Are you living hand to mouth? Because you’re not alone; this is not a strong economy, and many people are struggling. And though I’m very fortunate to no longer be in that situation, I lived just that way for more years than I care to remember. Here are my suggestions to help you out of this terrifying position. Yes, some of them seem obvious, but looks can be deceiving and things that seem obvious are often the hardest to remember. Keep these tips in mind, and I promise you’ll start living better.
1. Do your very best to build a financial nest egg. What does this mean exactly? It means having a savings account worth 30% of your annual income or as close to that as you can manage.
2. Every three months, sit down and evaluate your financial situation. Yes, I know, this is not fun, and it can be extremely hard to face the reality of your finances. But ignore them, and you’ll eventually be forced to face the consequences. Trust me, that hurts A LOT MORE. Once you have a clear understanding of your current finances, make a projection. What jobs do you have? What jobs do you think you have a good chance of getting? Do you need to start increasing your sales’ efforts? Answer these questions honestly. Now is not the time to kid yourself. Use this new-found awareness to keep you grounded and help you make smart money decisions in the coming months.
3. When clients give you a deposit NEVER use that money for anything other than their project. Otherwise, you might find yourself in a game of stealing from Peter to pay Paul.
4. Be consistent with your profit margin. If you’re not making the proper profit, which is 50%, then you’ll mostly likely always be cash poor. You must learn to charge what you’re worth, because there are lot of expenses and lot of people you to need pay at the end of every job.
5. Don’t forget Uncle Sam! You work for yourself, which means no one is taking money out of your paycheck to cover taxes. You must set aside money for taxes in a separate account. Never, and I mean never, use this money for anything other than taxes.
I live for wedding and event planning and designing. What I don’t live for is dealing with money, but I do need money to live! So, I have learned the very hard way that I must pay close attention to my finances and that doing so is just as much a part of my job as planning and designing. Being cash poor and not making the proper margin is not fun, and it severely limited my ability to do all that planning and designing that I love so much. Please learn from my mistakes. Be financially savvy, and you’ll get to keep doing what you love for decades to come.
Now a few questions for you: Do you find it difficult to make a 50% profit in this economy? Do you think that the competitors who are outbidding you are making a 50% profit? Have you ever accepted a job even though you knew you weren’t going to make the necessary profit? Was it worth it?
Up Ahead: Next week I’ll address the pluses and minuses of offering a discount.
George Bernard Shaw once said: “You see things and say, ‘Why?’ But I dream things that never were and say, ‘Why not?’” That quote embodies how Preston Bailey approaches every event.
