Many event planners are small business owners who are solely responsible for getting the clients and cash flow needed to stay in business. If you are new to running a business, it can be a challenge to determine how much you need to make to cover expenses, taxes, and savings for a rainy day. Below, we are talking about the basics of managing cash flow.
1) Know what you are spending
Whether you use financial software or a paper and pen, write it down. Most business expenses are tax deductible but you need to keep track of them. Keeping expenses organized by month will help with the next step of projecting spending.
2) Project future spending
As your business grows, you can see what you have spent in the past and can predict what you will spend for this year. I have a monthly amount that I spend, on average, for my planning business. This amount covers my marketing, networking, taxes, office supplies, and industry association memberships. I know that I need to cover this amount every month before I pay myself so that I can stay in business.
3) Charge what you are worth
Most wedding and event planners charge too little for their services. We love what we do as event planners, but we are still in business to make money. I know that you want to help people, but it’s not your job to finance anyone else’s event with low-priced services. If you go out of business, then you aren’t able to help anyone. Consider raising your rates.
4) Know your incoming cash flow
If you own your own planning business, you need to know exactly how much money is coming in each month. It can be as simple as an Excel document that has every month of the year listed with the date and payment amount you are expecting for each month in the future. When you book a new client, add their payment dates and amount to the correct months for easy reference.
5) Watch what you spend
Every dollar you spend on your business should add value and move your business forward in some way. If you have a slow year, every dollar matters. If you have a great year, you can save for a slow year and invest in your education and business.
Knowing what you need encourages you to get out there and make it happen. Sage Wedding Pros has some fabulous free and low-cost downloads to help you with cash flow management. Once you have an understanding of cash flow and spending, business becomes much easier because you know what you have and what you need.