Cash Management Tips
One of the biggest reasons that such a high number of martial arts schools fail is simply due to cash management issues. I’m going to share four basic strategies for you to follow to help you make your business more stable.
The Strategies Are:
Create six months of expense reserves
Open a retail bank account
Get a “reward” credit card and pay it off each month
Make a $10, 000 emergency fund
Create Six Months of Expense Reserves
One of the first things I learned when I started my first martial arts school was that it was important to have savings that totaled at least six months of my personal and business expenses.
Because you can’t predict the future and things don’t always go as planned having this type of security can give you peace of mind that you can have money to pay your bills and maintain your income if you are injured and lose the ability to teach for a while or if something happens to your business and you miss your income goals a few months in a row.
If you currently don’t have a six-month reserve put away, then start today and figure out how long it will take you to accomplish this and get to work on it.
Open a Retail Bank Account
Because you should run your retail pro-shop like a separate business, open a bank account for purchases. This way it’s easy to track how much money you’re profiting vs. spending.
Your pro-shop should always be in the “green” or profitable except perhaps the first month or two you set it up.
This also allows you to maintain easy control as the only expenditures will be for retail-related items.
Get a Rewards Credit Card
One of the ways that you can further maximize your savings is t0 use a credit card for business purchases that offer some type of incentive.
This could be in the form of cash rewards, airline mileage, or a program that allows you to use your points for just about anything. Be sure to select a card that does not have an annual fee. There are plenty of free programs out there. Be sure to pay it off each month. NO DEBT!
You can visit websites like: Creditcards.com or Creditcardguide.com to compare offers and apply.
The most important part of using your credit card for business is that you PAY IT OFF each month in full.
This requires again that you know how much money you have coming in and that you are disciplined when you use it.
If you can follow these guidelines a rewards card can help you more money.
Make a $10,000 Emergency Fund
Since your six months of savings isn’t to be used as your first choice for smaller emergencies, you also should have simple savings account with at least $10,000 in it.
This emergency fund can help cover unexpected expenses that can pop up out of nowhere.
You may have done some fuzzy math and realize you’re about to bounce a few checks (costing you $100.00 in fees and your reputation), need to pay your health insurance deductible, replace a broken mirror, or even window outside of your school after a bout with vandals.
By using these four valuable cash management tips, you can maximize your business stability, peace of mind, avoid over-spending on retail products, and earn some nice rewards in the meantime. Get started right away!
Your Action List
Open a second account at your bank for your retail purchases and revenue.
2. Shop online and choose a credit card that is reward-oriented for your business and apply.
3. Review the amount of money you need each month to live off of including all business expenses. Multiply it by six months to get the amount. Begin putting away money monthly until you have a six-month reserve.
4. Move $1,000 into a savings account for emergencies.