We have all had them, those nights where we wake up at 2 am and cannot get back to sleep because the worry, stress and fear is getting the better of you.
It does not need to be that way! We recently shared our top 3 tips on the podcast, but here they are again for you, with a little bonus at the end.
Create a Budget System with Buckets, Wheelbarrows or Cement Mixers.
I first learnt how to budget using an envelope system, nowadays we talk about buckets, but what we are actually referring too, is a banking system with multiple business accounts.
This idea behind these accounts is that each week, or on receipt of each payment, you can take money out of your everyday business bank account for tax and running costs and drop them into a separate bank account.
This will keep your operation funds in the one place, ready to use without the temptation of your other savings.
Bonus Tip, create the separate accounts in another bank that you don’t regularly visit. This keeps temptation even further away.
Know Your Break-Even Point
Honestly, for most business owners, this will be a scary exercise as we tend to make decisions on the fly without thinking about what those costs mean for our budget.
Time block this week, get a bunch of paper and pens and document every expense, fuel, vehicles, wages, insurance, advertising etc, everything but variable costs like materials and subcontractors.
Now do the sum, and break it back to a dollar per hour/day/week or job, that you need on average to just break even BEFORE you make a profit.
Once you know this figure, it is easy to understand how many jobs you need to do each month before you reach profit!
Bonus tip, if you find your running costs are too high, NOW is the time to renegotiate EVERYTHING!! Remember even 1% saved, will have a dramatic impact on your bottom line, which means you won’t have to work so hard!
Get comfortable with looking ahead.
If Waz and I had a dollar for every person who said “I can’t” when we told them to forecast their trade business cash flow, we wouldn’t need to work anymore!!
You can, and it’s simple, take an educated guess. Look back at the average you’ve made over the last 3-6 months, and that is your forecast.
Now if you look at that forecast while understanding your break-even point, you’ll know how many jobs you need to book in to ensure you make the amount you need to cover expenses.
If you don’t have them booked in yet, you’ll know to turn on your marketing and get the enquiries coming in the door. If you don’t take the time to look ahead, how do you possibly know you’ll have enough work to cover all costs?
Understanding your cash flow isn’t as hard as it may feel. Need help? Book a call with us today. HERE