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Frugality in my Business

February 1st, 2016 at 06:07 pm

Things have ramped up at work, and it has me thinking about work I will take and work I won't take. This is always an issue because I have limited time, and usually projects all seem to come to me at once, then things get quiet for a while. It's pretty much impossible to schedule things in my line of work.

Recent projects that have come my way:

- Existing project - it is going out for a second bid and I needed to update a few drawings for re-issue - No choice on this one because it's an existing project, but I just found out today that I may get paid for the second bid

- Small project - under $3k fee - I usually don't take these, but it's an existing client and not a lot of work

- Fire Station remodel - I got this one ages ago, and it's just about to start up - I am so thankful! The fee is ok (not super high), but it's a good project for someone I know and like.

- Project at the Community College - I am feeling a little doubtful this will go through, but if it does, it'll be great. I'd like to get back into University/School work. And it could open the relationship with the community college which would be great. It's not a huge project, but probably about a $20k fee.

- Project 3.5 hours away - Ugh. This is a hard one. It's a design build for a contractor I like to work with, and it's a fire station (and maybe two of them). It's far away, though. So I told them what the probable construction cost would be and I told them what the fee would be, and I didn't low-ball it, so we'll see if this scares them off.

- Stamping someone else's drawings - I was approached by a firm in Texas to do this for them (I was recommended by someone here that I like and respect). I don't even know the fee, but I said NO; this is not the kind of work I want to take on (not just in terms of liability but also because it's not the direction I want to go).

According to my profit/loss sheet, my business needs to make another $28k this year to make a profit.

And this is where the frugality comes into play. Being frugal in my business has a direct effect on my personal financial situation since my business is an S-Corporation (which is a pass-through entity to my personal taxes).

I set up a budget for my business just like my personal budget. I know I need to make about $79k in the business to pay myself a salary and cover health insurance, all of my licenses, office rent, cellphone, etc.

Some budget-cutting:
- business lunch just once a month (these don't generate the real work anyway, but it's good to stay connected)
- I clean the office myself
- avoid all bank charges!
- do free continuing education
- limit office supply purchases (I use paper twice - back side!, find the best deals on ink, don't get sidetracked by "cute" stuff in Office Depot, use what I already have on hand)

If you have your own business (S-corp, schedule C or whatever!) how do you keep the budget in line?

3 Responses to “Frugality in my Business”

  1. FrugalTexan75 Says:

    I think you made a good decision to not rubber stamp someone else's plans. That really sounds kind of fishy and unethical.

  2. Kiki Says:

    I have a budget for all expected business spending based on the previous years spending.

    Every payment I receive I save:
    10% toward the next years business needs (usually I have left over and just let it role over in that account)
    25% toward IRA savings
    5% for transportation costs. I spend a lot of time in my car so this goes toward saving for repairs, gas if I exceed my monthly budget, or other transportation/auto needs.

    The rest goes into a savings account until I can figure out the financial goal I will put the money toward. Right now that will be work on my house.

  3. Buendia Says:

    FrugalTexan - I feel that way, too, but it's legal if you are "supervising and reviewing" the production of the plans. It happens all the time in large architecture offices where interns produce the plans and the managing partner stamps them. If you look at it that way, it's not as bad. But still not something I want to do.

    Kiki - I love your method of budgeting! I base mine on previous year, too, but I think I need to adopt your brilliant savings plan!

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