Want to make next year’s annual expenses easier on the monthly budget? You can protect your monthly income by starting what I call a “Cyclical Fund” (C-Fund). When you start your Cyclical fund, you will deposit a smaller amount each month towards these costs and save enough over 12 months to have all of them covered when they come due! The alternative is what most of us do now, having to pay the large bill is all at once out of one month’s income. That can be very stressful and hard on your monthly spending plan!

3 STEPS TO START A CYCLICAL FUND:

1. MAKE A LIST OF ALL YOUR NON-MONTHLY EXPENSES. INCLUDE THE THINGS THAT RENEW QUARTERLY, SEMI-ANNUALLY, AND ANNUALLY. MOST BUSINESSES HAVE ABOUT 5-6 OF THESE. THINK ABOUT:

    • Business and professional license renewals
    • Subscription renewals for things like software
    • Membership fees
    • Annual domain and website renewals

2. TOTAL UP ALL OF THESE EXPENSES AND DIVIDE BY 12. THIS IS THE AMOUNT OF YOUR MONTHLY DEPOSIT.

3. SET UP AN ACCOUNT AND MAKE YOUR FIRST DEPOSIT. 

Do not open a savings type account if you will make frequent withdrawals to pay these bills as they come due. In the US, “Regulation D” limits the amount to free transfers or withdrawals to six each month. Then the bank can charge a fee for every subsequent withdrawal.

 

 

 

These 3 steps are a surefire way of starting and growing your cyclical funds!

It’s so easy to get frustrated when we forget when the annual bills come due, and of course, they still come due.  Start your Cyclical Fund to put a little away each month to cover what you will need. The stress is really reduced when the amount you need for an expected expense isn’t squeezed 100% from the same monthly budget.  Take time this week to sort this out and you will have a jump start on next year’s renewals.

There’s still time to join the  Q1 2021 Income and Profit Planning Intensive Session to have an actionable plan for your business offers, income, and profit through March 2021.

Visit this  link to register,  the next workshop is on December 12th.

 

Q1 2021 Income and Profit Planning Intensive Session

 

I don’t like the word, “budget.” I think it seems restrictive, and many people agree. Prefer to use, “the spending plan,” because you are truly free to decide how to spend. I find, however, the monthly spending plan causes some real stress for people. Sometimes it is the idea of planning out the money (particularly before it’s made) and sometimes it’s the feeling that your plan must be perfectly executed to be any good. BUNK. Having an idea of what you will spend, and when, makes it easier to make decisions. Because you have set a limit. A written limit. Your spending plans. And the plan is designed to be dynamic. As dynamic as your business.

 

Having an idea of what you want to spend every month in different areas of your business is smart. It’s way too easy to just hand over the debit or credit card without counting how the amount you spend reflects on your overall business income and expenses. You are in business to make money and earn a profit. You have to have a plan for your spending.

 

Know what You Will Spend and Write it Down.

 

Think of you spending plan as a helpful guide. Beyond the expenses in your breakthrough number (the four walls), you should consider your spending in other areas, such as your marketing, projects, supporting persons (not employees), and business processes. Creating a marketing budget, creating a budget for contractors, and a budget for things like accountants and payroll allows you to make decisions throughout the month on where to maybe spend more, or where to cut back.

 

How much you can afford to spend will be something you need to work out based on your business’s goals and income but have numbers down. I’ve seen one too many businesses hire people or launch a campaign and then run out of money before things could be completed. Because they bought into what sounded awesome, not what was really affordable at that moment in their business.

 

Plan to Make Changes Throughout the Month

 

Guess what? My spending plans RARELY go unchanged throughout the month. Typically, at least one thing changes. Maybe I made a small investment into a resource or course that became available. Or I decided to move a project forward sooner than planned because of an opportunity that I wasn’t expecting. The thing is, having a written plan allows me to make those decisions.

 

Unexpected changes are, well, to be expected. When you have your plan in front of you have a baseline. Then consider what comes up. You can ask yourself, “Can I afford this? Is it moving us towards the vision? Does this work better now or later?” Your answers will then guide whether you want to spend now or not. But with a good written plan you will already know what money has been allocated, what’s left, and how much extra has come in the door to guide you.

If you need some guidance in creating your spending plan, and getting your business money stuff straight and stress-free, join me in the live Profit 101 course starting July 1st 2020. For more information on what we cover in the course, including the six pillars of your business money, visit https://entremoneycoach.com/profit-101 . Doors close on June 30th.