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Tools and supplies: “Buy in bulk.” They cost less that way, normally. And, you will use those brushes and roller covers every day!
Careful! That includes sandpaper, caulking, spackling, masking tape and paper, clean rags, and breathing masks. Oh well, the price has just gone up.
The message here: You can only do so much in order to save and show increased profits. It has always been standard policy to expense out certain unavoidable things that come off the top. If you try and change that equation, here is where “debt” shows its ugly face. But let’s not go there unless we have to do so.
What do you do then?
Every month, you will have fixed costs that have to be paid. Sometimes, there will be “additional” costs that you won’t see coming. Don’t anticipate. Plan!
Make sure you have a “basic” ledger for your accounts. Include “Accounts Receivable” and “Accounts Payable.” Don’t forget accounts for “Petty cash,” “insurances,” and “Taxes.”
Every cost, expenditure, and outlay of cash must be accounted for.
Here are some general guidelines to help you work through those budget cuts.
1. Never assume, or absorb, the cost of the needed project products and materials yourself.
Make certain that those items are paid for up front, by the customer, before the work begins. No cost to you. Examples: Primer, paint, stain, varnish, wallcovering.
2. Figure in the cost of all related items. Include them in your project estimate or projection presented to, and agreed upon by, the consumer.
Try not to overlook the “small stuff.” It can add up fast, without you knowing it. Examples: Vehicle gas, oil, and repairs; faxing, long-distance calls.
TIP: Get that agreement in writing, before you start any phase of the project.
3. On a weekly basis, update your ledger. Prepare payments to creditors at the same time. Generate a reliable system that works for you. One with a low margin for error.
4. Properly schedule and “budget” the money for equipment repair and maintenance.
Ensure that the equipment, and more expensive tools, which you count on most to do the work, will operate correctly and efficiently. When you need them! Do not let them become neglected, and inoperable. Examples: Spray guns and hoses, compressors, power washers, scaffolding, etc.
5. Account for your time. That is the largest part of a budget. Generally, you can charge (1) by the “hour,” (2) as part of your “salary,” or (3) by the project. Whichever method you choose, charge according to the gross and net incomes that you require to provide for your business and personal needs.
6. Figure in total operating cost, plus 20-30 percent profit; divide by 30. This is the amount of gross revenue that you need to pull in every day to succeed.
7. Pay your creditors promptly, and regularly.
8. Remember: Greed and irresponsibility do not make a good budget.
A painting budget is like most other budgets. Simplify it as best you can.
Build your net profit slowly over time.
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Stay afloat! Budget safely! Thanks for visiting “Painting with Bob.”