Being a new business owner is exciting and scary at the same time. You might be wondering: What if I don't have enough clients? What do I do when my steady stream of work suddenly dries up?
Here are five tips to help you manage your finances:
- Overestimate expenses. It takes years to get to the point when you can quote a project with extreme accuracy. Until then, make it a point to budget an extra 10% more than you initially think something will cost. Buying more stock to get ready for a seasonal sale? Plan to spend $550 rather than $500. Giving your lawn care client a landscaping quote? Add in 10% to cover excess costs that will pop up. This will save you from embarrassment, losing clients and losing money. Of course, do not overcharge clients for some of the costs.
- Save early and often. Setting aside money for your salary and ongoing expenses is essential. Some expenses, such as business insurance and association fees, are due once a year. Others, such as rent, are monthly. You also need to save for taxes. Add up these infrequent expenses and then divide the amount by 12. Set aside that much each month so that you'll have a sinking fund that you pay these expenses from.
- Track your sales. Depending on your business, you'll notice there may be seasonal or monthly trends. Pay attention to these so that you are always stocked on inventory or have enough people or time to provide your service. Accountants are wise to not plan their yearly vacation in the weeks leading up until April 15. This is a time when they get lots of business without doing a whole lot of marketing.
- Keep a budget. Having a budget does for your money what food journaling does for your weight loss clients. It helps you see where your money has gone previously. Going forward, you should only spend what you will take in that month.
- Remember that time is money. Know which tasks you excel at, which ones you are competent at and which you have no business doing. You can probably fix the leaking faucet in the bathroom. But the work you give up from three hours of watching YouTube tutorials may be worth more than the $100 plumber fee. Sure, he might have it fixed in 15 minutes, and still charge you $100. That's okay because you're able to work three hours at your hourly rate doing something you excel at.
Use these tips to get your new business off to a great start. Don't forget to talk to your Park & Associates insurance agent about the ways to comprehensively and affordably protect your business. Contact us today to get started.