If your business is getting started, THE goal is to start bringing in revenue so that your upfront expenses begin to be covered. If you have $50,000 in expenses the first year and $50,000 in income, you may be still afloat or you may be out of business, depending on how you planned your budget.
Dan Cary of DMC Associates was kind enough to speak with me last week on the benefits of budgeting in business.
What is budgeting? It is planning for income and expenses over a period of time.
Where does it come from? When you’re starting a business, it comes from research, talking to others experienced in the business, and planning for the unexpected.
What should you include in your budget?
TIME
Plan for time to set up your business, do your research to get things set up right from the start. Also, be conservative in the time you anticipate spending getting processes in place and building up a regular customer base.
Equipment costs
Your equipment starting out doesn’t need to be the top end, it just needs to get the job done. Don’t make the mistake of spending so much on equipment it takes 10x more customers to make your money back. It’s perfectly ok to buy quality used equipment. Your brand spanking new equipment would cost 3x more and be “used” a month later anyway.
Storage costs for equipment
If you have a lawn mowing business, your neighborhood might not appreciate all your equipment on the front yard, and it is more prone to theft.
State Licensing and Registration fees
Plan to pay for setting up your business, register your business name, and get a license to operate it. Every state has different requirements and fees. Be sure you know all the steps required to get it set up right. The Secretary of State or Department of Revenue in your state is a good place to start. An attorney may be able to help.
Insurance- liability, health, and/or equipment depending on your business
Insurance is a required expense if you want to protect everything you’re working so hard to establish. Talk to an independent insurance agent (outside of the big name carriers) who can help with business policies.
Office supplies
There will be some bare minimum supplies you’ll need that you may not have. If you already have a good computer, don’t feel obligated to buy a new one just for the business. Again, your goal is to get the right tools to start bringing in revenue.
Legal, Accounting, and Bookkeeping Expenses
Depending on your industry, you’ll need more or less guidance from these professionals. It’s always a good idea to have specialists for your field who you can consult to save you a lot of time, money and headache down the road. Accountants can help you strategize and plan for the best financial outcome with your limited startup revenues.
Website (design and maintenance)
A website can cost anywhere from $100/yr to $3000/yr + depending on your ability to do tech stuff and shop around. You can buy a domain name for $10/yr and get hosting service for as little as $5/mon. Just remember, a professional looking website often serves as the face of your company. It’s better to get it set up so your customers can find you.
Professional Training (continuing education, seminars, online training, etc)
Do yourself a favor and stay on top of the latest trends in your field. It will help your business image, operational efficiency, and profitability. Plan for continuing education and it will make a huge difference for your business. This may also include sales, management, and marketing training if those aren’t your strengths.
Professional Memberships (Chamber of Commerce, other professional organizations)
Networking with others in your field and other entrepreneurs can pay off even more than continuing education. Cooperation across your industry may seem counterintuitive but I have seen many examples of professionals sharing leads and helping each other for the benefit of the customer, each other’s business, and ultimately the community.
Telephone
A professional business has a phone, preferably answered by a person during working hours, but at least with an answering machine. Most cell phones have voicemail included in their plans. Record a professional greeting.
MARKETING
This is the most important expense to plan for. It is also the easiest to leave off because it is optional. Remember at the beginning we talked about bringing in revenue up front to cover your start-up costs? Your marketing is the only thing that will get the word out about your business. You could have the best product in the world, but if no one knows about it, they will not buy it and you will go out of business.
You may choose to consult with a marketing professional upfront to get a brand established and basic low cost marketing campaigns planned. They may include fliers on neighbors doors or mailing postcards to potential customers.
Think about your marketing dollars as seeds that you’re planting for your business to grow. The more seeds you plant, the more will grow. Different campaigns have different results and customer yields- test, track, and tweak. Not every phone call will result in a customer. The best way to increase revenues is to increase your marketing efforts. **This is the most important advice I can share with you about starting a business.**
Planning the Budget
When you’re just getting started, it’s likely that you’ll be optimistic and plan your income accordingly. Timing your cash flow is what will be the challenge. Plan for the expenses you know about month by month. Add a buffer for unexpected expenses that will come up. Plan for a gradual increase in income- be conservative. Unless you have an established clientele base that you’re taking with you (ie hairdresser, financial planner) new customers will be somewhat cautious and watch from a distance before trusting that you’re going to stay in business.
Work the Plan
Once you’ve established your budget plan, you may see that expenses are exceeding income for a few months. Be sure you have enough savings to carry you through those months, and some months beyond that. If you’re leaving another job, be sure to have a solid marketing plan to get revenues right away. If you’re doing your business part-time, don’t think about leaving until you’ve proven a few months of income exceeding expenses.
Do your best to stay on track but if things come up, don’t be surprised. Remember to focus on generating revenue by getting customers, not growing inventory or equipment stockpiles.
If you’d like extra guidance on this part of business planning, contact my friend Dan Cary Sr.
Please let me know if this is helpful and feel free to share your business budgeting experience below.
Ever been stuck in a rut? I saw this inchworm on my table, going around and around in the same circle and thought it was a great illustration of what a lot of people struggle with in business. Have you ever worked day and night towards a goal only to get no closer to achieving it? You may be diligently running in circles like this inchworm.
Ruts deepen into graves. Take a look at things you’re doing on a regular basis that get you no closer to achieving your goals. Maybe this looks like an email loop- going between email accounts, looking for something new that might give you something to do besides the thing you know you should be doing.
Maybe it’s spending time learning more- holding out for that one “critical piece” of information- instead of taking action.
Let me tell you- there will always be more to learn. Always.
Take some time today to stop your regular routine. Lift your head and think. Refocus on your goals. Consider your regular activities. How are they moving you towards your goals? If your routines just spend your time and don’t move you towards your goals, what actions can you take regularly that WILL move your towards your goals?
Like the inchworm carefully moving around and around this small hole in the table, you may be working hard but not getting anywhere in your business. If he just lifted his head to survey the tabletop, not just look at what’s right in front of him, he could have easily redirected his path and gotten where he was going. Keep your eyes on the end goal, take a step in a new direction so you don’t get caught in dew-loops!
Do you remember your favorite teacher? Most likely, you remember more than just their name, you remember how they dress, some of their frequent sayings, and the key things they taught you.
One of my favorite teachers is John. His service is to inspire others to live out their purpose. He’s always reading, learning, and challenging commonly accepted practices to push himself and others towards truth. He knows his strengths and acknowledges his weaknesses.
I was thinking the other day how much our teachers have shaped how we run and market our real estate business. There are a lot of things I do on the marketing side of things because they are what my teachers do. In some respects, our business looks like our teacher’s business, which is why we chose them as teachers.
Would you choose to learn about running a gourmet restaurant from a McDonalds manager? Of course not. There are elements of customer experience and haute cuisine that are critical for success of your business, and the McDonalds manager wouldn’t model them for you. What you learn from this trainer would position you to create a restaurant that looks more like McDonalds than a 5 star restaurant. This is a simplistic example, but it can be applied to any aspect of life outside of business.
I started thinking about the significant impact of teachers when I talked with other investors who had different coaches and did things very differently with different attitudes. I saw more clearly how my mentors and teachers have shaped my life over the years. Also, how critical it is to choose your teachers very carefully, because what they do is what you will do. Their attitudes impact your attitude. It made me more sensitive to my need for solid teachers and mentors so that I can keep growing and creating an impactful life.
The time with good teachers is so life-changing, I fly and drive 1000′s of miles to spend time with my mentors in person. And it is always well worth the effort.
- Be on the lookout for people whom you respect and admire.
- Find ways to spend time with them so that you can be their student.
- Listen carefully to each lesson and story. Pack their wisdom away for later application.
It will change your life.
Ok, you got set up as an Employer on oDesk. You’re ready to take the plunge hiring your first virtual assistant. Where do you start?!!
To see me do this step by step, check out the video
I recommend starting with a small, fixed price job. A good example is getting a logo designed. This is a relatively short project which will require moderate contractor screening and some management. It’s a good warm-up.
So, go to “My Jobs”- “Post a Job”
For the Logo Design job I choose:
Category: Design and Multimedia
Subcategory: Logo Design
Job Title: Logo Designer
Pretty straightforward, right?
Description: specifics on what I want- a couple draft designs and then I will choose one to refine. Applicants should state turnaround time so I have an expectation and provide portfolios so I can evaluate.
Skills Required: Graphic Design (if this were something else, you could put in specific computer program experience or training you wanted the applicant to have)
Job Type: Fixed Price – This is not the type of job you want to offer to pay hourly. There is one deliverable, relatively uncomplicated, so fixed price should be fine.
Budget: Up to you. The min is $5. You will get applicants for that. Applicants can make any bid for the job. If you’ve really underbid, you will notice that your applicants are not qualified and/or you’ll get a lot of higher bids to communicate to you that the amount you expected is not reasonable.
Estimated End Date: If you have a hard deadline, use that. Otherwise, put a reasonable timeframe down for when you would like the job completed.
Job Visibility: Public- choose this to get applicants.
Choose “invitation-only” when you have someone you’ve worked with before who you know you’re going to hire for this project. You could also use this if you spent the time looking for contractors on the site. A warning about spending a lot of time doing that is that the contractors you think would be perfect for your job might not have room in their schedule for your job or at your budget. When you make your posting Public, you’re going to get people who want the job applying now and for a competitive price.
Advanced Options:
This is where you can add more specific criteria to your job screening. No applicant will be denied by oDesk. The website will let you know which applicants meets all of your criteria.
Feedback Score: I usually put 4 or more
Location: I’m not picky. If you have somewhere that you’d like to hire from for family or other reasons, go ahead and specify.
Test Passed: This is where you would choose more specifically what tests your candidates passed. It’s worth scrolling through to get a sense of all the tests they offer.
Has Portfolio: For this job I check this option. If the job was for phone calling, they would probably not have a portfolio so I wouldn’t check that box.
English level: Up to you, everyone uses their own scale for this one : )
Hours Billed on Odesk: For this job, I would choose “1 or more” so that there would be at least one feedback. You may still get people who are new to oDesk and that’s ok. It’s just helpful to have existing oDesk feedback. I’ve chosen people with no feedback when they were doing a very small job for a very low price. This helped them out with their first feedback and helped me out with a low price. Again, record your preference and you may get a wide range of applicants.
OK- time to take one last look at your posting and then hit “Post a Job” to get the process rolling.
Congratulations! You’ve posted your first job on oDesk!
Next: What you need to know to choose the best oDesk candidate…
Google “work from home” and you will see what 1,000,000′s of other people are seeing in search results. You love the idea of making money in your pajamas but what is the reality??
How do you sift through all the products and plans that practically guarantee money will be flowing into your bank account? Some of them must be work from home scams, right?
Be sure to look before you leap when getting into any work from home based business. Besides checking the reputation of the company and talking with other people involved in it, or no longer involved in it, here are some practical tips for evaluating any work from home business.
read more…
Have you ever thought to yourself while you were doing something that was tedious, repetitive, and like pulling teeth “This is a waste of my time, but it has to get done. Someday when I’m making a ton of money I’ll pay someone to do this for me!!”
Me too! When I heard that I could pay someone as little as $2 an hour to do things like posting ads online, writing articles, making websites, and doing web research, I knew I had to find out more. They are called “Virtual Assistants” or VAs and they live all over the world, where the cost of living is far lower than the US. Places like the Philippines and India have fluent English speakers, even with college degrees, eager to help you in your business, often for less than US minimum wage.
How do you find a Virtual Assistant?
There are many websites that facilitate the hiring of your VA. Some will charge a setup fee and assign you to someone who works in their center and works for you almost exclusively. You will pay a little more for this type of service b/c the agency does the screening, provides computer equipment, and onsite supervision. There are other websites where you can join for free, post a job as needed, and screen and manage your own contractor. The site I prefer for this is oDesk.
Using oDesk
I have used oDesk for about a year now. I LOVE oDesk. It is very easy to post a job, screen applicants, and manage the job. All applicants have profile pages where you can see their work history, portfolios, scores on proficiency tests, and feedback from previous customers. One thing that differentiates oDesk from other VA websites is that there are regular screenshots and activity meters embedded in your hourly contractors time logs. So, if I hired someone to post ads for me for an hour a day, I can see exactly where they were posting and if they were actually working during that time.
Another thing that makes oDesk easy to use on the go is the mobile app. If I’m out of the office, I can still keep in communication with my team as needed.
Pros to Hiring VAs:
- Affordable
- Easy to hire only as needed
- Can get a lot of skills on your team without full time staff
- No need to pay employee benefits
- You get to work with a lot of friendly and talented people from all over the world who say encouraging things like “More power!”
- Don’t deal with logistics of remote employee office setup or corporate ergonomics requirements
Cons to Hiring VAs:
- They are representing your company, you still want a level of integrity from your contractors. This isn’t always easy to screen for.
- They are located remotely so they are not accountable to you 100%
- Time zone differences can be an issue
- Political and weather issues can result in delays (just as they do in your hometown)
- Currency exchange rates can be an issue for longer-term contractors. When their currency falls, it drops their wages. They may need a pay increase to make up for that.
I mention these Cons so you go in with your eyes open. Usually you won’t encounter of these issues if you screen carefully. When you have someone who does a great job for you working longterm, exchange rates may become an issue. Don’t let these things hold you back from getting started employing VAs in your business. Once you see how easy it is to make things happen, you won’t want to go back to doing everything yourself!
Stay tuned for the continuation of this series of articles- 5 Things You Need to Know Before Hiring VAs on oDesk.
Do you believe it when you see it? Or can you believe it before you see it? As a business owner, you are creating something from nothing. You have to believe it will happen and see it clearly in your head. I don’t know how these guys ever figured out how to walk on water. I do know that they had to believe it was possible because otherwise they wouldn’t have wasted their time working on something that was “impossible.” What would you consider “impossible” that will become possible if you spend some time thinking, planning, brainstorming with others, and implementing? You CAN do it. Now get to it!