How To Run A Side Hustle #02 | Take Your Profit First
You came to this site because you want to know how to run a side hustle that actually has a profit. Most home businesses are operating at a loss. In fact, most entrepreneurs (that is what you are) operate businesses at a loss. That is because entrepreneurs and side hustlers aren’t managing their money like a true business. The profits from your business need to be managed and tracked just like you manage your time, budget money for groceries, and keep tabs on the money in your own checking account.
In my last article I explained how to manage your time to work a home-based business. Now you need to learn to manage your money.
How To Run A Side Hustle | Take Your Profit First
This sounds selfish, doesn’t it? Let me tell you it’s not!! You are running a business and you are now a business owner. You joined the business opportunity to earn extra income and you may dream of building a successful business that will allow you to leave your full-time job one day.
So doesn’t it make sense that you make money?
Whatever your business opportunity you need to understand your compensation plan. If you don’t know your company’s compensation plan stop reading this article now and go read it. On top of understanding how much money you make, you also need to know how often you get paid.
Monthly, weekly, bi-monthly?
Once you understand when you get paid you have to plan where your paycheck will go every time it is pay-day.
If you have a checking account to pay your bills for your business that is great, however, your commissions shouldn’t stay in that account. Open up a separate savings account at a different bank and nickname it, profit. Ask the bank to not give you a debit card for the account either.
Why a separate bank?
It’s simple. Out of sight out of mind. By not receiving a debit card makes withdrawing the money difficult. You are less likely to take a trip to pull out those profits. Additionally, because you have those profits in an interest-bearing account, you a creating a bit of extra profit too. You should also attach your primary checking account to your savings account for deposits only.
Once you set up your profit savings account, every time you get paid put 1% of your commissions into the savings account. You won’t even notice the 1% difference which means you won’t even think about it. The 1% is a great number to use as you start to run a side hustle. As your commissions and team grow, you should move the percent you transfer to your profit savings account from 5% to 10%.
This ensures you are saving a true profit and creating a real income for your business. The other percentages of the commission can be used for operating expenses, marketing, and business expenses.
As you can see if you follow this process you are truly taking your profit first. It is also a process to help you save money. This can also be done with a similar account for paying your business taxes. You can learn more about this strategy in the book, “Profit First,” by Michael Michalowicz.
Are you going to follow this strategy and take your profit first?
Like these tips? Read more on How To Run A Side Hustle