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Working From Home Part II: Money

Last time I talked about setting up your own hours to make sure your work stays consistent and that you may be able to pursue a social/personal life. Today I would like to open the discussion up about money and how to manage it when you are setting out on your own. Please remember, I am no super success story. I am giving advice based on what I see as my downfalls in the past.

First things first, personal account and business account should be separate. It is basically a must because psychologically you have to develop that separation of which money is meant for your personal life and which is meant for your business to succeed. It can be too easy to get caught up in the thinking that you have to make a mortgage payment in 10 days so you will get this many clients and projects and then use all that money to pay your bills. At the end of the cycle you and your business are still left with zero and in all likelihood the cycle will continue.

I know because I fell into that cycle. You start to make decisions based on what you need personally and not necessarily what is best to help your business grow. This happens more often with people who have no money set aside or decide to dump everything just to make it out on their own. The money doesn’t come in instantly and there will be (trust me) a time where you being to panic and start to think you have to let it all go and take drastic measures.

This is bad.

When it comes to starting off and setting a salary I honestly don’t know what to tell you. Maybe you decide to simply base it off the percentage that your company is bringing in until you reach a stopgap. For example you promise yourself 60% of the revenue until you can manage to pay yourself $4,000/mo. I’m sure others reading this have better advice, but that is just me throwing out some ideas.

If you can conquer the time aspect of working for yourself and get over the hump of managing money then really the only other “tough” aspect of running your own business that you are looking at is actually getting business. I will take a look at that part next week.