Become aware of your expenses. What gets measured gets managed. There are four key points to consider when managing your expenses:
1. Be aware of the percentage of money you have to put aside
As an example, it might be that 40% of everything you earn belongs to the tax office. The remaining 60% has to cover expenses, professional development, wages and savings. There will nearly always be more expenses than income in the first period of business. After the initial outlay of expenses always remember – spend less that you earn. When borrowing, always borrow less money than you can afford. Do not overextend yourself.
2. Have money set aside as a cash buffer
When setting up private practice you will have high expenses and low cash flow. Having a cash buffer will give you flexibility and will reduce stress. Spend money wisely upfront to save money in the future.
3. Have the tools to measure expenses
Remember – what gets measured gets managed. Regularly measuring expenses will allow you to identify and rectify and issues early on.
4. Billing weeks are limited
There are 44 billing week per year. There are 52 weeks each year that you will have expenses. You need to be aware of your expenses so that you can set weekly and or monthly income goals. Your invoicing target will depend on your goals.