Money Management..
So as we all know to succeed in business you have to know how to manage money, so, what tips, tricks, or plans have you implemented to help you manage money? For example, I keep at least 2-3 months worth of fixed expenses in the bank in-case anything comes up, like no work or whatever the situation may be.
Let's here it...
Let's here it...
1 - 17 of 17 Posts
Money is like a river. You're like a rock in the middle of the river creating an eddy. You can slow the river down, make it pool a little, but ultimately the river will keep flowing. Just make sure you don't let the river flow past you too fast or your eddy will dry out.
Simple really. Make more than you spend.
Your welcome.
Your welcome.
My favorites book on money is a very simple read, its called " The richest man in Babylon".
If only I could manage to pull off the simple money management that they advise, live on only 70 cents of every dollar, life would be good.
If only I could manage to pull off the simple money management that they advise, live on only 70 cents of every dollar, life would be good.
:laughing:
You do. As a matter of fact quite a bit less than that. The man in babylon would have been appalled if he saw what our government strips us of today.:thumbsup:
True story Beef, you are right.
My father in law gave me that book close to 30 years ago. Remains one of the best financial books I have read. Keep it simple :thumbsup:
I had my wifes name taken off of my business account.:whistling
Make as much as you can, spend it all. I want to die owing the Gov't a million dollars!!!!!:laughing:
My money management:
Remember,
1. YOUR NEVER MAKING AS MUCH AS YOU THINK YOU ARE.
2. Invest your money don't spend it. Take it for what you will but if you think about it, it makes sense.
3. Set your limits and stick to them
Make a list of all the things you want and spend the next 20 years of your life getting them. I very rich and smart former boss of mine told me, Ryan - if you want to be rich or have a lot of money just remember, you just have to use time to your advantage. 1 rental a year for twenty years....And don't be dumb.
Thats it.
Remember,
1. YOUR NEVER MAKING AS MUCH AS YOU THINK YOU ARE.
2. Invest your money don't spend it. Take it for what you will but if you think about it, it makes sense.
3. Set your limits and stick to them
Make a list of all the things you want and spend the next 20 years of your life getting them. I very rich and smart former boss of mine told me, Ryan - if you want to be rich or have a lot of money just remember, you just have to use time to your advantage. 1 rental a year for twenty years....And don't be dumb.
Thats it.
The invest/spend goes to every purchase.
Spend on batteries, Invest in high quality rechargeable batteries.
Spend money on labor. Invest in training.
Spend money on advertising. Invest in marketing/website/t-shirts/salesmen
spend money on accounting. Invest money on accounting software.
it never ends.
Spend on batteries, Invest in high quality rechargeable batteries.
Spend money on labor. Invest in training.
Spend money on advertising. Invest in marketing/website/t-shirts/salesmen
spend money on accounting. Invest money on accounting software.
it never ends.
I would say that 2-3 months is too little. We keep 6 months of reserve operating capital. We factor that into every job and put it away religiously. Once we have 6 months of liquid capital, we invest 6 more months. Once we have that bucket filled, we start using that additional revenue for capital expenditures or new equipment.
The best thing you can do for your business is to have a large savings account and borrow short-term against it. This establishes a wonderful credit rating that allows you to keep a good relationship with your banker.
Invest in your employees and their dreams. Donating to charities that they pick out in their name is a great way to do this. We allocate 1% of base pay to charity per employee (matched, we don't take this out of their check).
One other thing is to get accounts with all of your suppliers and insist on 2% Net 10 or Net 30 Days terms. This allows you to take a 2% discount on materials and supplies over and above your negotiated discount. It adds up.
The best thing you can do for your business is to have a large savings account and borrow short-term against it. This establishes a wonderful credit rating that allows you to keep a good relationship with your banker.
Invest in your employees and their dreams. Donating to charities that they pick out in their name is a great way to do this. We allocate 1% of base pay to charity per employee (matched, we don't take this out of their check).
One other thing is to get accounts with all of your suppliers and insist on 2% Net 10 or Net 30 Days terms. This allows you to take a 2% discount on materials and supplies over and above your negotiated discount. It adds up.
I have a rule that I put 10% of my Gross Income aside for investing in my business, unexpected expenses,etc.. It has served me well.
Colin
Vancouver, BC
www.coveinspirations.com
Colin
Vancouver, BC
www.coveinspirations.com
What Kind of margins do you operate on
Many thanks,
Terry
I admire you can set aside a full 10% - I was wondering what kind of margins you are able to work on in remodeling - Sounds like you would need 40% gross profit ,from my experience, to have an extra 10%. Would you help enlighten me.
Many thanks,
Terry
Unfortunatly people are not tought what money really is. This is all by design.
With that said, there is something much more important than money which is needed to succeed in this industry. Wisdom, experience and knowledge is far more useful. Not the knowledge of how to build a house, but how to build a business.
In the Richest Man in Babylon you are tought very simple concepts that very few implement. Pay yourself first, 10% of all you make is yours to keep, and never go to the brick mason for advice on gold.
To servive in this industry, understand it's not how much money you make but how much you keep that counts.
Learn the history, rules and laws of money and follow them religiuosly if you want your business to survive.
With that said, there is something much more important than money which is needed to succeed in this industry. Wisdom, experience and knowledge is far more useful. Not the knowledge of how to build a house, but how to build a business.
In the Richest Man in Babylon you are tought very simple concepts that very few implement. Pay yourself first, 10% of all you make is yours to keep, and never go to the brick mason for advice on gold.
To servive in this industry, understand it's not how much money you make but how much you keep that counts.
Learn the history, rules and laws of money and follow them religiuosly if you want your business to survive.
A few thoughts:
Keep enough cash on hand to run the business for at least (6) months without getting paid for anything.
Maintain a good banking relationship and line of credit, but don't use it anymore than necessary.
Write good clear contracts with clear payment expectations and collect money when due.
Get down payments whenever you can.
Take advantage of all early pay discounts.
Set up pay when paid contracts with your subs, they get paid for their work right after the client pays for their work. This encourages prompt good sub billing.
Don't buy trucks or equipment you can't pay cash for, rent it. And when you do get the point you can buy it, charge the client enough to maintain and replace it.
Separate your finances and company finances. Take weekly salary and occasional bonuses when jobs perform well and are paid in full. Don't write company checks for personal expenses.
Hook up with a good business CPA to help you determine your true overhead and mark up needs.
Track productivity on all jobs to help with pricing future jobs.
When you have a good year, use the money wisely. Pocket some, keep some in the business for growth, share some with employees.
Have an end game and succession plan in mind for when you are going to get out and what is going to happen to the company as you phase out.
Keep enough cash on hand to run the business for at least (6) months without getting paid for anything.
Maintain a good banking relationship and line of credit, but don't use it anymore than necessary.
Write good clear contracts with clear payment expectations and collect money when due.
Get down payments whenever you can.
Take advantage of all early pay discounts.
Set up pay when paid contracts with your subs, they get paid for their work right after the client pays for their work. This encourages prompt good sub billing.
Don't buy trucks or equipment you can't pay cash for, rent it. And when you do get the point you can buy it, charge the client enough to maintain and replace it.
Separate your finances and company finances. Take weekly salary and occasional bonuses when jobs perform well and are paid in full. Don't write company checks for personal expenses.
Hook up with a good business CPA to help you determine your true overhead and mark up needs.
Track productivity on all jobs to help with pricing future jobs.
When you have a good year, use the money wisely. Pocket some, keep some in the business for growth, share some with employees.
Have an end game and succession plan in mind for when you are going to get out and what is going to happen to the company as you phase out.
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