One of the first things an online business owner should do, other than actually starting their business, is to plan for success. The main reason that 90% of all new businesses fail within the first five years is that they did not manage their income and expenses properly. Not planning to make money often results in not making any money at all. Other reasons for failure include the owner losing interest, not researching their industry properly, and choosing the wrong products to sell.

Have A Basic Outline

Planning should involve having a basic outline of your online business expenses and income, be it monthly or annually. If you haven't yet started your business, then this part should be easy to figure out.

Income

Income will be from the money coming in from your online store (goods sold), affiliates, or other revenue streams you may have. You can decide between ACH vs wire transfer.

Expenses

Expenses will be all costs you incur throughout the month, including:

• Web hosting

• Merchant fees (credit card processing)

• Email marketing services (if you're using them)

• Resource material (books on business plans and such)

Cash Flow

In the world of online business, cash flow is the amount of money you have leftover once your expenses and taxes have been paid. Over time you might start to notice a trend in how much cash flow you have each month and where most of it goes, be it investing back into your business or spending more on luxury items.

The way to manage your cash flow is very simple. 

Seven Steps To Manage Your Cash Flow:

1. Set a Budget

Set a limit for how much money you can spend in one month; from there, you should know what each expense will be and the date it needs to be paid. If something unexpected comes up within that month, then you can either edit the amount you spend or put it on a credit card and pay it off with your next month's income.

2. Pay Your Monthly Bills and Expenses First

The best way to do this is to create a list of all your income and expenses and then work out which ones need to be paid by when. Once you know what you need to pay, then simply mark a tick next to it on your list when it's paid. Now you have a list of everything that needs to be paid in the order they need to be paid.

3. Use Some Money To Invest In Your Business

Using some money each month to invest in your business is a way of keeping yourself motivated as well as improving the value of your company. This could be in the form of educational books, courses, and other resources to help you become a better online business owner. Remember to mark these expenses on your list so that you know how much money is left after everything else has been paid for.

4. Use Some Money To Enjoy Yourself

Spending some money to enjoy yourself is a must. If you have been working hard to get your company off the ground, then it's important not to let that all go by neglecting yourself and what makes you happy!

5. Use Some Money For Taxes and Other 'Unavoidable' Expenses

Although we can't escape taxes, we do know when they are due and can plan for them in advance using some of the money we have left at the end of each month. We call these unavoidable expenses because they cannot be avoided, not that you will necessarily enjoy paying them.

6. Set Up A Buffer Account For Your Cash Flow

This is different to step number two because it's about having a bit of money left over as a buffer. For example, if you have $15 left after paying all your bills and expenses, then set up an account where this $15 is deposited so that it doesn't get spent.

7. Don't Touch Your Buffer Account

This final step should be obvious, but many people forget to do it and lose thousands of dollars in the process. Once you have a buffer account set up, then don't touch it - at all! It's there to protect your cash flow and give you a little bit of leeway if something unexpected comes up, which it will at some point.

That's it! 

By following these seven steps, you will ensure that your cash flow runs smoothly throughout the month without you having to worry about it. It will become easier with time, promise!