How to Set up Your Business Finances for Success

Managing money can be a major stressor for almost any wedding business owner. From knowing how much money you have in your bank account to making sure you are booking enough business to cover all of your expenses, it can be so stressful because it feels so foreign. But, just like many of the other responsibilities you have when running a business, just keeping on top of your finances is sometimes not enough—you have to make sure you are setting yourself up for future success. Lucky for all of us, WeddingPro Educator and CPA Nadia Anderson is here to help us become more financially literate. And today, we are sharing some of her best (and most actionable) advice to help you confidently set up your business finances. Read on to learn where and how you can get yourself on a profitable path forward. 

This article is based on a webinar presentation Nadia collaborated with us on in 2020. If you’d like to watch the replay, you can do so here.

Open business bank accounts

From the moment you start your business, one of the very first things you can do to set yourself up for success is open a business bank account. This is important because you want to separate your personal finances from your business finances to make your bookkeeping and accounting run much more smoothly. Nadia’s advice is to create different categories to tag your revenue streams as you complete your bookkeeping, keeping things nicely organized.

Track your finances

We know you’re busy and that maybe looking at the books for your business only happens on occasion, but we promise you—getting into a routine when it comes to tracking your income and expenses is a best practice when it comes to small business finances. It starts by organizing your income and expenses into three broad categories:

Fixed – These are the expenses you know you have to pay every month and are due on the same day of the month. Examples of fixed costs include rent, health insurance and any software subscriptions.

Firm – These are the expenses you regularly pay, but they may vary in amount or date. Examples of firm payments are paying assistants you hire for weddings or perhaps your bill for the floral market.

Flexible – These are expenses for things that are helpful to your business but not 100% necessary to operate it. Nadia recommends looking in this category first if you need to reduce your business expenses.

Pro tip: Tracking your business finances will set you up to move toward more sophisticated financial reporting that helps you analyze economic trends in your business. 

Put systems in place

Systems are essential to have set up for many reasons and they are necessary when it comes to finances for business. Because one of the primary keys to financial success is keeping your money organized—and it’s hard to do this without them. What types of systems do you need? Nadia has three recommendations for you:

• Have a system that will help you send invoices, get paid online, and generate receipts for transactions
• Have a system for tracking time and paying people
• Have a system to help you really understand how much your business is making and spending (you can even start with bank statements)

Pro tip: QuickBooks is a great financial tool for every wedding business owner, and it also helps you have a successful relationship with a bookkeeper, accountant, or CPA.

Get to know your cash flow

More than just knowing how much money is currently in your bank account, understanding your cash flow helps you make better money decisions for both the near and long term. A cash flow plan focuses on the future and enables you to set expectations for the money you will collect versus the cash you need to pay. You start by simply downloading your bank statement to know how much cash you have in the bank today, add any money you expect to collect from your clients, and subtract the expenses you know you have coming due within a specific time period to get your projected balance.

Pro tip: When reviewing your cash flow, you can decide on the period of time you are making calculations for. Nadia’s advice is to look at a shorter period (i.e., weekly) when things are volatile, and move to monthly or quarterly as things become steadier.

Numbers to know like the back of your hand

Just like you probably know how many followers you have on social media and how many unread emails you have in your inbox, there are specific financial numbers that are important to be able to rattle off. Nadia recommends that every wedding pro have these numbers in their head (or noted somewhere accessible) at all times:

• When you have automatic payments being charged, as well as any renewals and their due dates
• Your total monthly operating costs
• Your minimum cash requirement (read: What is the least amount of money you can pay yourself to live your life?)
• Your break-even sales target (you can figure this out by taking your total monthly operating costs and dividing them by your average booking rate to figure out the number of events you need to sell or book to pay for all your expenses)

“None of us started a wedding business because we wanted to learn accounting.” – Nadia Anderson

While there may not be a more accurate statement, having more than a basic understanding of the concepts of business finance will help you be a better business owner and ensure you can help couples plan their dream weddings for a long time. If you’re ready to dive in a little deeper, be sure to read this article where Nadia answers questions about payment plans and expense tracking next.

Please note: WeddingPro and the materials and information it contains are not intended to, and do not constitute, financial or tax advice and should not be used as such. You should always consult with your financial and tax advisors about your specific circumstances. This information contained herein is not necessarily exhaustive, complete, accurate or up to date, and we undertake no responsibility to update. In addition, we do not take responsibility for information contained in any external links, over which we have no control.

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