If you have a dollar and a dream, this one is for you!
This post is for my friends with a dollar and a dream. For the person who really wants to start, promote, or elevate their business on a tight budget. To be clear, I DO think you need to spend money to make money. If you are spending money that leads to growth though, what you’re really doing is investing in your business. Depending on how much money you have to invest, there are certain things you can do on your own or do without.
With that being said, the first step is creating an expense budget for your business. I’d recommend using the Profit First model (this model says you should only spend 30% of your revenue on expenses). For example if your revenue is $1,000/month then your expense budget should be $300/month. Now if you still aren’t making revenue, then use your targeted revenue to make your budget, for example, if you’d like to be making $300/month, budget your expenses at $90/month. I like this method because it’s simple and it helps keep expenses low.
What categories should you include in your expense budget?!
There are 3 major areas that entrepreneur and star of The Profit, Marcus Lemonis, says he focuses on in his businesses — people, product, process. I’m going to add two more— marketing and branding. Again, your budget will determine how much can go towards each of these 5 categories (if anything at all)).
Dos and Don’t when the budget is tight.
Hiring people could speed up your progress and free up some of your time to do more important tasks than the task at hand (e.g admin work, social media posts). The problem is that the budget might not allow for additional staff or even consultants. For this category DO use contracted workers for special projects when necessary. For example, occasionally hiring a photographer for professional pictures of a new product could be worth the one time expense. DON’T hire additional staff or ongoing consultants until your budget allows.
Process refers to all the administrative tasks and tools you use to make your business run well. This includes things like your scheduling system (if your business is service based) or your website. DON’T just sell your products or services for free on social media without purchasing a website. You don’t own anything on social media and you could lose all your followers (and sales) without notice. DO create your own website to protect yourself from losing your potential clients and revenue streams. DON’T use a free website. The free version will not let you use a unique domain and will likely include a watermark on your website. This gives your brand an amateur look and decreases credibility. Besides, websites are relatively inexpensive— you could sign up for a Shopify store right now for as little as $9/month. DO use other free tools, such as email marketing subscriptions and scheduling systems, when you are first starting out. DO upgrade once your income increases.
If you are a new business owner, you need to make sure your products are good quality and something that your customers would recommend to their friends and loved one. DO research supply costs for your specific product and compare that to the market value and your budget. DON’T select cheaper materials that will cheapen the look, feel and application of your product and disappoint your customers. DON’T be afraid to spend a little extra making a really great product, especially since word of mouth, reviews and recommendations are still the best ways to sell products and services.
Since we are talking about spending in this post, marketing in this context is paid promotions i.e ads. It is important to be strategic and intentional about your marketing strategy, especially on a tight budget. The U.S Small Business Administration recommends spending between 7-8 percent of gross revenue on marketing, however, most of the available research shows that small businesses spend just around 1%. No matter what your marketing budget is, you want to make sure each dollar is working hard to make you a sale. DO take your time learning about ads management. DO make sure you understand how to read your ads data and how to adjust your ads for maximum return on investment. If you’d rather not learn how to manage ads, DO hire an ads specialist. If you don’t have the budget to hire a specialist, DON’T run ads. Ads are dynamic and their effectiveness can change over time, so it is very important to learn how to set up and interpret your ads or hire someone who can.
Branding refers to your graphics, your designs, your business’ overall esthetic. There are several tools that offer free templates for creating an appealing and cohesive brand. DO start off using free tools like Canva to create your graphics and other designs. If you have some funds, DO use services like Fiverr or 99Designs to hire a one time, inexpensive designer that can create a brand kit for you to use in all your graphics. DON’T hire ongoing designers until your budget allows.
In the end, you can run a successful business with very few expenses— just keep in mind that if it doesn’t cost you money, it will likely cost you time. From the five categories mentioned, you can save the most money on people and branding. I’d recommend spending a little bit of money on process, especially on creating a professional looking website and an email capturing system. And finally, you should spend the bulk of your money on making a phenomenal product and on making effective ads that will convert.
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Cat Marte is a Small Business Coach + Social Media Strategist who helps success driven people launch and grow their small businesses using online marketing strategies. Book your free introductory call today.
When it comes to money, I have two goals: build wealth and pay off debt. To achieve these goals, my money is calculated down to the last dollar. You want to know what I didn’t calculate for? Coronavirus. The only other time I’ve been around for a major recession I was 16 years old. This time around, when the recession inevitably knocks on our door, I’ll be kicking myself for not planning.
They say (they being the “experts”) that you should have at least 3-6 months of living expensive in your emergency fund, yet according to the financial site MagnifyMoney, of the Americans who have savings accounts (because many don’t) the median savings is $4,960. In other words, from the 50% of Americans who do have a savings account, only 50% of those have over $4,960 in their savings, or in other, other words, about 75% of Americans have fewer than $4,960 in savings. Not only do I not have $4960.00 in my savings, but that amount would only cover my expenses for a month and a 1/2—maybe…
Let’s do some math
I make $50K a year in my regular 9-5. After taxes I make $3K a month. Unsurprisingly, I have a ridiculous amount of debt, starting with student loans. Here’s the breakdown:
|Income to Debt Ratio|
|-Credit Cards (Minimum payment)||$137.00|
After I deduct all my fixed expenses I’m left with $658.00 a month. Of those $658 I also pull some out for sinking funds, my Acorn account, and unexpected expenses (I’m looking at you medical bills!). So really, I’m looking at around $350-$400 a month, you know for food and gas and basic day to day survival. Not really sure where I’m suppose to pull emergency fund savings??
In the name of transparency, I am “saving money” through my 403(B) retirement plan, my Acorns investing account, my Capital One 360 CD, but none of these channels are easily accessible (which is how I like it!) and would not be quick and easy ways to get a hold of money should there be an actual emergency.
Let’s be real, I never really gave it much thought! If you think about it, my goals are focused on the future (building wealth) and on the past (paying off debt), but if I don’t start focusing on the present, any little thing could annihilate all my financial goals. This really hit home when $h*t hit the fan with this pandemic. We are at such a vulnerable time right now, whether it’s our job security or our health on the line, it’s so important to be prepared.
What Can I Do Now?
Not knowing what the future holds, I’m definitely going to take some measures to prepare for the worse. Based on the information I know so far, I plan on 1. Calling my student loan provider and halting my student loan payments. Because the Federal government announced it would freeze interest on federal student loans, you can temporarily go into emergency administrative forbearance without penalties. Doing this for at least 2 months will save me $400.00. 2. I am going to call my other loan providers for my car note and my personal loan to see what I can do to halt or lower my payments during this crisis. 3. I am going to throw that “stimulus check” right into my savings account.
The Bottom Line
I’ll never forget the 2 years my dad was unemployed during the 2008 recession. For me, planning and thinking ahead is a great was to reduce anxiety about the future. Reducing or postponing those 3 payments could help me build up a small emergency fund of $400.00- $1500.00 for the ghost of recessions to come. It also makes me feel proactive and productive during these times of uncertainty and unrest. Other things to consider are calling your credit card companies, internet provider, cell phone provider, and any other services you pay for to see how they can help. It may sound clique at this point, but we really are all in this together and I’ve found in my experience that companies are usually willing to work with you, especially during times of universal turmoil.
I’ve been obsessed lately with YouTuber and skincare enthusiast, @susanyara, and her channel Mixed Makeup. She’s constantly talking about the importance of self-care and feeling good about yourself. I have to say, I’m here for it. As someone who has always loved makeup and skincare, I was a bit hypocritical of people like Susan who spend ALOT of money on products and services that the “average” person would consider high end. Now I see that my perspective was too narrow, Susan says all the time on her channel, “If you can afford it, then why not? There’s nothing wrong with wanting to feel luxurious.”
I agree and disagree with that statement. Sure, if you have enough money and are financially secure enough to purchase the most high end, luxurious products for your own self-care, then why not? But I also don’t think it’s wise to go off spending on unnecessary luxuries just because. It’s one thing to buy a very expensive product that really works and a completely different thing to buy something fancy because, say, it smells nice. The latter, in my opinion, is mismanagement of funds.
Now, for us less lavished souls, self-care is obviously still important, and it’s not just about looking good. It’s a psychological phenomenon; when you look good, you feel good, and when you feel good, your entire outlook on life is positively effected. Not only that but taking care of yourself from the inside and outside creates a ripple effect that motivates you to also eat better, be more active and, vis versa.
Fitting it into the Budget
Unfortunately most of us cannot afford a $120 moisturizer or an out of pocket visit to the chiropractor. What we can do is budget, plan and adjust to our needs. For example, it is recommend to get a professional teeth cleaning every six months, but what if you don’t have insurance or your insurance doesn’t cover dental? It is also recommended to get monthly facials and to work out frequently. How can we fit everything we are “suppose” to do into our busy schedules and, most importantly, into our tight budgets?
If we had all the richest, then why not? The harsh reality is that we don’t, and yet, it’s still important to do something for ourself in the form of self-care. I like to pick at least three things that are important to maintaining my self-care routine while not breaking the bank.
This one I have trouble actually doing and it’s the one that’s the easiest to do because it can be virtually free. The problem with working out at home for free is that I am not motivated to do it. When I know my hard earned money is involved, I am more prone to working out. First I find the most affordable gym in my neighborhood, my current gym is $24/month. Then I calculate that if each work out is less than something unhealthy that I’d rather be doing, my money is being well spent. For example, a medium dirty chai latte from Starbucks coffee is about $6. In this case each workout should be less than $5, meaning I’d have to go at least 5 times a month or about once a week. This is a realistic goal I can reach and it keeps me motivated to at least justify me spending $24/month on the gym instead of something unhealthy like chai lattes. This doesn’t necessarily mean I would have spent those $24 on Starbucks instead, it’s just a little Jedi mind trick I pull on myself to get motivated.
Skin Care Products
Skin care has always been important to me, but never to the point where I wanted to spend a ton of money on it. Now that I have more wiggle room in my budget, I’ve been putting more effort into it. I keep this expense in check by first, making a very educated purchase. If I am going to put the big bucks into a skincare product, I want to make sure I am buying the right thing for my skin type and needs. I will thoroughly research products before purchasing them. Once I find the right product, I won’t buy right away! I will fit the purchase into my next paycheck’s budget, or the one after that, depending on the price. I don’t generally do this with all my purchases, but if it’s a big ticket purchase (anything over $30) then it’s worth budgeting for.
Some people might regard dental cleanings as an obvious “must,” but as someone who did not have insurance for a while and couldn’t really afford a visit to the dentist, dental cleanings were more of a luxury. I am fortunate enough to have insurance at this point, the problem is that my teeth are very weak and all the time I didn’t get cleanings did me no favors. In fact, my dentist recommends I get dental cleanings every 3 months instead of every 6 months. Because this is a top priority for me, I make sure I budget for the 2 extra cleanings that I need to pay for out of pocket. The key here is planning ahead. Once I book my next cleaning, I know it will be an extra $60 out of pocket, so I can can either save up for it in the three months leading up.
Like Christmas or vacation or any other big expense, the best way to incorporate self-care into your budget is to plan for it. In my (limited) experience, impulse shopping, poor planning, and throwing your money into things you aren’t committed to, can be your downfall. When your budgeting, sticking to just the essentials is the goal. Start by considering self-care an essential, then prioritize your top self-care needs and incorporate those into your budget.
I thought it was just me until I saw this post on Instagram.
Lately, I’ve been feeling like it’s “all about the money” and I know that in this #debtfreejourney it is, in a sense, yet, I wholeheartedly believe it shouldn’t be.
Just because you want to build wealth, save for a major purchase, or eliminate debt, doesn’t mean you lose sight of everything else in your life.
It’s about balance right?
When I was younger, I used to love reading and as I got older, I substituted reading for going out with friends, movies, and other expensive habits. Once I began my #debtfree journey, I picked up reading again, because (surprise!) it’s free. It’s something that I thoroughly enjoy and it’s absolutely free; you can go to your local library and get practically any book you want in any format you want for free!
Another hobby that I love is writing…this is also free. And it’s creative and engaging and thought provoking…
But what about the not- so- free hobbies that we love?
In the comments section of that Instagram post, I saw a girl saying, “millenials haven’t lost hobbies, we’re just broke.” But oh dear stuff.sam.makes, those are just excuses. As Robert Kiyosaki explains in his prolific book, Rich Dad, Poor Dad, it’s all about perspective. The Poor Dad is dismissive and defeated, “oh it’s too expensive, I can’t afford it,” while the Rich Dad is determined and optimistic, “It’s expensive, how can I afford it?”
It’s all about perspective and intentionality. If there is something you truly enjoy doing, not only do you have to figure out how you can get it done, but also be intentional about getting it done.
Prime example; I really enjoy yoga. Yoga, as you may know, is a pretty expensive hobby (around $120 for monthly yoga membership in the DC area), but I make it work. First, I don’t have a monthly membership, instead, I buy class pass bundles and also supplement with doing yoga at home following some of my favorite YouTube yogis.
The Bottom Line
Finding ways to do things you love (and keep you grounded) is really important. We live in a world that has increasing choices to accommodate all budgets. Do you love to swim? Find yourself a public pool, or join a gym. Want to learn how to paint? Search for free classes at art museums or the library. Enjoy political debates? Join a politically focused meet-up group. Whatever it is that you like to do, find a way to do it, life’s not just about making money and paying down debt.
I’ve recently started a #debtfree journey, where I’ve mapped out how I will pay off my debt (aka student loans) and become financially free. Related to this, Chapter 5 of the Happiness Hypothesis by Jonathan Haidt, is appropriately titled, The Pursuit of Happiness, wherein, he discusses our often misguided pursuits of wealth, fame, recognition, etc.
People who report the greatest interest in obtaining money, fame, or beauty, are consistently found to be less happy, and even less healthy, than those who pursue less materialistic goals.Dr. Haidt, Happiness Hypothesis
Further in the chapter, he explains how Western culture, and particularly American culture, strives to achieve status and perceived happiness, more than we actually strive for happiness. According to the book, this is why we (Americans), would rather take less vacations and make more money, instead of taking more vacations, make less and, subsequently being happier. Essentially, it’s always been about Keeping Up With the Jones (or the Kardashians??), it’s about one upping your competition and gaining power and influence.
I think we can all agree wanting to be powerful and influential isn’t a bad thing, in and of itself. The problem is that power and influence are mistaken for happiness. We think that when we are rich, or when we are famous, or when we rise in social status, we will be happier, yet, this is almost never the case.
Should we all renounce our materialistic ambitions?
It’s important to note, while money does not buy happiness, necessarily, it does offer piece of mind. Dr. Haidt mentions this briefly as he notes, “once basic needs are met, money simply cannot buy additional happiness.” The way I understood, “basic needs,” is a state where you have enough money to cover your bills and your rent or mortgage, have food on the table and, money left over for other basic needs (i.e gas, clothes, diapers, etc). What does that mean for someone living paycheck to paycheck? Or someone struggling to save, or someone like me whose “basic needs” are met but also lives with crippling debt?
I do agree with the general idea “money can’t buy happiness,” however, we need to revise the notion that “once basic needs are met” we will not gain anything from having a few extra coins in our pockets. Using myself as an example, I have a middle class income; I live alone; I follow all the “best practice” advice on how much I should spend on rent, groceries, etc, I have plenty of “spending” money, and yet, I have crippling debt. Yes, all my basic needs are met but I live with consent anxiety over my never ceasing student loan debt.
Once we’ve reached financial freedom, money simply cannot buy additional happiness.
This brings us to the idea of financial freedom. Being financially free is a state of living where you are not tied down, anxious, stressed, or worried about your financial status. In todays world, where things like credit card debt and student debt has had a negative psychological effect on so many people, it is safe to say that meeting our “basic needs” is no longer enough.
Instead, we need to be proactively educating ourselves on financial literacy, and how we can control money so that it does not control us. To Dr. Haidt’s original point, this is not about Keeping Up with the Jonese, this is about an internal practice that will improve our daily lives, offer peace of mind and, reduce stress and anxiety—all which can lead to a happier life.
There is nothing wrong with wanting to improve your financial situation, especially if it is the cause of stress and anxiety in your life. The key is to have intentionality; what is your true motive for building wealth? Is it to become financially free? To save for the future? Note these are all “behind the scenes” goals— no one will know how much money you have saved or that you are debt free just by looking at you. In turn, if you want to build wealth to buy fancy things, or to show it off to your friends, then you are in it for the wrong reasons. Yes the wealth may bring you influence and power, but the pursuit of wealth, will not lead to happiness. It may very well lead to unhappiness. This is something we should fully understand and accept as true before making sacrifices to build wealth.
This post is part of the Happiness Series. View more posts from this series.
Check out Dr. Haidt’s book site: Thehappinesshypothesis.com