Have you ever gone to the supermarket, bought what seemed like a moderate number of low- to medium-priced goods, and been surprised at how high the total was at the till? (This happened to me all the time. It’s why I quickly embraced the Scan As You Shop units when they came out.)
Things add up without our noticing, especially low-ticket items. We place a lot of mental weight on high-ticket items, but we can easily end up with many little things that add even more than that. Not always, but it happens.
The average UK household spends £46 a month on 7 subscriptions. That makes an average of £6.50 per subscription, so each one likely draws no scrutiny, but if you needed an extra £50 a month because your rent increased, you might be able to put together the money from those subscriptions. In one of my entrepreneur groups, I recently saw one person pull together £200 a month by cancelling their unnecessary subscriptions to pay for a course they wanted to take.
Watch my video on this subject here, or read on below.
Where you spend your money and time will determine where you can succeed.
If, as a woodworker, you spend all your money and time on wood, tools, nails, screws, glue, and courses, then you could be really good at making things out of wood, but you won’t sell any of it. Even if you outsource the sales, you’ll still need to spend at least a little bit of time and money liaising with someone and paying them for their services.
If, as an entrepreneur, you spend all your time and money for a full year on courses teaching you how to be an entrepreneur, you’ll (hopefully) learn the ins and outs of content creation, pricing, ideal client avatars, copyright and trademarking, each of the social media platforms’ quirks, how to set up lighting for video, and much more. But if you’ve spent no time providing value to anyone, you won’t be making any money.
Always remember the golden rule of entrepreneurship: You earn money by providing value to others.
Planned changes in needs and priorities
Your business will be well-served by you doing some strategic planning periodically, deciding and revisiting what’s important to you at different stages. Personally, I find quarterly works very nicely for goals and planning: it’s long enough to see real change but short enough to light a fire under myself.
At different points in your business, you’ll have different needs and priorities.
For example: At first, you need to get everything set up. You’ll need to ensure you’re complying with all relevant regulations, that you’re registered with HMRC, that you have all the foundations in place. You’ll also want to build something online so people can find you. This could be a website, an Etsy shop, a Folksy shop, a Facebook page, an Instagram account, etc. Mix and match whatever’s right for you and your business.
Once all this is set up, you’ll want to get the word out about your business. This could take the form of advertising, publicity, putting out content, showing up at markets, networking, etc.
These two different periods have very different needs and priorities. If you spend money and time advertising in the first stage, it’s wasted: you aren’t yet ready to sell. If you don’t have somewhere built online for people to find out more and buy from you (or read what markets you’ll be attending and buy from you there), then piquing their interest doesn’t gain you any sales.
So, in this way, your business’ needs and priorities for your time and money will change at different times. You need to be able to know where your money and time are going, to know both:
- Whether where you’re actually spending these matches your current needs and priorities, and
- How to shift these when your needs and priorities change.
Suppose you are in the habit of being lulled by Facebook’s tempting “Boost Post” button and don’t think much of it because it’s only £5. In that case, you might be surprised by the invoice at the end of the month that shows you spent £100 on Facebook and Instagram advertising, especially if all the other overheads in your business are currently only £50/month. Yikes: you hadn’t planned on such a focus on advertising this month.
Setting priorities and keeping track in your accounts lets you avoid the emotional rollercoaster that can put you on – feelings of guilt, anger, shame, fear, and more can all come about from this scenario.
Instead, use your accounts to:
- See where your money is going, and
- Decide if that’s in alignment with what your current needs and priorities are.
If it’s not, change it.
Unplanned changes in needs and priorities
As well as regular planning, you can use your accounts to deal with the unexpected. This could be a good unexpected, like a course or membership you want to join that’s only open this week. Or this could be a less than good unexpected, like having to replace a load of material because your pet ruined it.
Either way, if your bookkeeping is up to date, you can find what areas you can afford to spend less on for a time.
Whether you’re reducing spending to meet an unexpected need, or just shifting spending around to meet new goals, the key is having well-kept accounts to base those decisions on.