Money Management
Diagnostics
What stage do you think you’re at in the development of your business model? Diagnose and see the next steps to strengthen your business.
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You don’t yet have a method for tracking business income and expenses.
You don’t yet have a separate bank account for your business, meaning your personal and business income are mixed together.
You don’t yet know how to set a price for your product or service that makes sustainable profit.
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You hold onto receipts and track business income in a notebook or spreadsheet.
You’re exploring options for a business bank account separate your business income and expenses.
You have a rough of how much it costs to make your product or service, but still refining your margins.
Your business makes money some weeks and doesn’t other weeks.
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You’re consistently tracking all business transactions in a spreadsheet or basic software.
Your business finances are completely separate from your personal funds.
You’re beginning to project revenue and manage basic cash flow.
Cash flow isn’t resilient and business operates month-to-month.
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You’re using account software to track business financials and/or working with an accountant.
Your pricing reflects your costs and your margins aim towards profitability.
You’re able to plan ahead for expenses, seasonal revenue changes using sales data and projections.
Your business income is stable or you’re able to build its assets.
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You’re producing regular profit & loss, balance sheet, and cash flow statements to monitor business needs.
The business has enough cash on hand to support growth.
The business has credit or loans that it’s managing responsibly.
You’re working with an accountant or financial advise on strategic financial decisions.
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You can secure loans, lines or credit, or investor funding.
You’re using financial reports to guide growth, expansion, and long-term strategy.
You have financial controls in place.
IDEA STAGE - Focus on the following to get from Idea to Emerging:
Start tracking money coming in and going out of the business. Organize receipts, invoices, and any sales records.
Separate your business and personal finances–open a bank account just for the business
List all of the costs associated with your pfoudct or service (materials, equipment, your time, etc)
Test your pricing with customers
Make a few sales
Think about a way you can track where your money comes from. Which products, services, customers, or sales channels generate the most sales?
EMERGING STAGE - Focus on the following to get from Emerging to Sustaining:
Ensure you’re tracking business and income consistently – daily, weekly, every two weeks, etc.
Connect your business bank account to all of your payment platform to ensure your business income isn’t getting mixed in with your personal accounts
Set aside time each month to review your sales (income), expenses, profit (income minus expenses), and your cash on hand to help you make decisions.
Review whether your pricing truly covers your costs and leaves you enough money to pay yourself and your business goals (i.e. purchase a key piece of equipment in 6 months)
Try estimating what sales and expenses might look like next month or next quarter.
Set aside a position of profit (income minus expenses) when you can to build cash reserves.
SUSTAINING STAGE - Focus on the following to get from Sustaining to Established:
Create a budget for your business –annually or quarterly– that estimates revenue, expenses, and any big purchase you need.
Analyze your sales data to see when the slow and busy times are.
Build your business assets by looking for opportunities to create a rainy day cash fund, purchase equipment, build inventory, or invest in business systems.
Consider working with a bookkeeper, accountant, or tax professional
Set financial goals for your business and your salary
Digitize your income and expenses with basic software
ESTABLISHED STAGE - Focus on the following to get from Established to Growth:
Start building and maintaining cash reserves.
Identify where to improve margins or efficiency
Draft a plan for growth (if you envision growth)
Establish strong financial controls, such as approval procedures, inventory control, and regular financial reviews
GROWTH STAGE - Focus on the following to get from Growth to Scaling:
Maintain consistent profitability and financial performance
Develop multi-year financial projections
Keep financial statements current and accurate
Prepare for loans lines of credit, or investment opportunities
Questions to ask yourself:
Do I know how much money my business earned and spent last month?
Can I easily find receipts, invoices, or financial records when I need them?
Are my business and personal accounts, expenses, and income separate?
Do I know which products or services make me the most money?
Do I know how much it costs to make each product or delivery each service?
Am I pricing my products or services high enough to cover the costs?
Do I know how much cash my business has available today?
Do I have a financial goal for next year?
Do I know what investments would help my business grow?
If someone asked me how much money I need, could I provide a clear answer?
Could my business continue operating if sales slowed for a few months?
Do I have advisors or professionals I trust who help me understand my finances?
Do I regularly review my business’s financial performance?
Common Mistakes
Assuming you need software or a formal bookkeeping system before you can start tracking finances. Instead, start with a simple system and build from there. They key is building a habit.
Mixing business and personal money. If you use the same account for personal and business expenses, it will be difficult to assess the health of your business. Think of your business as an entity separate from you.
Focusing on sales instead of profit. Making a sale is exciting, but sales don’t necessarily mean a healthy business. Pay attention to your costs (expenses) as well as your sales (income) to assess whether the business is doing well.
Forgetting to save receipts, invoices, contracts, or bank statements. Create a simply system for organizing your records. You’ll be happy with yourself come tax season!
Setting your prices based on what other people charge or what feels affordable to your customer. If your price does not cover your costs, it does not matter how many sales you make.
Avoiding financial information. Some entrepreneurs feel uncomfortable with profitability, but as you get to know your business numbers, the less anxious you might feel about them.
Case Studies
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Marie Shawn Teasyatwho – she tracks income & expenses in a written ledger and works with an accountant to digitize those records. It’s a simple system that works well for her.
FAQ’s
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Marie Shawn Teasyatwho – she tracks income & expenses in a written ledger and works with an accountant to digitize those records. It’s a simple system that works well for her.
Change Labs Tools & Resources
Here you will find helpful resources including recorded videos, worksheets, templates or other relevant documents to accompany your business journey
Document Downloads
Profit & Loss example
Cash Flow statement example
Monthly income & expense tracker worksheet with instructions
Balance Sheet example
Cash Flow Projections example
Business Experts
Recommended Resources
Crowdfunding:
Kickstarter:
The best tool for launching creative projects and physical consumer goods.
Indiegogo:
Offers flexible funding models and is popular for tech startups.
Small Business Loans:
Kiva
Rooted Relative Fund
Navajo Small Business Credit Initiative
New Mexico Climate Investment Center
New Mexico Community Capital
Grant Funding:
Tribal Funding Registry
USDA
Local First AZ - has a listserv where they publish grants relevant to AZ-based organizations