Money management is a skill every business owner should master, especially for small and medium businesses. It includes accounting, forecasts, financial statements, and finances. Altogether, they play a vital role in assisting you in accomplishing the goals you have established for the business one by one.
Proper money management determines the success of your business. For instance, you can decide whether your business makes profits. The resources you can afford include opening a new store, recruiting new staff, stocking inventory, purchasing new equipment, or opening a new office in another location.
Furthermore, money management also helps you determine the price of your products or services in the market, select the right supplier for raw materials, develop a business expansion plan, diversify the revenue sources to maximize profits, and improve brand awareness to explore new markets.
Additionally, suppose your business requires further investment for business expansions. With the financial information, you can understand how much investment you need and if you can repay the bank loan required for the business expansion. So you can confidently discuss your business prospects with a potential lender to avail of the loan.
So far, we have spoken about the importance of money management. Now let us look at the key tactics you can adopt for intelligent money management for your cleaning business.
1. Track your expenses
One of the methods you can adapt to track your expenses begins by creating a budget. It is a list that has all the expenditures of your business in an organized manner. It will permit you to do the following;
- Monitoring the costs
- Developing expansion plans
- Eliminating the unnecessary costs
- A clear outline of the profits that your business generated
Furthermore, the budget will also enable you to determine the long-term and short-term goals. So you can develop a clear outline to accomplish the short-term and long-term goals you have established for the business. So you will be highly motivated to accomplish the plans for your business.
2. Reduce operational costs
You may think about operational costs and how to reduce them for money management. Well, operational costs are those required for the daily functioning of the business. That includes the employee’s salary, the cost of the raw materials, the selling of products or services, maintenance expenses, and running the administration.
The operations costs exclude the expenditure for manufacturing, interest on repayment of loans, and foreign exchange. Now you may wonder how to reduce the operational expenditure for better money management.
Many tools are obtainable in the market, and selecting the right tool can often be easier said than done. You have to research thoroughly before determining the tool. For instance, if your priority is automating appointment scheduling to improve customer experience and ease daily business operations.
You can consider automating appointment scheduling with online appointment scheduling software like Picktime. You may think about how it would help you to bring down the operational expenses. The software has a personalized booking page or widget you can quickly integrate into your website. You do not have to change your website significantly.
That gets rid of the need for customers to contact your business directly by email or phone. They can schedule an appointment by logging onto the website. That will help you to save a substantial amount of time and resources.
Otherwise, you have to recruit staff to handle customer appointments and follow up with them. The software sends automated reminders via email and SMS. So your team no longer has to contact your customer directly to avoid no-shows and appointment cancellations.
The customer can reschedule the appointment in just a few clicks if needed. The software has a calendar feature to give you a complete overview of daily customer appointments. So you can organize your day accordingly. So you and your staff will not feel stressed handling multiple customer appointments.
Furthermore, the software generates reports and analytics that will give you considerable insights into your business. So you make informed decisions while developing business expansion plans and determine how your business does in terms of finances.
If your cleaning business operates in more than one location, you need not make additional investments for software support. That helps to keep the operational costs to a minimum.
The software also lets you create a secure database of customer information and their appointment history. That will help you customize the services to your customer and enhance their experience.
3. Maintain the accounts thoroughly
Another essential aspect of money management is maintaining through bookkeeping. So you can track the road where the money goes, pay taxes on time, and stay on top of finances. If you are planning retirement, it will help you plan your retirement.
Here are some tips for maintaining your accounts properly;
- Select the right accounting software to manage all your finances
- Separate your finances: you have to open a business account with a bank of your where you like. So your personal financial liabilities do not spill over to your business
- Establish a system to monitor sales.
- Avoid dealing in cash until you have established a sound bookkeeping system.
- Getting a credit card issued for your business will ease tracking business costs.
- Settle the business expenses first, then your expenses. In many cases, a single person owns the business and takes a percentage of profits from the company.
- Analyze profit and loss statement: checking your bank account from time to time does not indicate that your business generates profits. That is not good practice either. To understand your company’s finances, you have to look at the profit and loss statement carefully. That will give an idea of the profit percentage you can take.
- Take a paycheck yourself: write a check or transfer the amount online.
4. Analyze the cash flow
Another technique that you can utilize for smart money management is evaluating the cash flow. There are two aspects for analyzing the cash flow. They are as follows;
- The flow of cash is greater than the expenses paid over time.
- The inflow of cash in the business and the outflow
It is a financial statement that helps estimate the money that will flow in and out of the company. You can use it to establish sales targets and assess the expenses needed to increase sales. Furthermore, evaluating the cash flow will assist you in determining the percentage of the profit you can take as the owner. You can also develop an expansion plan based on the projection and the investment required.
5. Set aside some amount for business expansion
You want to expand your cleaning business as a business owner eventually. You have to keep some money aside to plan for the business expansion. By doing so, you can attract new talents to your business and invest in improving the skills of the existing employees. The employees would feel appreciated for their contribution to the company.
That will, in turn, improve the services that you offer your customers. That will enhance the brand image as satisfied customers spread the positive word about your cleaning business.
6. Take a loan if needed
Most business owners are reluctant to take a loan because of the risks associated with nonpayment. For instance, when trying to expand your staff or new equipment, you cannot do without the influx of investment. Well, that is not the case in real life. Most business loans come with flexible terms and conditions. As a cleaning business owner, you can easily accommodate the bank’s terms and conditions. The loan will assist you in boosting the cash flow of your business.
7. Maintain good credit for your cleaning business
Expanding your cleaning business will involve recruiting staff and acquiring completely new equipment. If the staff is not taken care of, this cannot be accomplished. Instead, you can try to get a loan from the bank. That is possible only when you maintain good credit. That is when the banks know you can repay their loan. Otherwise, the banks will not lend you money.
You may wonder how you can maintain good credit. It is prudent not to take loans with interest rates you cannot repay. So you should take loans that you can pay back and have low interest rates.
8. Put in place a billing system
Among cleaning business owners, encountering a client who consistently falls behind on payments is almost unavoidable. Proper financial management ensures that the business maintains breakeven. If your clients delay the payment, it is time to think outside the box to develop innovative solutions.
Suppose your clients do not make the payment on time. That is unpaid bills, and that can lead to cash-strapping your business. If you have such clients, you can make them pay in installments instead of calling them repeatedly. For instance, you can provide them with a discount on the bill if they pay the full amount upfront..These methods we’ve provided here will likely help you achieve efficient money management principles that are best suited for the cleaning business. That will ensure that your cleaning business stays sustainable.
