1. Are you good with money?
If your cupboards are full of branded products and unnecessary luxuries you should be taking a hard look at how much you're spending or think about being less of a brand snob. It's money you can ill afford to lose if you want to maximise your profit margin each month.
Learn to turn down the thermostat on your heating and turn off lights when you leave the room. Better still, get those energy saving bulbs. Yes the light is a bit shit but they do save you money. You can also turn down the stat on your fridge freezer. Oh yes you can.
2. Don't give freebies to friends or relatives
It sounds harsh but being generous to your nearest and dearest at the expense of your income could cost you your business. Charge them like everyone else or they will strip you bare in no time. I had a friend who had a cafe and gave away teas, coffees and cake to her friends whenever they came in. Within 6 months she was bankrupt and lost everything right down to roof over her head and her bank cards. By the time she had finished ruining them financially she and her two kids were sleeping in bed and breakfast waiting for a council house. Let that be a lesson to you.
3. Are you admin savvy?
Are you good with paperwork? Or do you put it aside on the promise of doing it later? Get into the habit of filing EVERYTHING as it comes in. It'll make your job come tax return time far less of a headache. Keep spreadsheets. If you don't know how to use them, learn. They are not difficult. If you are really crap at this sort of thing get an accountant or pay a friend to keep your paperwork up to date. It might cost you a few hundred but it could save you much more in the long term.
4. Streamline before you start
Wherever possible streamline your bills before you start. The less money you are haemorraging each month on non-avoidable payments the better. Pay off credit cards and loans if you can, reduce your outgoings wherever you see a way. I moved into a houseshare to keep my bills down. My biggest expense is my car which I need for business. My household bills come to less than £600 a month and I don't owe anybody anything. It means there are never any surprises around the corner.
5. Can you work from home?
This will save you money on travel, rent and you can claim back a bit of your heating and electricity through your tax return. But be mindful not to get lazy. Set office hours and stick to them.
6. Get some savings behind you
Believe me you will need this. Banks won't lend to you and you'll discover how quickly people disappear when you need a financial helping hand. The rule of thumb used to be always keep the equivilent of three months wages in the bank for emergencies. If you're running your own business this applies doubly. If there are months when you've fallen short in sales - which WILL happen, I guarantee it - having enough there to top up the shortfall so you can keep paying for your essentials is a very good thing. But (and refer back to point 1) don't think of it as an excuse to treat yourself.
You might enjoy drinks out with your mates now, or a couple of meals out a week, but believe me this sort of thing kills your profit when you are making your own money. You think you're skint now at the end of the month waiting for your paycheck? Wait til there is no regular paycheck. You will get lonely, you will wonder why you bothered, and eventually your friends will probably stop talking to you, but you wanted to run your own business right?
HOWEVER, don't miss business type opportunities such as events where you get to flash your business card. It's not an excuse to flash cash of course and don't wine and dine potential business clients out with your own money (you can't claim these on your tax return) but hobnobbing with other business people who may be good for you can only be a step in the right direction.
This is not an exhaustive list. I think there may at least be a part 2 to this blog entry. But these are the main things I think it's good to know about. After that, you start looking at the finer details. But I'll come back to those later. Are you running your own business or freelancing? What are your tips for keeping your head above water? Message me!