Know your numbers: How to create a simple financial plan for product-based businesses. As if you don’t know your numbers, you don’t have a business… you have an expensive hobby.
I am passionate about this as I know money, numbers and finances are one of the main things that creative product businesses can put their head in the sand about. And it is one of the biggest things holding product businesses back from making consistent money.
This post will help you create a simple financial plan:
- Understand your business and personal expenses
- Build a simple financial plan
- Set realistic sales targets
- Know exactly what you need to earn
1: Start With Your Start-Up Costs
These are the costs to get your business up and running. For example:
- Equipment
- Tools
- Initial stock or materials
- Website setup
- Branding
- Advertising
These are usually one-off or early investments. Write down everything you spent (or plan to spend) to get started.
2: Understand Your Business Expenses
Your expenses fall into two categories:
2.1. Overhead Costs (Fixed)
These are the costs to run your business, whether you sell or not.
- Website hosting
- Insurance
- Accountant
- Software (like Adobe)
- Coaching or courses
- Marketing tools
- Studio or office space
- Payroll
These are usually monthly or yearly.
2.2. Variable Costs
These change depending on how much you sell.
- Materials
- Packaging
- Postage
- Transaction fees
- Travel
- Supplies
The more you sell, the more these increase.
3: Know Your Personal Expenses
This is the part many people avoid, but it’s the most important.
Ask yourself: How much do I actually need to live?
Include everything:
- Rent or mortgage
- Bills
- Food
- Going out
- Holidays
- Fitness
- Beauty
- Pets
- Insurance
- Hobbies
Don’t leave anything out. This gives you your real-life number and what your business needs to support.
4: Bring It All Together (As a Simple Financial Plan)
Imagine your business is a bucket:
- Money comes in (sales)
- Money goes out (expenses and tax)
Your job is to make sure: More money comes in than goes out
5: Don’t Forget Tax
This is the part many product business owners forget. Not all the money in your business account is yours. You need to set aside money for:
- Income Tax
- National Insurance
- (And later, possibly VAT if you grow)
For most small UK businesses: Set aside 20–30% of your profit. This gives you a safe buffer as:
- Revenue is NOT profit
- Profit is NOT take-home pay
Pro Tax Tip
Open a separate account or saving space in your account (if you use Monzo/Starling) and:
- Move 25% of profit into it every month and call it your tax pot.
6: Create Your P&L (Profit & Loss)
Your P&L is simply:
- Sales – Expenses – tax = Profit
Simple Financial Plan Example:
If you need £2,000/month personally. You actually need to earn more to cover tax.
Personal expenses: £2,000
Business expenses: £1,000
Total needed: £3,000
Add tax buffer (25% of profit portion):
New target: £3,500–£3,800/month
7: Set Your Sales Targets
Now you know your numbers, you can set realistic sales targets in your product business.
Example:
- Target: £3,000/month
Average order value (AOV): £30 - You need to sell: 100 products
Now it becomes clear and actionable on how many products you need to sell each week.
Ready to Create Your Simple Financial Plan?
I want this to give you confidence as when you know your numbers:
- You make better decisions
- You price confidently
- You stop undercharging
- You know what to focus on
- And you stop guessing.
Turn Your Numbers Into a Christmas Sales Plan
Once you know your numbers, the next step is a plan to grow them. In the Christmas Sales Strategy Session, we’ll take your targets and build a personalised 16-week roadmap to make this your most profitable Q4 yet.
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