They sound very business-y and accountant-y and complicated.
But they're actually pretty simple to use, and can really help you get your head around the numbers side of your business, as they help to give you an idea of what's going on with your money - where it's going, when it's coming in, and how much you need to stay afloat.
Today I want to break down financial tables and tell you a bit about how they work.
The financial tables I use for clients are spreadsheets made up of four tabs: Products, Personal Budget, Costs and Cashflow.
Or services, if that's what you offer.
This tab is all about working out the prices of the products and services you offer to gain a better understanding of how many units you would have to sell to meet your target income and also to clarify the products or services you want to offer.
Your products tab will usually have a different "table" for each product/service, with a cell for the name, description, price, cost and profit. To work out the profit, you can enter "=" in the cell you want it in, click the cell the price is in, "-", click the cell the cost is in and hit enter.
This will take the cost away from the price to show you how much profit you'll make from this product or service.
Your personal budget will work out how much income you need to make from your business.
First, you enter all your monthly outgoings; things like rent, utilities and groceries. You should also include an amount for general living and entertainment.
To get the total, type "=SUM(" into the cell you want the total is, click on the top outgoing amount and pull your cursor down to the bottom amount, enter ")" and hit enter.
Then below that, work out all your monthly income excluding your business, so income from employment, your partner or family, any benefits, etc. and work out the total in the same way.
Under this, you'll want to take the total income away from the total expenses like we did for the profits in the Products tab and you'll see the total income you need from your business to make enough money to live on.
This means that you will easily be able to work out how many products you need to sell to make enough money.
The costs tab is pretty self-explanatory.
You simply list all the costs you incur on a monthly basis to keep your business running.
This would include things like website hosting, office rent, broadband and marketing.
Calculate the total in the same way we have previously.
This is where everything comes together!
The purpose of cash flow is to work out the amount of money that will be moving (or flowing, wink wink) through your business each month.
It's basically a big income and outgoings spreadsheet which takes into account everything we've done in the previous tabs and brings them together to give us an idea of the money in our business from month to month, as well as a new row for income from your business.
So you would copy all the relevant information over from the other tabs by clicking the cell where you need the information, "=", going to the tab with the info you need and selecting the relevant tab, then hitting enter. Do this for all the relevant tabs.
To work out the income from your business, you need to estimate how many units you will sell of each product or service you offer each month.
You would usually assume that your first few months bring none or little income, increasing with each month, as your sales will hopefully become better as time goes on.
And that's pretty much all there is to it! Do you use financial tables in your business? Why (or why not)?
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