One of the very easiest ways of starting a business is to become a service provider. This is something a lot of entrepreneurs will try on their journey to having a business and a life they love and many have done so in San Luis Obispo County. And they have done it well. In 2015, the San Luis Obispo / Paso Robles / Arroyo Grande metro area was ranked sixth in the nation for small business success. In 2013, San Luis Obispo County had 7,873 employer businesses compared to a staggering 23,558 non-employer businesses (hint – those are the small businesses like yours, often a service provider, just starting their business, with no employees yet). This statistic corresponds with national numbers. Currently, there are about 27 million small businesses, with approximately 3 quarters of them being run by solo-entrepreneurs. Those numbers come from the SBA (Small Business Administration) and since they don’t aggregate and publish often, the numbers are a little old, so you can guess with certainty they are bigger now! As a nation, we have an average growth rate of 2% on small businesses, but with San Luis Obispo County being in the top 10 in the nation, we may well be growing at a faster rate.
The point I wish to illustrate is that there are a lot of people just like you, starting a business as a service provider without any employees. And why is that important? Because businesses experience common problems arising at similar stages in their development and the solo-entrepreneur predictably will be trying to do everything themselves. Are you trying to do everything yourself? How well is that working for you.
One of the most common complaints I hear is about overwhelm. So, let’s talk about the elephant in every service industry business – billing. Many service providers do not get paid when the job is completed but must bill for their services. If you are starting a business by yourself without an employee to manage billing and invoicing for you, go grab your green accounting hat and add it to the many, many hats you’ll wear as an independent entrepreneur. It is very simple. If you fail to stay on top of your billing, revenue won’t keep flowing in and your business will stop before it truly starts.
Here are some very simple, effective strategies to help you when you’re starting a business. Ready?
Every service provider starting a business will want to find a way that best suits them and their activities to track their time as well as manage it. This is the first step for billing (and if you think you will remember, I guarantee you will cost yourself a lot of uncollected earnings). You will find your needs are two-fold: a calendar for scheduling and a tracker for work performed for billing. Depending on your business, they may be one and the same. Let’s say you offer massage therapy: clients schedule with you for blocks of one or two hours and you add them to a calendar. You must also somehow mark that the service was or was not completed. When service providers are starting a business they will want to experiment with calendar options. Here are a few tips:
- Dry Erase Calendar Whiteboard – Keep a quick list of appointments (or use the whiteboard with the calendar markings) and mark with green or red which ones your need for your end-of-month billing. Great for daily appointments like in-home services. Also great for goal setting while you are just getting started and for those of us with an artistic penchant it can be a lot of fun too.
- com – Web and mobile app for detailed time tracking. I love this app! You create “projects” for clients and simply press “start” to track your work online. You can stop and start easily and track billable time as well as activities for billing.
- TSheets for QuickBooks Online – Mobile time tracking app. Clock in and out according to customer and link to invoicing in QuickBooks.
- Google Calendar – If you want a colorful online calendar with integrations into Outlook and your phone, this is a great way to go. Tip: Use the note field in events for stage two, time management.
If you are just starting a business or you find yourself in overwhelm at any stage of your business, it is also useful to track your administrative, marketing and business development time to find areas where you can become more streamlined and effective or find areas where you may need to hire help.
There is a real time vampire to your billable time when starting a business. Those emails just come flooding in like the tide, don’t they? And depending on your service type, the phone may ring a lot too. While we hope the calls we receive are to hire us for work, there will be a lot of them that are not to our benefit. Here are my tips for keeping your billing under control with emails and phone calls.
- Dedicate your work email inbox to business related items and honor it. Most entrepreneurs buy a domain first when starting a business, so make sure you get the email with that domain, no gmail! That’s a huge pet peeve of mine as I believe you look both unprofessional and uncommited. On top of that, you won’t be able to focus when you are ‘on the clock’ without a dedicated email for actual work emails – too many distractions. This is how it works: you can have mystartupbiz@gmail and use that for all of your spammy marketing subscriptions that you really may not want to read and you know will waste your time and then use your email@example.com for your clients and business emails. Then when you are in that email box you are only working and not subject to extraneous distractions.
- Bill for reading and/or responding to emails. You are providing a service. If your email is a yes/no/maybe or to schedule a time for a billable service such as a house cleaning, don’t bill for that as the money will be coming later, but if you are giving your expertise in the email, that’s a service and has a fee. Think about how attorneys do it. Phone calls are the same. Set your timer and bill for your work. I use 10ths of an hour, i.e. every 6 minutes is .1 of billing. It adds up.
- When you are starting your business is the perfect time to establish a business phone number. Look at https://voice.google.com to set up a special number that is your work number rather than use your personal cell phone for everything. Or look at https://www.vonage.com, they’ve been in the game of virtual phone numbers even longer than Google. (Or go search “virtual phone number” and see what interests you: evoice, callhippo…). This will enable you to turn off the work calls when it’s family time.
- Having a mobile time tracker app will also help you to log the time for that phone call. Look at your phone after the call. The screen will tell you how long the call was. Open the app and log it. And remember, to do it. Your time is money. You can elect to give it away, but don’t THROW it away.
Invoicing and Accounting
I use QuickBooks. I teach QuickBooks. I love QuickBooks! I don’t really talk about much else. If you are serious about growing your business, I believe you should invest in accounting software as it is a necessary tool, is essential for taking care of the financial aspect of your business and will take the stress out of tax season – just get the version designed for to fit your business needs and grow into it. There are a few different versions with different options for access that you can look at. First off, you must have accounting software with the capability to invoice with ease. Add your customers/clients into your accounting software and design a professional looking estimate form and invoice right away.
QuickBooks Online Plans (all have a monthly subscription fee):
- Self-Employed is suitable if you are just starting a business as a service provider and not processing a lot of money yet. It can invoice and accept payments – it also tracks miles. However, many small businesses outgrow it very quickly. My daughter tried this version and found that it was not enough for her business needs. I suggest starting with the free trial and looking to see if it has the features you need before migrating your information to it.
- Simple Start is service provider and startup friendly, sends estimates and does invoices, accepts payments, tracks sales tax, single user, and helps out when tax time comes around! Again, you will most likely grow out of it quickly.
- Essentials is a great fit for service-based businesses who invoice, accept payments online, and collect sales tax. It allows for multiple users with this plan and you can grow into this one.
- Plus is for businesses with inventory and not for service industry entrepreneurs starting a business.
QuickBooks Desktop Products:
I still prefer the desktop products over the online plans. You will have to upgrade often as they “sunset” software regularly (sunset = discontinue and stop supporting it, and for QuickBooks this includes cancelling the ability to download bank statements), but they will last 2-3 years before an upgrade will be required and I still prefer it as the most tried-and-true.
- Pro 2018 is the one to invest in if you are starting a business as a service provider or as any other business startup short of a warehouse. It can track time without the add-on, manage bills and accounts payable, track inventory, and of course, handle your invoicing needs and has many robust reporting options you can use to measure the financial health of your business.
- Premier 2018 is designed to support industry-specific needs, more users, and can do forecasting. If you are just starting a business, you are not playing at this level (yet) but can easily migrate to it whenever you are ready.
- Enterprise 2018 is what you would need to run a warehouse.
I have many more effective tips for those of you growing and starting a business. These tips were focusing in the service industry and billing struggles. If you would like to receive free tips like these regularly, subscribe to my weekly email for business owners. It’s free and full of great information. Sign up below: