Budgeting and Forecasting
Budgeting and forecasting are fundamental financial practices for any business. Together they assist you in managing cashflow, acquiring and maintaining equipment, paying creditors and staff, reinvesting
What are our remedies in turning down our bills, especially in this pandemic time?
As a rule of thumb, how much of your profit should you put back in the business?
Live poor, grow faster. Pending on your business the more you can invest in customer acquisition the faster your business will grow. Prior to do that though you need to make sure your systems can handle an increase in volume.
You have not listed what business you are in however after doing a quick check there is a person with the same name as you in Tutoring. If that is the business you are in, based on the information on the website. I would say there are a number of competitors in your industry, investing in technology would be ideal.
And again, if it is the tutoring business you are in. There is a massive market for it, there are marketing companies that specialize only in that area. So customer acquisition isn't an issue, making sure you have the technology to handle it is.
Without knowing more about your business, this is almost impossible to answer specifically. However, a couple of generic things to look at:
If this is a real issue for you, i would suggest you talk to someone who can help with this, as you will need to get a handle on this. While there are many companies who work in this space (yes we are one of them) make sure you get someone who can not only help you in the short term, but also teach you what to look for moving forward so you can continue to monitor your business as apposed to someone just trying to sell you something. We also offer free initial consultations if you would like to discuss more.
If you're uncertain, it is important to have your accountant look over the numbers. Given fluctuations in the economy and revenue for small business, it would be wise to include a buffer to ride out any difficult trading periods.
Keep in mind also that it is illegal to knowingly trade while insolvent.
Is there a certain percentage I should be spending of my profit?
Hi guys I'm thinking about selling clothing merchandise for online celebrities. I'm trying to draw up a financial plan at the moment and unsure of what margins to put on the products? How should I...
Easy way to price your goods is to compare it to competitions. Research your competition and find where you are on scale compared to them in terms of the quality of your products. If you're product is better, price it more than competition, and vice versa. As long as the sell price is more than double of your cost, you are doing fine. Adjust price as you go.
One of the first questions I would ask is, are you profitable? Meaning, are you currently making more money than you are spending? If not, it isn't time to draw a wage. Keep in mind if you need to scale (add employees) they are the first to get paid and you are the last to get paid (as a founder / owner).
If your business is making a profit, do you have more than enough to keep the company profitable for 1 to 2 months and still have extra money left over? If not, keep not drawing a wage. If this sounds like a board game, you aren't far from the truth.
Lastly, if your business has met and exceeded both of those conditions it may be time to start drawing a wage. However, I would recommend starting small and gradually scaling it up to avoid having to ramp your wage back down.
If there is still too much "haze" around this topic, I'd recommend talking to an accountant or tax advisor.
Your regular office expenses will have a direct impact on your business's profit margin. Therefore, it is vital to constantly look for ways to reduce your regular business expenses. By making a few...