipts from the cappuccino during lunch break, a visit to the beer garden and from the butcher. Every sum, no matter how small, is now noted.
- Enter your receipts in your list once a week. There you clustered the expenses, often by “groceries”, “car”; “Clothing”, “rent”, “additional costs”, “insurance”, etc. Seminar participants tell me that after a few weeks they have developed their own division.
- At the end of the month you take stock. Make a clear note of which sums you needed for which rubric. You notice that there are a few months, such as January 1, when insurance companies make a disproportionate impact.
- After a quarter of a year, a first representative statement about your needs is possible. The annual view will of course then further refine this.
Keeping costs under control
Founders and low-income earners should be one thing above all - stingy. Every expenditure must be carefully considered, because money is particularly scarce for them. It does not have to be the fully automatic coffee machine, first the grandma Erna coffee machine does too.
But having fun - I'm really serious. Experience has shown that those who control their expenses have their costs well under control. Even if that sounds banal and boring at first - because who likes to be seen as a stingy philistine? But: A cent saved, a cent earned! Therefore: Every document, no matter how small, should be checked carefully. Can I deduct the expenditure against tax? Is it really necessary? Can you save something through discounts?
You should cluster your expenses in certain areas (analogous to tax) so that they are readily available over the course of the year and year-on-year. Those who have an overview can quickly see which expenses are really necessary - and which can be avoided.
For example, if postage expenses have risen sharply: maybe it was a marketing campaign for the young company? Was it worth it? Or if the toner cartridges are changed every month - maybe it is worth the trip to a cheap print shop for flyers etc.
Refrain from luxury - even if it hurts
Finally, it is important to forego unnecessary luxury. For example, I basically travel by train, 2nd class. I will keep it that way, because why should I pay twice as much for a little more comfort?
Most of the time that's fine. Sometimes, however, not, for example, if the neighbor ate liver sausage bread or garlic and made three phone calls. Or when the train is completely overcrowded. Then I'm angry right now - but my wallet thanked me.
Investment for founders
As a result, you will act financially more consciously. “In-between expenses” will decrease. And you know what it is all about in the future - to cover this need with your company profit. But financial planning is only the first step. Because then you should also take care of the topic of investment.
After all, start-ups and entrepreneurs want and should invest their money well. One possibility: overnight money or fixed deposit accounts. However, this is not as easy as you should think. I keep seeing how difficult it is to find ordinary overnight and fixed deposit terms for the self-employed.
Equity fund for entrepreneurs
Equity funds can be an alternative - if you pay attention to the front-end load. If you are looking for not only short-term investments, but also long-term investments for your business assets, you will probably end up with equity funds quickly. Here you have no disadvantages as a self-employed person.
You can optimize the costs if you keep your deposit with a direct bank (this is done by CortalConsors, for example). Then the purchase costs are low per se. In many cases, you can also buy funds that have a sales charge on the stock exchange.
Attention with the sales charge
Then only the normal expenses for securities purchases are incurred (and these are capped at direct banks, not simply as a percentage of the purchase value) instead of up to 5,5% sales charge. With an investment sum of 10.000 euros, that is easily 500 euros saved.
For your private money, of course, it works the same way, only that you can choose from the full range of direct banks and not only among those who are so gracious to keep business accounts and custody accounts.
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