Many freelancers and small business owners feel overwhelmed when it comes to dealing with their finances. They tend to set up their businesses because of their specific skills and passions, so it’s only normal if the financial side of things isn’t a priority for them. They’d rather focus on their work and what truly interests them rather than their bottom line.

However, sooner or later, all freelancers and small business owners have to take stock of their finances to run a sustainable business. You need to know you’re earning enough to make ends meet and to support your own financial requirements in the long term.

Ignoring your finances and burying your head in the sand is never a good idea. This is partly because the longer you put off tackling a problem, the harder it can feel. When my mentees first come to me, they often feel overwhelmed by their business finances. They’re unsure where to start to get on top of the situation and sometimes actively avoid looking at the numbers in their business.

If you’ve never paid much attention to your business finances, they’re likely to be in a bit of a mess. In fact, the thought of going back through your previous finances probably feels like too much to cope with.

I’ve therefore written this blog post to help you make a start if you’re feeling overwhelmed by the numbers in your business. I hope you’ll find the action plan useful while also picking up some tips you’ll be able to implement over time.

Money management for freelancers

The first thing to say is that keeping on top of your finances is an act of self-care. It’ll help you feel more in control of your business and will free up some valuable headspace for the tasks you find more interesting.

In the past, I’ve spoken about how getting your prices right can support your mental health. I’ve also discussed the impact that your money mindset can have on your success and mental well-being. I’m a true believer that keeping your finances under control will ultimately lead to you being in a better position, both in your business and in your personal life.

Knowing that your business is bringing in enough money to cover everything you need will make you feel more financially secure. And when you’re keeping on top of the numbers in your business, you’ll also be able to deal with any issues you spot straight away, before they become insurmountable problems.

One thing I always say to my mentees is that familiarity breeds confidence. The more you look at your numbers, the more familiar they’ll become, and the more confident you’ll feel. It’s like strengthening a muscle. At first it might be weak, but the more consistent effort you put in, the stronger it’ll get. It isn’t something that’s going to happen overnight, but by building on your efforts a little bit every day, you’ll eventually reach your goals.

This is why, if you’re feeling overwhelmed by your finances, I’d always suggest starting small and building up to the bigger, scarier things that just don’t feel possible right now. The small tasks you carry out will accumulate until you reach a point where you feel much more comfortable and the scarier things feel more achievable.

You can find some of the smaller tasks I’d recommend carrying out in the action plan below.

How to manage business finances – An action plan for when you feel overwhelmed

1) Separate your business and personal finances

If you don’t already have a separate bank account for your business finances, set one up as soon as possible. This is crucial because not only will dividing your finances make your numbers clearer and easier to follow, it’ll also put you in the frame of mind of being a serious business owner.

By separating your accounts, you’ll become far more efficient as it’ll be simpler for you to keep track of your business finances and prepare your tax returns.

2) Log into your online banking regularly

Once you have a separate bank account for your business finances, make sure you use it! Log into your online business banking on a regular basis and look at what’s going on. Observe the transactions and their figures without attaching any emotion to them. This will help you build familiarity with the numbers in your business, which will in turn increase your confidence.

When you actively avoid looking at your figures, you can end up feeling overwhelmed when you inevitably have to log into your account sooner or later to see what the situation is. The more you look at your numbers, the less scary they will feel.

3) Record your numbers in a spreadsheet

A good way to start keeping on top of the numbers in your business is to record your income and expenditure. In this blog post, I provide 5 reasons why recording your income and expenditure can be so useful when monitoring your business finances. Not only will it give you a clear, real-time overview of the financial health of your business, you’ll also be able to categorise the data and analyse it.

By breaking down your income and expenditure into different categories, you’ll be able to see where the majority of your income comes from and where most of your money gets spent. This will provide you with crucial information that you can then use to make strategic business decisions. For example, you might realise you need to rein in your spending on training and courses, or you might decide to dedicate more of your time and marketing efforts to a particularly successful service.

I have a free Income and Expenditure Spreadsheet you can download that will make it easy for you to categorise your data. You’ll be able to keep track of what’s coming into and going out of your business while also being able to analyse the data you input.

4) Create a plan for regular financial check-ins

This action plan is intended to get you over that first hurdle of feeling overwhelmed and avoiding your business finances. But it doesn’t stop there! This last task encourages you to continue with the progress you’ve already made by turning those financial check-ins into a habit rather than a one-off occurrence.

Create a realistic plan for regularly checking in with your business finances moving forwards. The key is to avoid being overambitious, otherwise keeping on top of your finances will still feel overwhelming and you simply won’t do it!

If you need some inspiration, here you can find my free download containing the tasks I suggest carrying out on both a weekly and monthly basis. From keeping on top of your invoices to assessing your profitability, I hope these checklists will give you something to aim for step by step. By adding one small task each time you check in, you’ll soon be managing your finances like a pro and feeling far less overwhelmed!

If even the thought of following through on this action plan leaves you feeling overwhelmed, I’d love to support you via my Business Money Mentoring. During a 30- or 60-minute call, I’ll give you reassurance and guidance on the best place for you to start with your business finances.

Sometimes all you need to do is take the right first step and the rest will follow. Find out more about the customised help and support I can offer you by clicking on the button below.

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