As a one-man show, I have do a lot of things myself to keep my business running smoothly. A few smart people offered their advice when I was starting out, saving me a ton of headaches.
When I started, I didn’t have a clue. Today, I take these systems for granted. Had no one helped me, I’d still be figuring this stuff out.
Whether you’re just getting started in your own business, or you're looking for a few ways to streamline some of your systems, implementing these strategies will save you time and effort in the long run.
1. Create a Smart Invoicing System
Because I have a lot of clients, I have to write a lot of proposals and invoices. If you don’t have a good system for this, you run a high chance of messing something up.
There’s nothing more important to your business than knowing what’s going out, what’s coming in, and when it’s all happening.
When I started out, I used the numeric coding included with all generic templates (001, 002, 003, etc.).
But as things become more complicated, you’ll need to create a system that tells you exactly who the proposal/invoice is for and when it occurred.
You’re after scalability here; the ability to have your system grow as you do. Create a smart system now, so you won’t have to figure this out as your client list grows.
Here’s how I order mine:
The first number on the proposal/invoice corresponds to the current year.
Next is a series of two letters that correspond to the name of the business I’m working for. (e.g. Kraft Foods = KF)
Lastly is a hyphenated number that corresponds to the month and they day I created the proposal/invoice.
For example, if I did a piece of writing for a business called Johnson Brothers on April 1st, my invoice/proposal number would be #15JB-0401.
I can quickly glance at this number and no exactly who the invoice/proposal was for and when it occurred. I don't even need to open it.
Whatever coding system you devise, make sure it gives you enough information to remember the work.
2. Create a Spreadsheet to Track Everything. (Your accountant will love you for this).
I love creating spreadsheets. It gives me some weird satisfaction. A good spreadsheet creates control. If you do it right the first time, you won’t have to mess with it later (which becomes a huge procrastination tool if you let it).
First, give your spreadsheet a title that corresponds with the current year. Within it, create separate sheets (the tabs at the bottom) to help you keep everything in one place, but broken down within one sheet.
There’s a reason people hire secretaries and assistants to do this sort of thing. It’s time consuming. And it’s easy to let slip. Make sure you set aside time each week to update your spreadsheet, otherwise you run the risk of missing important information. I like to do mine on Friday mornings, but lots of people set this type of task aside for the weekend.
The most important thing you should track is your income. If you let everything else slip, you can figure it out later. You don't want to do that with your income. It baffles me when I hear stories of people who forget to collect money. Don’t be that person!
At the very minimum, you should track three things:
Invoices for income – with dates out and in.
Business Expenses – for write off purposes on your taxes
Mileage – if you’re traveling for work, you can write this off too.
3. Getting Paid
This is tricky. People have their own systems for paying bills and sometimes their system doesn’t sync with yours.
When I ask other business owners about getting clients and customers to pay them in a timely manner, they all say the same thing: “There’s nothing you can do about it.”
To some degree, they’re right. But you can take some of the stress out of it by thinking through a few scenarios.
Now let me be clear. While we’d all like to be paid the same day we complete work, that’s not realistic. While I do include “Payable upon receipt” on all invoices, it's my experience that the vast majority of clients pay me as soon as they’re able, usually within a few weeks.
Creating Cash Flow
Making sure money was coming in steadily was not something I gave a lot of thought to until it wasn’t happening.
It’s essential to create a cash flow in your business. Without it, you’re at the whims of a feast and famine cycle, creating stress upon you, your business, and your family.
One way I’ve been able to expedite payment has been through the use of PayPal (I’m not an affiliate, so this is not a promotion, just a recommendation).
If clients pay me from a PayPal account, the money shows up instantly in my account. If I want to transfer that money to my bank account, it takes three days.
The good thing about this is that waiting on my own transfer is less of a big deal than waiting on initial payment from someone else. I've got the cash in hand, technically.
If the client uses a credit card, PayPal charges 2.9% interest on the total charge and an additional .25 cents per transaction. I include a flat 3% charge with each invoice, making it very clear why it's there. I then put the client on the honor system by making it optional, depending on their payment type.
I've never had a problem with a client not paying the additional transaction fee if they use a card.
Establishing Payment Terms
Another system I used to protect myself and create some cash flow is to collect half of the total project up front. Clients usually pay the first half quickly because they want to start the project right away. It builds trust and it greases the gears a little.
Often times, though, collecting the second half takes a little longer. There’s a fix to this.
You can set up a 50-25-25 system, where you collect half up front, twenty-five percent when the project is near completion (you should provide proof of this), and the final twenty-five percent at the completion of the project.
I’ve also seen systems of 50-30-20.
Whichever system you choose, the idea is to mitigate your risk and increase your cash flow. In any case, make sure you’re crystal clear with your clients and customers about your policies.
They’ll appreciate knowing your expectations and you’ll appreciate their timely payment.
There are lots of little things you can do make your business run smoothly. I couldn’t possibly cover them all in a blog post. I have faith that you’ll figure out your own systems as you go.
The key to all of this is to think it through first. Imagine yourself in certain scenarios and then plan for them.
While you can change course as you go (and you should if you need to), it will save everyone – especially you – a lot of time and effort if you plan ahead.
Like I mentioned earlier in this post: the things we may take for granted now, aren’t obvious to everyone when we’re starting out. So I’m curious…What systems have you implemented in your business that have had a large impact?