Here are six essential financial strategies you may want to consider adding to your to do list for financial success in 2024.
For pool care business owners, strategic financial planning is crucial for long term success and sustainability. In this article, I will discuss key action items to consider in order to strengthen your business’s financial health and set the groundwork for growth in the upcoming year.
Pool Care Business Strategies 2024
1. Reduce Expenses by $200.00: This is an easy one… One of the most effective ways to improve your business’s bottom line is to identify and cut expenses. Whether it’s negotiating better pricing with suppliers, optimizing your pool routes to save on fuel costs, reviewing your bank statements to find excessive spending, finding subscription fees you may have forgotten about or streamlining operational processes to save time during your day preparing, loading, or cleaning. Time is money and every minute counts when you have a weekly pool care business. All of the above significantly impacts your profitability and will free up necessary resources.
2. Set Aside 25% of Revenue for Taxes (If you are a sole proprietor or have an LLC) Taxes can be a significant burden for businesses, especially if not planned for properly. I have heard countless times, “I owe $14,000 and I don’t have any money in my checking account”. The best way to avoid this is to plan ahead by putting away 25% of your revenue in a savings account. Leave it alone. If you have to dig into that account to run your business your expenses are too high or you do not have enough cash flow to run your business. By setting aside 25% of your revenue specifically for tax obligations, you can avoid the stress of scrambling to pay taxes when they come due.
A book that changed my business and personal life is Profit First. I highly recommend any business owner read this book. You can thank me later. I recommend the audiobook. The audiobook version has been updated. Read it today!
LLC or S-Corp?
If you have elected to be taxed as an S-CORP, you will want to talk with your accountant on how best to prepare for your tax obligations. In the first year of owning my pool care business, I was set up as an LLC. I took money out to pay myself as “Owners Draw” I had three savings envelopes set up in my QuickBooks checking account. Profit, Owners Pay and Taxes. My first three months in business I set aside 2% of revenue into my profit envelope, 35% into my Owners Pay envelope and 25% into my Tax envelope. That left 38% to run by business. These numbers are fluid and I have reviewed and changed these numbers periodically over the last two years with my new pool care business in Texas.
3. Save $10,000 in an Emergency Fund: Unforeseen circumstances can arise in any business, and having a financial safety net in place is essential. Aim to set up a new emergency fund envelope as soon as you can and set a goal of saving your first $10,000. This fund can be used to fund emergency vehicle repairs, equipment repairs, unexpected dips in revenue, or other emergencies. Having an extra 10K can provide peace of mind and help your business weather uncertainties with ease.
4. Open a QuickBooks Checking Account: And utilize High Yield Savings Envelopes for all of your savings’ accounts. Consider opening a QuickBooks Checking Account to streamline your business’s banking needs. Additionally, using high yield savings envelopes for all funds can help you maximize interest earnings on your business’s cash reserves or holding accounts. QuickBooks currently offers 5% interest at the writing of this article. QuickBooks Checking offers some great features over your local banks… Same day credit card deposits, Instant Deposits with no added fees or balance minimums, No Service Fees, Mobile Check Deposits, Debit Card for Purchases, Google and Apple Pay, and so much more. Get the smartest account for your pool care business with QuickBooks Checking.
S-Corp Election Strategy
5. Consider Choosing the S-Corp Election for your LLC: For many small business owners, making an S-Corp election can offer significant tax advantages and operational flexibility. Please consult with your Tax professional to evaluate whether making the S-Corp election is a beneficial move for your pool care business. This strategic decision could lead to substantial tax savings and improved financial efficiency. The Internal Revenue Service mandates the S-Corp election must be made by March 15th, 2024.
6. If you are a Sole Proprietor: Switch your business to an LLC ASAP. Operating as a sole proprietor exposes you and your personal assets to all business liabilities. Transitioning to a Limited Liability Company (LLC) can provide an added layer of legal protection for your personal assets like your home and property while offering tax flexibility. Be sure to consult with legal and financial advisors to assess the best business structure for your unique situation.
Operational Tactics for Your Pool Care Business in 2024
I’ve written a lot on these subjects. Here are four links that discuss business structuring and layers of legal protections.
In conclusion: Developing a comprehensive action plan for your pool care business’s financial future health in 2024 is paramount to your long-term success. By implementing these key strategies, you can lay a solid foundation for financial stability, growth, and resilience in the year ahead. As always, seek professional guidance from qualified financial and legal experts to tailor these recommendations to your specific business needs.
Stay tuned to The Pool Blog for more valuable insights and tips to elevate your pool care business to new heights in the coming year. Wishing you a prosperous and successful 2024. The best is yet to come.
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See you next time!