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We’re talking all things business finance today. We are 100% not experts on this topic. We are completely self-taught with help from coaches, various resources and online courses. If you feel like finances are confusing, we hear you! This was not something that came natural for us— in fact, it still doesn’t! But understanding our finances has helped us make key business decisions that lead us down the path of success rather than failure. So if you feel confused or know literally nothing about finances or how to manage your money, you are in the right place. Get ready to take back that control and confidence.
In this episode we chat about how to manage business finances from a partnership perspective, how the book Profit First influences our financial management, what our financial workflow looks like, and some resources to get you started.
Managing Your Finances with a Business Partner
We’ve found that the biggest secret to our partnership’s success is to understand each other’s strengths and weaknesses, especially when it comes to finances. A simple example, we use Excel templates quite often to create our budgets. Court very strongly-dislikes Excel, while Abbey has a better understanding of how to use it efficiently. So, Abbey has taken a stronger role in that side of managing finances for Duo Collective.
We also prioritize monthly meetings to review our current financial situation, set goals, and make a plan for savings. We constantly communicate with each other about expenses, so neither one of us is surprised by an expense showing up on a credit statement. Open communication about finances with your business partner is so important! Money is an emotional topic, but you absolutely can’t be afraid of talking about it. You should both be involved in some way when it comes to finances.
How to Manage Your Money as an Entrepreneur
The Key: Follow The ‘Profit First’ Method
The book Profit First has been a leading guide to how we manage our finances and we highly recommend it for every small business. From day one, it helped make sense of our finances and put a solid structure in place to effectively manage them moving forward. This method helped us understand how much we could pay to ourselves, how much to save for taxes and expenses while not forgetting to give ourselves the proper bonuses we deserve.
Rule #1: Do not use your personal bank account for your business finances! Setup a separate bank account and do this right away.
Well actually, setup four accounts. Following the Profit First model, you should have the accounts listed below. You’ll take a certain percentage of money coming in and drop it into these accounts. Take a listen to the full episode to get a better explanation of how much to put in each account and what percentages we put in our own.
- Salary Savings
- Tax Savings
- Business Savings
- Profit
Bonus account: If you haven’t yet started saving for retirement, start by opening a retirement savings account and shuffling a percentage of money there. At the end of the year, with the advice of your accountant, you can move some money into a SEP IRA or some other investment account.
What our Financial Workflows Look Like
We use Asana to manage almost everything when it comes to our business. It’s no different when it comes to our financial workflows. Here’s a sneak peek at what tasks Abbey manages each week, month and quarter to wear that CFO hat for Duo Collective. This to-do list also holds us accountable to make sure these tasks aren’t forgotten! And yes, this is outside of what our bookkeeper does for us. If you don’t have a bookkeeper, you likely will have more tasks here.
Who we lean on financially since we aren’t CFO’s…
We have creative brains, not financial brains, so we have a team behind us to help manage our finances. Money is a sensitive subject and it’s always important to bring in a second or third party to help you remain impartial to what is working and not working in your business. Almost half of all small businesses fail and finances is a massive part of that failure. Don’t let that be you!
Bookkeeper
Madison Dearly is a lifesaver when it comes to our financial reports! She categorizes our income and expenses for us, which is handy come tax season. But this also helps us understand our business performance. Having these reports (done correctly) allows us to make big business decisions and still ensure profitability!
For us, we love to track our income based on the various different services and offerings we have from one on one services, to our shop, coaching programs and courses. This helps us understand where we may need to hire help, what offerings aren’t serving us any more and so much more. If you are working with a bookkeeper, are their custom reports that you can develop that could help you make smarter decisions?
Budget Templates from Val Marlene
If you listened to episode 33 with Val, you’ll know we participated in her business coaching program in the early Duo days! Part of the program was talking about business finances. The budgeting spreadsheet templates are AMAZING and we review them both weekly and monthly to stay on track with our spending and saving goals.
Pssst… you don’t have to be in her program to get the templates! Shop them all here 🎉
Local Accountant
We highly recommend finding a local accountant to help manage your finances and advise you on business decisions from a financial perspective. They can also provide you with resources to learn more about your finances and profitability.
If you’re just getting started in your business, we highly recommend reading Profit First. Like we mentioned, we knew nothing about managing our money— in fact, we hated even the thought of it. But Profit First changed the way we understand our money and how to manage it correctly.
Finally, if you feel overwhelmed, just know you aren’t alone! Explore the resources we mentioned in this episode and watch your confidence with money flourish. You got this, friend!
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Abbey Oslin and Courtney Petersen are Minnesota-based marketing experts, educators, and co-founders of boutique marketing agency Duo Collective, which specializes in SEO, social media strategy, and branding for small business owners and creative entrepreneurs. To learn more about Duo Collective, or to inquire about working with our team, head over to www.duocollective.com.
To inquire about being a guest on Duo On Air, please fill out this application form.
And to submit a topic or a question for next week’s episode, send us a DM on Instagram! See you on Monday!
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