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Budgeting Basics for Small Businesses · The Boujee Multipreneur

0:16
SPEAKER_00: Welcome back to the Bougie Multipreneur.
0:19
SPEAKER_00: I'm your host, Hilary Hushour Jones.
0:21
SPEAKER_00: I'd like to talk a little bit today about expenses, especially in our business.
0:26
SPEAKER_00: So if you haven't thought about this in a while, this is your little wake-up call.
0:30
SPEAKER_00: This is your reminder message.
0:32
SPEAKER_00: Put it on your to-do list.
0:34
SPEAKER_00: We need to start checking our expenses.
0:38
SPEAKER_00: I prefer to check mine once a quarter.
0:41
SPEAKER_00: I have in the past done monthly.
0:44
SPEAKER_00: So it depends on like your stage or your life in business.
0:48
SPEAKER_00: I have been in business over 17 years.
0:51
SPEAKER_00: So some things don't change drastically for me anymore.
0:55
SPEAKER_00: And quarterly works for me.
0:57
SPEAKER_00: If you are newer to business or you have struggled in the past, perhaps monthly would be better for you.
1:03
SPEAKER_00: But I'm going to talk a little bit about what I do.
1:06
SPEAKER_00: It doesn't mean like my way is the only way or the right way, just letting you know what I do, what has worked for me, what hasn't, and then how it's I've become successful doing this strategically over and over year after year.
1:20
SPEAKER_00: One of the biggest things I do is I check my credit card statements.
1:26
SPEAKER_00: Now, I do just as a heads up let you know that I do pay off my credit cards every month.
1:33
SPEAKER_00: I it's something ingrained in me, I guess.
1:35
SPEAKER_00: I never spend more than I make on my credit cards.
1:39
SPEAKER_00: So I'll never have a running balance for credit cards.
1:42
SPEAKER_00: I hate, hate, hate having to spend any extra fees on things such as interest.
1:49
SPEAKER_00: It is just a such a pet peeve.
1:51
SPEAKER_00: If I even have a$20 interest charge on something, I'm like, what is this?
1:55
SPEAKER_00: I don't like to waste my money because I want the universe to keep sending me money.
2:01
SPEAKER_00: I'm not going to waste it on stupid things like interest charge.
2:04
SPEAKER_00: Okay, I'll stop my rant.
2:06
SPEAKER_00: So I look at my statements for the credit card and I highlight things that are non-negotiable in certain colors.
2:14
SPEAKER_00: Non-negotiable meaning my fee, the fee is the fee.
2:19
SPEAKER_00: However, I also highlight things that could potentially be negotiable, such as you would think maybe the fee for the trash pickup and trash service would not be negotiable, but it is.
2:34
SPEAKER_00: And the thing that I did is I checked with another local trash company because I was like, why am I paying almost$200 a month on trash?
2:43
SPEAKER_00: Like, really?
2:44
SPEAKER_00: And I found a lower rate.
2:46
SPEAKER_00: So what I did is I took that quote from the new company and I contacted my current company and I said, Hey, they're gonna charge me$50 less.
2:55
SPEAKER_00: So either I can stay with you and you can lower, you can figure a way to lower my rate, or I'm gonna cancel my service today.
3:02
SPEAKER_00: So they, of course, were like, Well, you've been so such a loyal client forever, blah, blah, blah.
3:07
SPEAKER_00: And I'm like, Yes, so what are you gonna do for me?
3:10
SPEAKER_00: So they ended up matching that price.
3:12
SPEAKER_00: And you would think, wow, I didn't know that you could do that.
3:16
SPEAKER_00: I agree.
3:17
SPEAKER_00: I didn't know.
3:18
SPEAKER_00: And sometimes you don't know unless you ask.
3:20
SPEAKER_00: Now I think things like electric, gas, and water, those are probably set in stone.
3:26
SPEAKER_00: But what on your credit card statement could be negotiated?
3:31
SPEAKER_00: Another case in point are cell phone bills, right?
3:34
SPEAKER_00: How many of us have looked for like a different plan?
3:37
SPEAKER_00: Like, are you even using all the minutes that you have like been paying for?
3:42
SPEAKER_00: That's another thing.
3:43
SPEAKER_00: Last year I found out I wasn't using and I was overpaying.
3:47
SPEAKER_00: And I was like, you know what?
3:48
SPEAKER_00: I'm gonna switch to a different company.
3:50
SPEAKER_00: I had been with one company for 20 some years, and I told them the rate that I could get at a new one, they couldn't beat it.
3:58
SPEAKER_00: So I left and ended up getting like new phones for free.
4:00
SPEAKER_00: So sometimes like it is worth it.
4:03
SPEAKER_00: Come to find out, I get just as good a service, and I'm saving like$100 a month for business cell phones.
4:11
SPEAKER_00: So this is great, you guys.
4:12
SPEAKER_00: Like if you haven't looked into your cell phone lately, business or personal, that's another great thing to look at and see like where you could shave off some money from your your overhead every month.
4:25
SPEAKER_00: And you might think, oh, it's a lot of hassle or work, but again,$100 a month savings over 12 months, you've got$1,200.
4:34
SPEAKER_00: I guarantee there'd be something fun you can spend with that$1,200.
4:38
SPEAKER_00: For me, it would probably be a new Gucci purse, but I mean to each their own, right?
4:42
SPEAKER_00: You pick what you want to spend that extra money on.
4:45
SPEAKER_00: So back to the statements, highlighting what you can and can't change.
4:50
SPEAKER_00: Also, maybe highlight do you need this?
4:53
SPEAKER_00: Do you need this subscription to X, Y, and Z?
4:57
SPEAKER_00: I know for our office, we do use subscriptions to like Google for certain things, like storage devicing, you know.
5:05
SPEAKER_00: So the$1.99 per month that I spend on that is non like I can't do anything with that.
5:10
SPEAKER_00: So to me, I leave that one alone.
5:13
SPEAKER_00: But if there's something else that you have subscription on, I'm sure it's nothing like a magazine because no one gets those anymore for their offices, but there's probably something that you have a subscription on that you're actually not using.
5:24
SPEAKER_00: And you know, even if it's a$20 a month subscription, again, times 20, 12 months, look at that savings that you are making.
5:33
SPEAKER_00: So start looking at these credit card statements, highlight some expenses that you could potentially negotiate, highlight some that you just don't need and you just need to call and cancel it, and start working on that list, you know.
5:48
SPEAKER_00: Um, you could, like I said, do this every month.
5:52
SPEAKER_00: I tend to do it quarterly because some of my things just don't change anymore, and I'm not someone that signs up for a lot of subscriptions to things, anyways.
6:01
SPEAKER_00: So, however, little caveat, if you have your business coach on your credit card, keep them on because those business coaches are key.
6:12
SPEAKER_00: Why do you ask?
6:13
SPEAKER_00: Because I just happen to be also a business coach with HHJ Consulting.
6:18
SPEAKER_00: So just a little joke there though.
6:20
SPEAKER_00: Everyone keep their business coaches because we are worth our weight in gold, and you know it.
6:26
SPEAKER_00: Another great thing that I do with my money is that I allocate percentages to different free checking accounts so I can really see where my revenue is coming into.
6:39
SPEAKER_00: If you have read the book um about um like separating all your money and allocating your percentages, that's kind of like where I got it from.
6:48
SPEAKER_00: And I'm sorry the name of the book is escaping me right now as I look around my office trying to figure out what that name is, but I think if you know, you know.
6:56
SPEAKER_00: So I put all of my revenue into one account that I've labeled revenue.
7:02
SPEAKER_00: And just so you know, I do have like eight accounts total.
7:07
SPEAKER_00: So if this seems daunting to you, it is daunting, you know, do some more research about this.
7:14
SPEAKER_00: I'm just gonna quickly go over it so I'm more visual.
7:17
SPEAKER_00: If it was me, I would need a visual to have someone show me this.
7:21
SPEAKER_00: But essentially all my money goes into a revenue account, and then I know exactly the percentage or the dollar amount that I need per month to allocate to my operating expenses.
7:32
SPEAKER_00: So I have a separate account for that.
7:33
SPEAKER_00: So I might have things drawn out of here monthly, but this is also the same count I pay off my credit card with.
7:41
SPEAKER_00: I do the credit card just because I like the points, and I get so many free airline tickets per year by doing this that it's like a win-win for me.
7:51
SPEAKER_00: I have so much in overhead that I get it just, you know, the points are ridiculous.
7:56
SPEAKER_00: I have to keep doing that.
7:57
SPEAKER_00: And I use Amex.
7:58
SPEAKER_00: So if you are of the thought, like, hey, credit cards are bad, they're evil, don't use them.
8:05
SPEAKER_00: I agree if you get into credit card debt and issues, I agree that they're bad.
8:11
SPEAKER_00: But for someone like me, and hopefully you that can pay off your credit cards every month and just use those points, I think it's a win-win.
8:19
SPEAKER_00: So I allocate money from my revenue.
8:22
SPEAKER_00: Let's just throw this out there.
8:25
SPEAKER_00: Let's say 50% of my revenue every month needs to go to overhead.
8:29
SPEAKER_00: Okay.
8:30
SPEAKER_00: You could um once or twice a month, you could take the percentage of what's in that revenue account and move half of it over to your operating expenses.
8:40
SPEAKER_00: I also have a separate account for my payroll, and I have a separate account for taxes.
8:47
SPEAKER_00: I have a separate account for me.
8:51
SPEAKER_00: So one of my several businesses I have set up as an LLC, um, and then I get taxed as an S-corp.
9:01
SPEAKER_00: So I can um do like owner draws or distributions.
9:06
SPEAKER_00: Both of those words are about the same.
9:07
SPEAKER_00: So I have a separate account where I take a percentage of all revenue and I put it into another checking account that I can then disperse to myself every month.
9:19
SPEAKER_00: I do personally have a paycheck that goes out of payroll as the owner, um, all my staff and I get a payroll twice a month.
9:29
SPEAKER_00: And then pretty much, as most of you business owners know, most of it just goes to taxes for you, right?
9:35
SPEAKER_00: So I pretty much use most of my paycheck to go to taxes because I hate paying taxes at the end of the year.
9:43
SPEAKER_00: I know it's like a necessary evil.
9:46
SPEAKER_00: And since my husband does taxes, shout out to BF Tax Management.
9:50
SPEAKER_00: Uh, this is what has worked well for us.
9:53
SPEAKER_00: Nearly my salary goes towards taxes.
9:58
SPEAKER_00: But um, it's a low salary, to be honest.
10:01
SPEAKER_00: I take more in distribution.
10:02
SPEAKER_00: So when you work with a great accountant to help you decide how much you really need to take on a payroll and then push that money towards taxes, that works well too, because I would much rather get a uh return than pay a chunk of money at the end of the year.
10:17
SPEAKER_00: Am I right?
10:19
SPEAKER_00: So I allocate all that.
10:20
SPEAKER_00: And going back to the tax checking account that I have, uh, I have to pay taxes on like the business property taxes, right?
10:28
SPEAKER_00: And I also own my commercial building where my chiropractic, one of my chiropractic offices is in.
10:35
SPEAKER_00: So I allocate money every year to paying that tax too, because that's a big chunk.
10:41
SPEAKER_00: So I hate being like caught up in like, oh, now you owe$6,000, right?
10:46
SPEAKER_00: So I know exactly how much I'm gonna need twice a year, and I can allocate that correctly.
10:52
SPEAKER_00: So I love having the tax for that.
10:54
SPEAKER_00: I don't use my tax account for my personal taxes, and again, the way my business is set up, um, I'm still gonna be paying for that on the personal end is floating through.
11:04
SPEAKER_00: So depending again how you have your account set up.
11:08
SPEAKER_00: You know, if you're a C Corp, you might pay taxes differently than an S Corp or an LLC.
11:12
SPEAKER_00: So really love allocating money.
11:15
SPEAKER_00: If you want to learn more about this, reach out to me.
11:18
SPEAKER_00: I did like the whole webinar on this too.
11:20
SPEAKER_00: Be happy to just send you my YouTube link for that.
11:23
SPEAKER_00: I also am a big fan of like saving for expenses.
11:27
SPEAKER_00: So I have an account that's actually just a business checking account for expenses, meaning, oh, my roof has a leak.
11:36
SPEAKER_00: Now I'm gonna spend another$10,000 on that.
11:39
SPEAKER_00: Like you guys know, as a business owner, and especially if you own your own building, it's like always something, right?
11:44
SPEAKER_00: I like to have a good$10,000 sitting in this account because I feel like lately nothing is less than$10,000 to fix whatever it could be.
11:54
SPEAKER_00: So I always keep like a chunk there for what I call like um expenses for big items.
12:00
SPEAKER_00: Or if you are listening and you're a chiropractor like me, you know, if you need a new table, it's like at least$10,000, right?
12:07
SPEAKER_00: So I just try to like keep a savings of that.
12:11
SPEAKER_00: I do also, speaking of savings, I have a business savings account that actually makes interest on it because you need to have the like three months of your um operating expenses saved for in case of emergencies.
12:28
SPEAKER_00: So if you are the sole provider of your business and something happens to you or you get injured or sick, or you want to go to maternity leave for three months, you guys need to have all the exact amount that you would need for operating expenses saved up.
12:44
SPEAKER_00: So if you're not starting to save for your business savings, that now is a good wake up to remind yourself that you need to start allocating money to a business savings in case of emergency.
12:59
SPEAKER_00: Like I know that we all have that for the personal side, but don't forget, like business, you also need in a case of emergency savings.
13:08
SPEAKER_00: And some resources say three months and some say six months.
13:13
SPEAKER_00: To me, three months is a little bit easier to swallow, but I think anywhere in that three to six months is that mark would be good depending on your business.
13:21
SPEAKER_00: So look at what you would need to run the business, even if you had to hire someone to take over for you.
13:28
SPEAKER_00: I know it's kind of like gloomy thinking about like, well, what if I got injured?
13:33
SPEAKER_00: Or, you know, what if I was skiing and I fell and broke both of my arms, or what if I was in a coma?
13:38
SPEAKER_00: I'm just saying, like, I don't want to be negative because I don't want that stuff to happen.
13:42
SPEAKER_00: So go away out of the universe.
13:44
SPEAKER_00: But in case of emergency fund, I would say three to six months.
13:49
SPEAKER_00: So I definitely have that one set aside, separate earning interest and allocating money to that.
13:55
SPEAKER_00: And even let's say you're thinking of this and you're like, Hillary, this is a lot of money.
14:00
SPEAKER_00: I'm I'm just breaking even at as it is.
14:02
SPEAKER_00: You know, what's 1%?
14:05
SPEAKER_00: I don't know, could you allocate$100 a month to start with or whatever it is that you can do, but definitely start somewhere.
14:12
SPEAKER_00: Um, I think the worst thing is to have the attitude, I don't make enough money, I can't do that yet.
14:17
SPEAKER_00: Yes, you can.
14:19
SPEAKER_00: You can put away$25, or you can put 20, you could put 100, you could put a thousand.
14:24
SPEAKER_00: So start saving for the long-term uh business savings, the three to six months then if you are like me and you always have something that crops up in your business, like a roof leak, or you need a new piece of equipment because something's died, or uh, you know, have another account set aside for that too, just so you know that that money is there.
14:48
SPEAKER_00: So, case in point, I've had like this huge roof issue.
14:51
SPEAKER_00: It's been years.
14:52
SPEAKER_00: Anywho, I don't know how much I've dumped into this roof.
14:56
SPEAKER_00: I'm gonna guess 50 to 100,000, literally.
15:00
SPEAKER_00: So I keep saving these money for this roof issue.
15:03
SPEAKER_00: I literally could have probably just bought a new roof by this time, but in any event, I've learned a lot about roofing in case you guys want to know.
15:12
SPEAKER_00: So save the money for that.
15:13
SPEAKER_00: That way, when it happens, you know, this year when they're like, hey, it's gonna be$9,990.
15:19
SPEAKER_00: I was like, you know what?
15:20
SPEAKER_00: I okay, let's get that started soon, because in the back of my mind, I knew I had 10,000 sitting there.
15:26
SPEAKER_00: And so it's just nice not to have to stress out about that, right?
15:30
SPEAKER_00: Uh life's too short to be stressing.
15:32
SPEAKER_00: I would rather be allocating money correctly and putting it aside.
15:37
SPEAKER_00: Um, it also really helps you keep track of things.
15:40
SPEAKER_00: You know where your money is going.
15:42
SPEAKER_00: So at the end of the year, you're like, you know, I made a half a million dollars.
15:47
SPEAKER_00: Where'd that go?
15:48
SPEAKER_00: You know exactly where it went because you've been allocating over the year and showing where these things went.
15:54
SPEAKER_00: Um, another thing that I wanted to talk a little bit about is uh some people, my clients have asked me about like line of credit.
16:03
SPEAKER_00: Should they get that?
16:04
SPEAKER_00: Should they use a line of credit for anything for the business?
16:07
SPEAKER_00: I think it's a good idea to be able to access that in case of emergency, in case you don't have that in case of emergency set aside.
16:14
SPEAKER_00: You know, how quickly and easily are you going to be able to get the line of credit?
16:19
SPEAKER_00: And then there's also like the thing where people say, should I have liquid cash or should I spend everything and or and or only spend what I have?
16:32
SPEAKER_00: Meaning, um let's say you wanted to buy an investment property, and I'm kind of speaking from experience.
16:41
SPEAKER_00: If I've spent only the money that my business has made and I never used any line of credits, then I maybe wouldn't have as much liquid cash.
16:52
SPEAKER_00: So I, you know, could I spend, you know, 50,000 for a new roof if I wanted to use up all my savings, but I don't want to use savings because I want to keep that liquid so that way when I need 50,000 and down payments for a new commercial building or a residential property, then I have that.
17:13
SPEAKER_00: So then I can get a loan and then I can use, I can start renting that out and making more money, more passive income.
17:19
SPEAKER_00: So there's just two schools of thought.
17:21
SPEAKER_00: If you're someone that is going to want to buy a piece of property or something and you need money for a down payment, I would not personally use up all my liquid cash.
17:32
SPEAKER_00: I would start using things as like a line of credit for to pay for something big.
17:37
SPEAKER_00: So there's different ways to look at it.
17:40
SPEAKER_00: I can't say that I know the exact way.
17:42
SPEAKER_00: It really depends on your situation, but just something to think about.
17:46
SPEAKER_00: Do you want to use up all of your cash and all of your savings for something for the business?
17:51
SPEAKER_00: Or should you get a line of credit to pay for a big chunk of business expense?
17:56
SPEAKER_00: Something to think about, just you know, putting some two cents in there for you, especially if you're someone like me that likes to invest in have investment properties and things, you need some liquid cash to put down payments on.
18:09
SPEAKER_00: And as a reminder, I love paying off credit cards.
18:12
SPEAKER_00: And there's two schools of thoughts about that, too, that um, you know, that helps you with your credit, etc.
18:19
SPEAKER_00: I've heard a lot of different rules.
18:21
SPEAKER_00: This is just me.
18:22
SPEAKER_00: It's my how I was raised.
18:24
SPEAKER_00: You pay off your credit cards or you don't put it on there, especially with those high interests.
18:28
SPEAKER_00: I hate getting charged for things.
18:31
SPEAKER_00: And um just just today, like all my checking accounts for business and personal.
18:36
SPEAKER_00: I mean, I have 10 to 12 probably combined checking accounts that are all free.
18:41
SPEAKER_00: And every time I see a service charge, I reach out and I say, What's this$20 service charge for?
18:46
SPEAKER_00: Because I don't I want to make sure I can avoid getting any service charges.
18:50
SPEAKER_00: I don't like paying for things for nothing, even if it's like, oh, it's just$20.
18:55
SPEAKER_00: But I've worked hard for that$20 and I want the universe to bring me more money.
18:59
SPEAKER_00: So I'm going to show and tell the universe right now that I want large chunks of money, preferably$100,000, dropped effortlessly into my lap.
19:09
SPEAKER_00: And I will not waste the money that is given to me on service charges and uh frivolous things.
19:16
SPEAKER_00: So except Gucci, I will waste my money on Gucci because I deserve it.
19:21
SPEAKER_00: Thank you again for listening to me on the podcast.
19:25
SPEAKER_00: Stay tuned for more.
19:26
SPEAKER_00: And you can find me on Instagram, Hillary Heshour Jones, Facebook, YouTube.
19:32
SPEAKER_00: I'm all there.
19:33
SPEAKER_00: And it's um website is hhjconsulting.com.
19:38
SPEAKER_00: Have a great day.