What You Should Do
Of course planning is one of the most important things you can do when running a business, but the problem for many self-employed entrepreneurs is that they don’t do it. In the world of finance, it’s very difficult to track what goes in and what goes out. Timing is also important because most businesses will fluctuate in the amount of business they do. This is why you can’t really plan on a month to month basis. You must look at things in three to six month blocks.
Also don’t forget to set some cash aside for tax and national insurance so that you can pay your taxes on time. This is a common problem for business owners, especially self-employed entrepreneurs. The tax bill is one of the most important bills you have to pay, but you only pay it once a year, so it’s easy to forget about it until the last minute.
Advice to Consider
For help creating a budget you can work with, try using Business Debtline’s budget sheet on their website. Having a budget will help you figure out how much income you can actually take out of the business. That will help you create a household budget and plan for other benefits or income. Once you’ve subtracted your household budget from the business budget, you can see what’s left to pay to creditors.
All business owners should prioritize their debts. For example, priority debts are those that will result in some sort of loss if you don’t pay them. For example, you can’t do business without electricity. If you need your car for your business, then you must pay your car payment. Non-priority debts are those that don’t have as much power to get their money back, like personal loans and credit cards.
If you do end up behind on your payments, then you should take steps to deal with your creditor and make arrangements. Don’t just wait until they take action against you. Most creditors are willing to work with business owners because it’s less expensive for them and they are more likely to be paid eventually.
It also helps to have someone who can give you good business advice. Having a business coach or other business service expert can help you sort through your budget, make payments where they are needed and cut items from your budget if you can afford to sacrifice them. No business owner can afford to be on their own in the world of business. There are just too many variables that you need to be aware of.