How Fast Are You Burning Cash - A Bookkeepers POV

Your burn rate is how much money your business spends monthly aka your expenses. This includes cost of goods sold, expenses, owner pay, loans, etc. It is ok to have a high burn rate if you plan for it. If you keep getting blindsided by expenses or you are unprepared for the ebbs and flows of sales, you will create a cash flow issue for your business. You might end up in a habitual state of stress of trying to make "one more sale" to cover your expenses and keep your doors open.

If you're a business owner operating without a budget, you could burn through your capital far quicker than expected. Many owners make the mistake of overspending on office space, software, or staff. Tracking your burn rate is crucial to running a profitable company. Not tracking your burn rate pretty much guarantees that your business will fail, you'll go into debt, or you won't be taking a paycheck as the owner.

Good budgeting, especially in the first year, gives you confidence. It’s the difference between scaling smart or scrambling for survival. And if you keep telling yourself that you are too busy to budget or not smart enough, then you are making that your reality. You are pretty much the perfect example of the definition of insanity - I know, I know, that is harsh...yet true.