How well you understand business finance will make or break your business.
It’s the difference between weathering difficult times, and stumbling at the first sign of trouble.
Understanding business finance puts you in control, so you can make sound decisions that increase your wealth and give you more time with your family.
But financial management is more than just balancing the books. When you’re running a demanding service business, financial management means everything from how you set your prices, to who you choose to work with.
We asked 12 entrepreneurs and financial experts for their best business finance advice and the tools they use to stay sharp.
Here’s what they had to say:
The Best Financial Advice for Small Business Owners
1. Start now, even if you start small
“It’s OK and fairly normal to be lost or overwhelmed by ‘knowing your numbers’—the real key is doing something about it before it ruins all the hard work you’ve put into your business. The best resource in my opinion for accountable financial management is building systems and a team around your business. It starts with a system that will give you accurate data in real-time. Next, build a team of people around you who can take that data and help explain what you don’t understand.”
2. Make a simple budget and work from there
“The best financial advice I’ve ever received is to do the right thing consistently, and the money will follow. That’s from Matt Boelman, my business partner.”
Start with a simple budget and know your monthly burn rate and break-even point, then work from there. Know what you need to charge to be profitable and stand your ground on pricing. Listen to industry podcasts, (The Green Grind, Fullerton Unfiltered, Green Industry Podcast, Lawn Care Leaders) read books, get a great mentor, and watch what others are doing. Most importantly, don’t get caught up and mistake looking good for being profitable.”
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3. Learn the language of accounting
“The best advice I have ever received is that the language of business is accounting. If you can’t read the scoreboard, you can’t know the score. And if you don’t know the score, you can’t tell the winners from the losers. I got this from working with Keith Cunningham (see the video below).” —Kevin Simpson, Executive Business Coach
4. Become a student of your numbers
“We got into business to make a profit. The problem in the home service industry is that the majority of contractors do not charge enough for their services because they do not have a firm grasp on what they need to charge to make a profit. You don’t set your price upon what the competition is charging. You set your price based on the profit you want to make and all the costs associated with running your business.
There are hundreds of line items (expenses) to pay for in your home service business. You need to account for every one of them. I have learned to become a student of my numbers and know all the costs in my business. If you are not on top of your numbers, everyone in your company will get paid except for YOU the business owner.
The podcast I like to listen to to help train my mindset in this is the ‘Wealthy Contractor Podcast.’ It talks about pricing and how, as business owners, we need to be on top of our numbers. A key responsibility of being a business owner is knowing your economic business model and ensuring that your business makes a profit.”
5. Focus on recurring revenue instead of one-time gains
“I love the book The Automatic Customer. It talks about creating a recurring revenue stream in any business. Create greater value in your business for now and when it’s time to sell later.”
6. Always, always price for profit
“When you’re starting up, it’s easy to think that you can charge less than everyone else. Then you get to the end of the year and realise that you haven’t made any profit after all the expenses are accounted for. My best bit of advice is to charge enough and always charge at least what the competition charges. And always expect your costs to be higher than you budgeted for.
Network, network, network as much as possible, Facebook is a good starting point. Even having a chat with the local competition can often lead to work.” —Robbie Lynn, Premier Lawns
7. Don’t neglect your personal life and wellbeing
“My finance professor in college said on the first day of class, ‘if you don’t remember anything else from this class, remember to invest in your marriage.’ He’d made tens of millions serving as a former CEO and chair on several boards and he’d also been divorced 3x so he very much spoke from the heart.”
8. Get yourself out of the field
“The best financial advice I ever received was from my mentor, who told me to learn to bill other people’s time. My time is finite.” —Hunter Kipps, Kipps Kustom Scapes
It’s easy as an entrepreneur to feel like you have to do everything yourself. Don’t fall into this trap.
Hiring others to do the work—whether that means more technicians in the field, office staff, or project managers—frees up your time, so you can delegate, scale, and increase your business’ equity.
Whatever your dream team looks like, remember, you’re not in this alone.
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9. Learn how to value your time (then teach your customers how to do the same)
“The best financial advice I have is to:
(1) pre-qualify potential clients before putting time in
(2) learn to say no, and
(3) a free estimate means you and your potential client value your time at nothing.”
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10. Save more than you think you need
“Don’t save up ‘6-months of living costs’…save at least double that. I do landscaping and tree work; if I have a pine knock me in the head tomorrow…that 6-months of living might not seem me through to when I can work again. I try to keep more like 18-months of living costs saved in the bank.”
11. Structure your business to protect your personal assets and save on taxes
“You may have started your business as a sole proprietor, but you’ve now started to build a pretty solid client base and the company itself is growing financially. It’s times like these when you need to assess your business’s structure for tax implications and to protect your personal assets.
I have a client who started out as a single person operation, and is now filling large contracts to multiple vendors. There was a huge tax savings of over $10K she could have mitigated, if she had properly addressed the business structure. She ended up incorporating the business later.” —Coreina Hubert, CorePro 8
12. Learn how to spot a scam
“One of the biggest reasons why scammers target small businesses is because entrepreneurs like you typically don’t have the means to protect themselves against scammers like large corporations do. Every business needs to pay close attention to cyber security when leveraging technology, e-commerce platforms and electronic payments. You need to make a point to regularly update your anti-virus software and firewall to ensure that your data and your clients’ data is protected.” —Varun Ranipeta, Security Engineer
Keep the Conversation Going
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