Welcome back to our fourth week of our blog series for running a stationery business! The last few weeks we have covered some amazing topics for starting your business. If you’re just tuning in, I am putting together a blog series for 12 weeks that is chock full of great advice, tips and freebies to help stationers (and calligraphers) run their stationery business to its fullest. Below are links for our previous posts:
This week we are going to talk about why it is so important to know your numbers in your business. Money is sometimes such a taboo topic to talk about, however, if you want to run a successful and thriving business, you need to know your numbers inside and out.
Know your cost of doing business
I put this topic first because it is truly so important. I feel like so many business owners don’t know where their money goes half the time and if they were to sit down and figure out how much they are spending monthly on overhead items they would be shocked (and even decide to cut some unnecessary things!). When I talk about “cost of doing business” I am referring to items that you pay for (whether it’s yearly or monthly) to actually run your business. These are items that even if you didn’t take on a single client one month, you would have to shell out these expenses to stay in business. Some of these could include your internet, Adobe subscription, gmail business, insurance, rent, CRMs, marketing, social media schedulers, etc. These are items that are not project specific, they are for your business as a whole. I alway recommend sitting down and listing out all of these expenses you pay to see what your cost of doing business is each month. This will help determine what goals you need to set each month or quarter for your business. You know you will at a bare minimum need to make at least that much at the end of a project to cover those expenses that month, and then anything over that will be allocated to other areas (we will cover that in point 3 below!)
Know your expenses per project
Once you know your cost of doing business, you need to start crunching the numbers to determine your cost per project. Even after doing this for 9 years, out of habit I will calculate my net profit percentage from each project. This just helps me to make sure that I am in fact charging what I should for each item or project to make the profit I want at the end of the day. This one is pretty easy and straightforward. You will take all of your expenses per project and add them together to see how much you are spending on each project. Did you spend $75 on wax seals, $50 on envelopes, $200 on printing, keep a running list of these items for each project so you can tally them at the end of the project. It’s so easy to forget when you are ordering multiple items per project. I do this easily through my CRM, Dubsado, they have an expense section for each project where you can quickly add these in. I created this handy Excel calculator that allows you to put in your amount you charge for a project and the amount you spent on a project to calculate your profit percentage per project, be sure to snag it for free below!
Know how to plan for the unexpected
As a business owner, we usually have a friend named Murphy, and him and his law follow us around just waiting for the perfect time. While being self employed is one of the most rewarding things I have done, there are so many variables that we simply cannot control. If it’s slow season and clients aren’t there, we don’t get paid, if we get into an accident and can’t work, we don’t get paid, our computer crashes, we have to buy a new one, we want to take a 6-week sabbatical, haha yeah right. See where I am going here? How many of you have personal savings account? I would like to think everyone just raised their hands. So why would you run your business without a savings or safety net? I truly believe that you will enjoy life and your business more when the stress of money isn’t hanging over your head. I recommend having at least 3-6 months worth of expenses set aside for your business. Remember that cost of doing business we calculated up in step one? That’s what I am referring to, take that and multiply it by 3 or 6 depending on what you’re comfortable with. This could also include whatever salary you need to pay yourself. Does your family depend on your paycheck from your business? Then you need to know what your bare minimum bring home needs to be for your family and include that in your 3-6 months of savings. So heaven forbid that slow season lasts way longer than expected (been there), or you owe more to Uncle Sam than you thought (yep, been there, too) you will have it set aside.
I hope this has helped and be sure to snag your free profit percentage calculator below!