As a small business owner and tradesman, you often take the time to watch your money. But do you have a formal budget? Budgeting helps you get through the slower times and lets you re-invest into your business. These budgeting tips for Canada tradesmen can help you achieve your business goals.
Tradesman Tips for Padding Your Nest
When planning a budget around your career as a tradesman, the first thing to consider is lean times you might experience. Most construction and contracting work is seasonal, with business waning when the cold sets in and rising again once warmer weather breaks. This is one reason why it’s a good idea for you to set money aside for an emergency fund when business is good.
When you’re thinking about creating a rainy-day fund, consider how much you require monthly in terms of salary, then set aside enough to cover at least one month of personal and professional expenses without business revenue. Over time, you can increase this to at least three to four months of salary for times when workloads drop. This nest egg offers you peace of mind during slower periods.
Equipment Repairs and Replacements
Do you find that your equipment wears down and becomes less effective over time? Do you also notice tools can sometimes go missing on a job site? Do you need a new tradesman workbench? Broken or lost tools can bring your job site to a halt when you work in the trades, and for that reason, it’s a good idea to set aside enough money to cover the basics should incidents involving your equipment occur. One way to determine how much you need to save is by calculating how much it would cost to fix or replace the key items you need to work efficiently and productively. If you save enough to purchase a new piece of equipment entirely, it might be prudent to upgrade, then keep the replaced item on hand for emergency use.
Separate Your Money
To establish clear lines between uses for your money, consider setting up multiple bank accounts. This helps you separate money you have to pay to cover quarterly or annual taxes, funds you need to cover business expenses, your personal salary, and your personal retirement funds. You can also set up special savings accounts to cover the repair and replacement costs of tools to ensure you don’t spend it on other things and find yourself with an interrupted income because of missing equipment.
When you’re starting out in your career as a tradesman, you can get off on the right foot by creating a budget that guides you through your company startup. This helps you determine how much money you have, how much you can spend, and how much you need to earn to meet your professional goals. As your trade takes off, you can refer to this budget to keep yourself on track for success while reinvesting in your business along the way. Using a budget template can take the guesswork out of planning by pointing out things you might not have considered.
Whether you’re going into trade delivering food across the country or flowers across town, opening a plumbing or machine shop, or throwing your hat into the contracting or construction business ring, creating and sticking to a budget can set you up for long-term success. Plan your expenditures carefully, and always ensure you have enough funds on hand to cover essentials plus some extras.
As a small business owner, you want to keep an eye on your cash flow and grow your company. Always know exactly where your business stands. Make smarter business decisions now with Quickbooks.