Concrete Cash Flow: Mastering Money Matters for Your Decorative Concrete Business

It's time to talk about money matters for your decorative concrete business. You want to maximize your profits, and we have some practical business advice to help you do that.

It's Time to Take Control of the Money Side of Your Business

Decorative concrete isn't just an art; it's a business. As an entrepreneur in this field, you have likely taken the initial step of setting up a corporation or LLC and declaring the tax structure, but that's just the beginning.

If you haven't taken that step yet, we discuss it in our online course, Step-By-Step System for Launching Your Decorative Concrete Business.

Once you've done that, the next crucial step is to...

Set Up Business Accounts

All business revenue and expenses should be run through a business bank account and business credit cards and properly categorized through business accounting software.

Pro Tip: Don't run business expenses through your personal account.

Running business expenses through a personal bank account can lead to legal, financial, and operational complications. It also makes it harder to determine whether or not your decorative concrete business is making money.

Using a dedicated business account enhances financial clarity. It allows for precise tracking of income and expenses, aiding in budgeting, financial analysis, and decision-making.

Track Your Income

Efficient financial management involves tracking income. I recommend tracking your income on payment method and product/service.

This means categorizing payments based on methods (cash, check, or credit card) and the type of product or service provided (like stamping, overlay, staining, etc.).

This detailed tracking is invaluable for assessing the profitability of different segments within your business.

Monitor Expenses

Expense tracking is equally crucial.

Every time you spend money, it needs to fit in some category.

Some expense categories include:

• Automobile expenses: note or lease, service, and fuel
• Insurance expenses: automobile, workers comp, general liability
• Payroll expenses: wage, taxes, and fees. (We talk about time tracking and payroll here.)
• Material costs: track by manufacturer, materials, or both
• Supplies: track as many subcategories as you can to see where your money is going and identify areas of waste
• Marketing costs: Google Ad Words, Facebook, Instagram, and any other marketing categories, including sponsorships of teams or events

Establishing specific categories allows for a clear view of where your money is going.

This level of detail aids in making informed decisions about budget allocation and identifying areas where cost-cutting may be necessary.

Pro Tip: Save your receipts.

This is a non-negotiable practice.

Keep copies on hand for at least seven years, and scan them into your accounting software regularly. This diligence ensures you can track, approve, and account for every expense.

Setting up your accounts, accounting software, and categories will take a little leg work on the front end, but it will make a huge difference. It will be challenging to go back and recreate later.

Common Pitfalls

1. Not showing all your income (putting cash in your pocket).
2. Mixing personal and business expenses.
3. Tracking categories of expenses that are too broad so that when things get tight, you can’t make good decisions as to where to cut back.

For example, because we track marketing dollars AND ask every person who calls our business how they heard from us, we can determine a cost-per-lead comparison between Google Ad Words vs. Facebook. And when things get tight, we cut back on the less effective one.

Falling into these common pits can hinder your ability to make informed decisions during challenging times.

Consult a Tax Professional

We are not tax professionals, and our recommendations are only for general information.

Tax laws and regulations are subject to change, and applying these general principles can vary based on individual circumstances.

We recommend you consult a qualified tax professional for advice tailored to your situation.

BUT we can guarantee your tax professional will require balance sheets and profit and loss statements to file your taxes and process deductions and write-offs properly.

By separating your accounts and tracking income and expenses, as we've talked about, you can easily generate these reports both for them and for you as you take control of your money matters.

As a bonus, here are some final thoughts about paying yourself.

BONUS: Paying Yourself

When starting out, you may need to pay yourself through distributions or draws.

However, budgeting for a base salary is crucial as your business grows.

Running it as actual payroll ensures deductions for Medicare and Social Security, contributing to your long-term financial security.

So There You Have It

So there you have it. Three recommendations regarding your money matters and some common pitfalls to avoid along the way. PLUS advice on paying yourself.

Mastering the business side of decorative concrete is as essential as perfecting the craft. By implementing these steps and maintaining financial discipline, you ensure your business's success and pave the way for long-term stability and growth.