One of the key components of running a successful web design business (any business really,) is to manage your money effectively.
Most businesses go out of business, simply because they don’t follow some basic money management rules. The following are my ‘Killer Money Management Rules’.
Top 6 Killer Money Management Rules
1. Credit cards are for transactions only - not for carrying debt. Pay off your entire balance every month!
2. If you can’t buy something cash, don’t buy it.
3. If your bank account is not increasing every month, it’s time to go into crisis mode.
4. You should have a stash of ‘fcuk-you’ cash … one years worth. So, if you spend $2000/month to live, you should have $24 000 in the stash. The stash should be held in a no risk, immediate access account like an ING account.
5. Never touch your emergency stash unless it’s an emergency. Having this stash makes you sleep well at night. I call it ‘fcuk-you cash’ because when you know you will be fine for a year, you can tell idiot clients to … you get the idea.
6. Create a separate retirement account/investments that you pay into regularly and first - this is a ‘never touch’ account.
Lots of business owners pile all their funds in one place (as I did) and then end up broke at 55. Fortunately for me, I learned these lessons young.
LOL @ the FCUK U stash…
Mostly for American Designers, I don’t know how European taxation works…
I just got my Business registered with the state and got all the financials straightened. It is also invalueable to save EVERY reciept for things you buy related to the business. These can be given to your tax preparer come tax time, and will go against all your moneys in, hopefully balancing you back to 0. I buy a lot of books, computer peripherals, hosting accounts, programs, etc. All of these can be written off at the end of the year provided you can provide reciepts.
Another Idea for managing funds etc….
Keep a Money In and Money Out balance sheet.. I do this through Excel and it works wonderfully. Whenever I spend a dime on anything for the business I mark it in the sheet. Whenever I charge a client for anything it is also marked. You can take this a step further and combine the two sheets and get a good idea of your total capital. I also try to give all my clients reciepts for everything. Paper trails are good. I am working on putting together a more professional business demeanor and looking through diffrent aspects, things like proper proposals, fully itemized reciepts etc. For me this is one of the hardest things, since I am a scatterbrain.
Hope this helps someone
Robert
Hello,
I need to put my 2cents worth in as that’s about all I can afford!
As a person who regrettably deserves such heroic titles as
‘The Procrastinator’ and ‘Dr Distraction’ I can’t offer the standard good practices advice of the folks above. It’s important however to allude to one detail that is often a designers downfall and the least appealing requirement of a hardly fought design deadline. Payment for thy self.
As a job often goes over time in my world I become reluctant to encourage charges that tip over and above the “quoted” schedule / fee. That in turn creates reluctance approaching for the initial payment(s) too. In a misguided effort to please I have always asked for payment at the end in a lump sum. Bad move.
In short, if I could rewind the clock, I’d never do anything but 1or2 weekly payments for services rendered. That creates light paperwork with no issues of backtracking - accounting for time, expenses and physical product. 1 hr a week instead of hrs of papertrail misery after an exhaustive job. It’s the last resort.
Be vigilant with your time/paper records as Robert mentioned, if your like me and don’t relish sitting for 8+ hrs in front of the box in a row, preferring to move between work and play, buy a logbook for work hours (set up excel log too). And don’t ever leave the room without putting the entry/leaving times (Sounds lake a factory). Even have someone you report to weekly make sure all time + exp are accounted for. You deserve the rewards.
It all adds up and can really help for quoting another similar job better.
Over and out, of pocket.
Julz
I spend a dime on anything for the business I mark it in the sheet. Whenever I charge a client for anything it is also marked. You can take this a step further and combine the two sheets and get a good idea of your total capital. I also try to give all my clients reciepts for everything. Paper trails are good.