Business Plan, The All Important Financials


IMG_1077Even when you have an accountant, it is important that you have a working relationship with your financial information. I recently read a book called Grow Your Own Business by Kari Chapin and it has taught me a lot about why I need a business plan and how it helps me focus on what is important in my business. One crucial aspect of the business plan revolves around financial information.

Managing your business finances is a lot like managing your personal finances.  Business finances just have a few more components.

In your personal finances, you have an income and living expenses and if you’re smart you budget your income to cover the living expenses along with other things that you want to do with your money. It’s the same with your writing business. The goal in your business is to make a profit.  Profit means that there is money left over after the expenses.

Keeping Track of Expenses

In business, there allowable expenses for tax purposes, and I need to know what these allowable expenses are. Talk with your bookkeeping expert or accountant to better understand your own allowable business expenses. Any expenses that are not allowable expenses could be considered personal income (salary expense subject to personal income taxes) or considered a personal loan from the business.

Recently I opened my business checking account that is separate from my personal checking account. This way I can first show the IRS that I look at my book sales as a business and not a hobby. Also, I can keep track of the expenses all in one place. when I get my statements, I have a record of what bills and  income from my  business. As my business grows, I will move into a Quicken program and then to hiring an accountant,  but for now my checking account and a general ledger is enough to get me started. .

Fixed Expenses versus Variable Expenses

Fixed expenses are expenses that stay the same. Fixed expenses include things like rent and insurance premiums. IN other words, these expenses do not change from month to month over several months to several years.

Variable expenses change from month to month. These include utility expenses, production expenses, and postage among others.

Keeping Track of Income

Keeping track of specific products and how well each is selling helps you understand how valuable that product is to your business. If your business depends upon one particular product, it might be good idea to determine how you can diversify your product line. That is why as a writer, I should continue to write more books and promote more books even though only one of my books is successful.  If something was to happen to that book’s profit, I will still have other books providing income.

Creating a Budget

Creating a budget may not be fun, but since I want to eventually make my living writing books and marketing them, it is necessary that I produce one so that I can create momentum in my business.

As I have to do with my personal finances, I also have to create a budget for my business. Right now my business is not providing me an income that I use , but currently I am using it as a place to invest money in which I hope to have a future return as well as reinvesting sales back into my business. Because money is limited,, I have to carefully budget what I do with that money to make the most of that investment.

Not only do I need to budget the income that I currently have, but I have to determine how much of an income I anticipate having in the future and how it will need to be spent. For instance, right now it is festival season in our area where I can sell my books. Because October ,November, and December are the months leading up to Christmas, I have been taking advantage of the season by having book signings. In January and February, I anticipate a slow down in print book sales and perhaps an increase in e-book sales. In the late winter and early spring I anticipate an upsurge in sales of my nonfiction gardening book Simply Vegetable Gardening. In April I anticipate the launch of my next book and a flurry of activity and book sales of that book.

Based on the above mentioned activity, I will determine what I anticipate in sales,  income, production costs, anticipated expenses, cash flow, etc. This may seem like overkill in a publishing business my size, but it is practice for my business as it grows. With more finances comes more responsibility and I intend to be up to the challenge.






As just stated, an asset is something that you own.  Over time the value of that item becomes less valuable so that item is said to have depreciated. Your bookkeeping advisor can help you determine your depreciation schedule for any assets in your business.

This information is by no means all there is to having a financial plan in business. this just gives you some idea of what is involved in finances. Be sure to discuss any questions you have with a financial adviser or tax consultant of some kind. The Small Business Administration can also help.

IMG_8330 final copy

Donna Brown is an ordained minister. As Author Cygnet Brown, she  has recently published her first nonfiction book: Simply Vegetable Gardening: Simple Organic Gardening Tips for the Beginning Gardener

She is also the author of historical fiction series The Locket Saga. which includes When God Turned His Head and Soldiers Don’t Cry, the Locket Saga Continues, and most recently, A Coward’s Solace, Book III of the Locket Saga.For more information about Cygnet Brown and her book, check out her website at .

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