An article from The College Investor, How To Run Your Personal Finances Like a Business, was referenced in one of the blogs I read daily. I absolutely LOVE the concept because one of the things I learned early while in the MBA program at Case Western Reserve University is that what you learn is not just for business; it can and SHOULD be applied to your personal life as well (Finance, Economics, Accounting, etc.). On a daily basis we do the same types of things corporations do: we find ways to earn income and analyze our expenses (operating costs). We also plan for “life events” like saving for a house or buying a car (long-term, strategic planning).
Businesses have full-time people dedicated to analyzing their financial position. On a monthly/quarterly/yearly basis they generate financial documents, like income statements (explained below) and have formal review sessions to gain insight/understanding into how they performed against the plan and how it positions them for the future. How often do you review your financial position? Not just what you spend last week but also your 401K, insurance policies, stock growth, rate of return on your savings account? There is SO much to learn (which I also love) and I’m diving in head first with resources like Early Retirement Extreme and Smart Women Finish Rich.
You MUST use Mint. It automates a lot of mundane tasks for you – the same types of tasks businesses pay software engineers to develop for them so they can focus on value-added tasks like analyzing trends, comparing year over year expenses/revenue, etc. Mint calculates your monthly net income (income – expenses) automatically on a monthly basis. Access-anywhere (mobile, desktop) templates like Google Docs work well also. (I happen to use both, for different purposes).
The article details 5 steps to running your personal finances like a business:
Create Income Streams
Slash Your Operating Costs
Pay Your Employees First (i.e. yourself)
Insure Your Risks
Make Your Money Grow
Fine Tune Your Systems
Think Long Term
If you come across unknown terms or phrases as you read through this material, you can use resources like Investopedia, iTunesU and even Google Search to gain a better understanding. Take it slow and don’t give up!
Happy Financial Planning!
Ask Bri via Facebook: Can you walk me through the steps of getting a business licensed. Thanks in advance! (Texas)
Thanks for your question! Surprisingly, the process is fairly easy, but you must educate yourself before you begin the process to be sure you understand the legal and tax implications. Let’s assume you already have an idea for your business: one that is specific in purpose and has a target audience.
First, give considerable thought to your business name and get feedback! Begin with the end in mind: people will need to locate your business on the web and let’s be honest, no one wants to type victoriashairandnailshoponline.com. Think about what your website name will be and use this tool to see if the domain/website name you desire is available; but, do NOT purchase it (more on this later). If you come up with a great idea but still need more time, you can reserve the name with your Secretary of State but it’ll cost you a little.
Next, put your tax dollars and mouse to work. You need to get facts from a trusted source. Someone you already pay to work on your behalf. That trusted source is the Small Business Administration (SBA). Their website is packed with information, resources, guides, templates and more. Watch the video to get an introduction to the SBA, then spend 30 minutes taking this online course: Young Entrepreneurs An Essential guide to Starting Your Own Business. Module 2 covers six basic steps you must take: 1) Have a plan 2) Get assistance 3) Find a mentor, 4) Decide on a business model/structure 5) Finance your business 6) Register your business. The SBA has local offices all across the country. You can even locate a course in your area to see what courses and resources they offer.
Be sure you understand the options for business types! The graphic below provides a high level overview but always use the IRS’s designations, found here, as the ultimate authority. The LLC is a common option because of the personal protections, so start there and use process of elimination for the others. Know that if you decide on a LLC you must have the those letters in your business name (i.e. Bri ALys, LLC).
When you are ready to file, it must be done with your Secretary of State. (Texas, Georgia, Alabama, Ohio). Getting a business licensed is as simple as filling out a form and paying a fee. There are no other requirements and filing online is much quicker than snail mail. Fees vary by state but typically are only few hundred dollars or so. Once it is approved you’ll get a certificate in the mail and you’re ready to go!
Once you have your certificate in hand (and only then), establish an online presence. Few tips here:
Create a single logo to use on Twitter/Facebook/Instagram to help get the word out about your product or service. Use Word, PowerPoint, or whatever tools are at your disposal and mock-up a design, something you like.
There is no reason for you to create a website that you can’t manage and update yourself. You can create a FREE blog that looks just as good as any website and there are hundreds of design options, see TechCrunch. Bri Alys is also a BLOG! With most blogging platforms like WordPress, you can buy your own domain/website name, add email and pay a nominal fee to remove ads from your site. I like WordPress because they also have Mobile Apps. Total cost: <$100, a little time and creativity.
Create your own hashtag (think #selfie) so that when you post or advertise on social media, your content is easily discoverable. We use #brialys. You can also use other common phrases that associate with the content of your post (i.e. #women #tech #business)