It was 6:00 am, Brandi, a freelance copywriter and graphic designer instinctively reached for her cellphone to type herself a note about a killer ad line idea for a client. (“Is your business financially sound? Think Again.) “Not bad,” she said as she placed her phone on the nightstand and jumped out of bed to prepare for the day. 40 minutes later, Brandi sat at her desk, in her home office, sipping on hazelnut coffee from her favorite mug. She read through her emails, checking to see if one of her newer clients liked the radio script she had written the day before. They did. She smiled.
After she had responded to the rest of her emails, the next task on her list was to make sure her invoice system was up-to-date. It had been 18-months since she had taken the plunge into self-employment and business was booming.
Business was sporadic at first, but recently in the last six months, Brandi had received tons of referrals from small and large companies as well as repeat clients. At 8:00 am Brandi began to review her bookkeeping records. She had a natural knack for being organized; which worked in her favor when ensuring that all of her revenue was being recorded accurately. She had been so enthralled with her records that she hadn’t noticed her husband calling her name from the office door.
“Hey beautiful, are you ignoring me?”, Robert asked as he took a seat next to Brand’s desk. “Ignore you, never’,” she said. “I guess I was I was caught up in making sure my books were up to speed.
Robert leaned closer to Brandi to view her computer screen.
“The numbers look good baby; which services are bringing in the biggest income?” He asked.
Brandy looked up from her computer screen and looked slightly dumbfounded.
“I’m not sure?” she replied.
“Are you recording each service into a separate revenue account?”
“No, I’m not. I didn’t think I needed to separate each service.”
“Honey, I think you need to consider having each service under a different cash flow record. That way you can determine which service brings in the most money per month and which services are not beneficial financially”, he said.
“You know what, I never thought about separate revenue accounts. That’s why I keep you around”.
“I see we have jokes this morning. Now have a wonderful day at work; I’m heading into the office”.
Small Business Lesson: Cash Inflows
As a business owner, you understand and strive to make a profit. This helps in making the right decisions, such as what kind of product/ service to offer and which services to discontinue. In Brandi’s case, she needs to clean up her revenue management files to accurately identify, record and categorize each of her services such as web design revenue, logo design, editing, etc.
Similar to Brandi, if you document various sources of income, you will be able to determine if the product or service is worth offering. As a small business owner, ask yourself:
1. Is there a demand for your particular service?
2. Are you priced too low or too high?
3. Do you need to eliminate the product or service, or perhaps modify it some?
4. Do you want to invest marketing dollar into this declining product or service?
Don't be afraid to eliminate a product or service; this will allow you to invest (money, time and energy) into services or products that are bringing in the big money and better profits.