Ideas for Spring Cleaning Your Finances and Organising Your Business
I don’t know about you, but when spring is on its way, I always feel energised and that little bit more refreshed. I love getting out into nature and seeing the new buds on the trees and green shoots emerging from the ground. The nicer weather is so uplifting, especially when it's combined with birdsong and bright colours.
After the dark winter months, people often feel as though spring is the start of something new, or they see it as an opportunity to inject life into an old project. Many houses also get a good spring clean, and this often makes homeowners feel a lot better. They’ve brushed away the cobwebs and freshened up their space.
As small business owners, we can take a leaf out of their book. Spring is as good a time as any for us to clear out our business finances and make room for new business growth.
It’s a good idea to get your finances in order whenever you feel the need. By organising your numbers and properly understanding them, you’ll be able to see where you should be strengthening and how you can develop your business moving forward.
In this blog post, I’m giving you some ideas if you feel inspired to spring clean your business finances over the coming weeks.
Ideas for organising your business finances
1) Check your pricing still relates to your circumstances
You should be checking that your rates are still relevant to your circumstances as often as your circumstances change.
A lot can happen in a short space of time, both in your business and in your personal life. You might have moved house or country resulting in a higher cost of living. Or maybe you’ve started paying into a pension or investing in coaching, which could leave you with additional business expenses.
Ask yourself if your circumstances have changed recently? And if so, how are they different?
Changes in your circumstances should always be taken into account in your pricing. In Charge with Confidence, I show participants how to set their rates so they’ll be able to cover both their business and personal expenses. This is really important because to run a sustainable business and make a decent living, you have to be earning enough to pay for everything you need in the number of hours you have available to work.
Check in with your pricing and make sure that with your current rates you’ll still be able to afford all the things you need. If you won’t, ask yourself what needs to change. Could you reduce your expenses, or do you need to increase your prices to cover them?
2) Get up to date with your invoices and chase any that are overdue
Getting on top of your invoicing is probably one of those tasks that gets sent to the bottom of your to-do list. But once you’ve done it, it’ll make you feel so much better and more in control of your finances.
Send out invoices for any projects that you haven’t invoiced yet. And while you’re doing your invoicing, chase up any invoices that are overdue.
As small business owners, we need to get into the mindset of prioritising our income and making sure we receive what we’ve been promised.
3) Check in on your budget (or create a budget if you haven’t already got one!)
It’s so easy to put off recording your business expenses, but if you don’t keep on top of them, not only do you risk forgetting about them, you also risk missing out on tax relief. Get caught up and record any business expenses you haven’t noted down yet.
If you don’t have a budget for your business expenses, make sure you put one together. I offer a free business budgeting spreadsheet with full instructions on how to use it. Creating a business budget is often the first task I get my mentees to do. It sets the tone for keeping track of your business finances and helps you put a figure on the expenses you’re going to have to cover.
A budget also helps you avoid overspending. For many freelancers and small business owners, this is a common issue. How many times have you decided to take that extra course?
When you are checking in on your budget, look to see whether or not you’ve spent more than you’d originally planned. If so, ask yourself why this is. Could you cut your spending elsewhere to make up for the overspend?
Finally, don’t forget to take note of any anticipated expenditure that you know you’ve got coming up. Make sure you have enough money in your account to cover upcoming expenses so there’s no need to panic when it’s time to pay them.
4) Look at your time-tracking data and do something with it!
I always encourage people to track their time and use the data to gain insights into their business. However, I know that while a lot of people do track their time, they never seem to get around to doing anything with it. If this is you, it might be time to change that!
Look back over your time-tracking data and see if there’s anything you notice. A good place to start is by looking at how many hours you’re working overall. Are you happy with that figure? Perhaps you’d rather be working fewer hours. Or maybe you feel as though you could even be working more.
Once you’ve considered this overall figure, look at how many hours you’re spending on paid client work. You might find that you’re spending fewer hours on client work than you’d originally anticipated when you set your rates. If this is the case, you might need to increase your prices.
If you have any customers who pay you per hour, it’s also a good idea to check in and see whether you’ve recently been earning less from them on average. If the quantity of work hasn’t decreased, this could be because you’re getting through their projects more quickly than you did in the past. Again, you might want to consider increasing your rates so clients don’t see the price of the work you’re supplying going down rather than up.
5) Assess where you’re at with your financial goal for the year
I usually recommend having a financial and a non-financial goal for your business each year.
If you don’t already have a financial goal for your business, come up with one and put a system in place that will allow you to monitor it on a regular basis.
If you do have a financial goal, check in and see how you’re progressing. For example, perhaps your aim is to achieve a certain income by the end of the year. In this case, look at where you’re at and where you want to be. How far off your target are you, and what can you do over the coming months to make sure you reach your goal?
6) Review your business finances for the previous month
Reviewing your finances for the previous month is likely to leave you feeling a lot more organised.
I’d recommend starting with your income and expenditure. Recording these numbers will give you a clear overview of how your business is performing while also helping you track progress towards your financial goal. If you don’t already have your own system for doing this, I offer a free income and expenditure spreadsheet to help you note down what comes in and goes out of your business accounts each month.
Income and expenditure don’t always happen straight away. You might find that you’re having to wait for customers to pay your invoices, or if you pay for something using your credit card, it might take a while for the money to leave your account. Besides telling you how your business is doing, recording these figures will allow you to keep an eye on any payments that haven’t been received as expected, as well as any untoward transactions.
Another indicator of how your business is performing is your profitability per client. To calculate this, take the amount you earnt on projects for a specific client, minus any variable expenses, and divide this figure by the total number of hours you spent on work for them. If there are any clients earning you less than your minimum hourly rate, I’d recommend raising your rates with them or looking for other customers who will pay you more instead.
I hope this post has given you some ideas to help you feel more organised when it comes to your business finances. If you’d like access to my free budgeting and income/expenditure spreadsheets for your spring clean, check out the free resources I offer via the button below.
Hi, I’m Susie
I mentor freelancers on pricing and business finances so you can earn a decent living doing what you love.
I’m a translator, editor, chocoholic, crochet addict, animal lover, and budding gardener (get it?) who loves empowering others to achieve their goals.
