3 November 2015
For many up and coming in the heating and plumbing industry, the time comes when you think about branching out on your own by starting your own business and building up your client base. Before stating, it’s important that you do some careful planning so that you don’t find your plans have fallen through before you even get started.
A good place to start is by working out the number of hours per week you are likely to work. You also need to factor in holidays, lunch breaks and other time that you aren’t actually earning, as well as accounting for seasonal variations and whether you have additional outgoings to enable you to do the job properly. These calculations should help you to come up with the most important figure of your business - what you will charge per hour in order to live.
Once you work out how much you need to charge, you then need to give some consideration to your daily, weekly and monthly cash flow once you are out on jobs. If you have some money saved then this takes the pressure off slightly, but if not, then this area needs some serious planning.
You will need to buy materials to get started on a job, so you will need to take an initial deposit from the customer or make arrangements so that customer can buy the materials directly themselves.
If you are starting out on a particularly lengthy job, you may want to get the customer to pay you in weekly or fortnightly installments. This will help you have a steady cash flow as well as creating regular communication with the customer, which is always helpful for solving any issues or problems.
Make sure you get your invoices out in a timely fashion, as it’s far more likely a customer will pay with minimal difficulties soon after a project has been completed. The longer you leave sending out an invoice, the increased likelihood the client will not pay. It’s also a good idea to send out the invoice, then immediately contact the customer to check that they have received it. This gentle reminder ensures that the the excuse of not receiving the invoice cannot be used, as well as acting as a polite prod that the customer needs to pay.
Think about how you will accept payment. Cheques are very old-fashioned and outdated, so being able to accept cash, cards or bank transfers is much more of a convenient option. Also remember to put aside money each month for your tax returns and remember to file all business-related VAT receipts.
It’s worth investigating getting a business credit card, as this can provide immediate cash flow for large or unforeseen purchases. Needless to say, a credit card is not free money, so it needs to be used sensibly. Many suppliers offer merchant accounts where you can get things on credit, paying later at an agreed time. This can really be of assistance to your business, especially as they often offer discounted rates.
If you give the points raised above some serious planning and consideration when you are just starting out in business, you will save yourself some big headaches further down the line and will be more financially and mentally prepared to overcome the inevitable obstacles that will come your way.
Article by Benjamin Clarke
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