You just landed your first sale – woohoo!
The clients are happy, the closing process went smoothly, and that commission check is burning in your hand. Your first instinct is to spend it on a celebration dinner, but is that the smartest move for your fragile, new business?
Before you go off and spend your hard-earned money, take a look out our proven system for setting you up for financial success starting with your first deposit.
Set Up Your Business Banking
It can be tempting to deposit that first check straight into your personal checking account, especially when there are bills to be paid! However, it is imperative that you get a bank account just for your business deposits. We recommend working with a community bank or credit union to avoid unnecessary fees, which is perfect for when you are first starting out.
Once you settle on the bank that will work best for your needs, make sure to have separate accounts that have different purposes. For instance, creating accounts for taxes and expenses will allow you to set the right amount of money aside. This makes it easier to track where the money is going and how much you have for each purpose.
Give Every Dollar a Purpose
Now that you know where your money is going, you need to determine how it will be spent. It’s easy to want to take home every dollar for your paycheck, but the reality is that you need to invest your money wisely. Developing a strategic cash flow system helps you understand how your money is being spent and the true health of your business. This will not only give you peace of mind, but will help you make the smartest decisions for your business, such as knowing where to cut expenses.
To determine how to allocate your funds, we recommend starting with an assessment of your business and creating target percentages dedicated to each of your core accounts. For example, you may wish to set aside 15% of every commission check for tax purposes and 50% for your take home pay. No matter what your percentages are, give every dollar in your business a purpose in order to minimize any financial gaps – and to give yourself a little room to celebrate!
Get Into a Routine
Consistency is key when getting into a cash management rhythm! Set aside time every month to review your numbers, do your allocations, and audit the financial health of your business. We recommend taking a look at this twice per month – particularly on the 10th and 25th. You may even consider working with your accountant or bookkeeper on this schedule as well. This routine keeps you in practice and will guide you in making the smartest investment decisions with your commission checks.
Ready to finally deposit that first commission check?! You earned it! Schedule your free consultation with our profit professionals to get started on the right foot today.