Learning about business finances

I’ve been in business for a little more than two months, which is a blink of an eye in the business world. It’s encouraging to see my bank account balance creep up slowly. I move the HST and an additional 30% for taxes to a separate account so that I’m not at all tempted to touch it.

I’ve made a few purchases here and there, things to help me work more happily and effectively:

  • an extended battery for my laptop so that I can use it all day without looking for a power outlet
  • the Artrage Studio Pro drawing program
  • a few books to read and review

Those decisions have worked out well. I’m still flipflopping on the idea of getting a tablet, so I’ll postpone it until I meet some more of my other savings targets. Although I’m earning a decent income now, I plan to work on riskier, self-directed projects in a number of months. A good savings cushion will help reduce stress then, so I don’t want to get used to a level of expenses that match my current income.

I’ll try managing my business finances like the way I manage my personal finances. Because I’m still building up my business’ emergency fund, most of the income will go towards that. Some of the income will go towards an opportunity fund and other things, though, because it’s good to train myself to experiment within the context of the business.

What about long-term savings? I haven’t been adding to my investments because I’m not sure if I’ll need the money in the short term. Besides, I suspect I might be better off investing the money in developing my capabilities. Would I have a higher return on investment than the stock market, which has been up and down and sideways over the past few years? Maybe. I can probably hedge my bets by going half and half. I can’t time the market, but I can keep regularly investing in it and things will probably work out.

Many people struggle with managing irregular cashflow. If I fight lifestyle inflation and err on the side of caution, I think things will be all right. I’ll only be able to test this once I move into that pattern of work. In the meantime, I can get ready for it. Here we go!