Budget Calculator

THERE ARE PLENTY OF WAYS TO GET AHEAD. THE FIRST IS SO BASIC

I’M ALMOST EMBARRASSED TO SAY IT: SPEND LESS THAN YOU EARN

Paul Clitheroe
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KEY FACTOR:

Unfortunately, because this looks like an easy business to start, the majority of owners do not have sufficient funds in their bank accounts to last through the first stage of their company-existence. Existence is exactly that. You are simply trying to get your company launched. If you have less than 50 clients you are in the existence stage. When the average residential cleaning service owner is finally in stage 2, survival, they have often times run out of money.

The opposite is an owner who starts with $30-50K in the bank but does not have a budget and revenue plan. They could easily be out of money and business before the owner who started with no money in the bank.

To lead and manage a company with staying power you must manage your finances. Surveys show that the one thing that millionaire’s have in common is they have both business and home budgets and know where every penny is spent.

Benchmark the millionaire, not the owner of the trucking company who owed 100 trucks and did not make any money so he bought another 100 trucks. That will not fix his problem. Larger size does not always mean larger profit dollars for you.

ACTION ITEM:

Start by figuring out how much take home pay you will need in the next 12 months.

Next write down all of the expenses you will have, by the month, operating your business. I recommend you use an excel sheet for this. If you are going to be the only cleaner to start your expenses will be much lower than when you have employees. You will add an employee about every 16-18 added repeat clients, for budgeting purposes.

Add those expenses to your personal income needs and now figure out how many homes you are going to have to clean to make that gross amount of money. You can figure this out by determining how much you are going to charge by the hour (even though you should never tell a prospect and hourly rate, your business is run on that number). Assume that a cleaner can clean 6-7 hours per day and the average home is 3 hours of cleaning. Using those numbers you can calculate the number of homes you will need to clean. Be sure to prorate the value of the homes based on the month they are sold in. The client you sell this month will be worth 12 months of revenue to you in this year’s budget. The client you sell 11 months from now is only worth one month of revenue to you in this year’s budget.

IMPLEMENTATION PROCESS

Do not spend a penny that is not in your budget. If you have excess money left over at the beginning of each month, after paying yourself and your taxes, that is the time you can decide to spend extra money on advertising, education, seminars, employee ‘treats’, etc. If you run 3 consecutive months ending the month with extra net income you can revise you budget for the remainder of the year, planning to spend more money on certain areas by design in your budget.

Rags to Riches has a revenue and budget calculator that will calculate income and expenses for 3 years. It is simple to use and can tell you exactly what you will make if you sell X amount of clients per week.

Related Product: Budget Calculator

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