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Money & Your Business

It takes money to start a business. The amount will vary, depending on your business. Here are some details to think about.

Equipment/Materials

Your father may lend you his paintbrushes to get your painting business started, but after that, you should buy your own. If you're making cookies to sell at school, you can't expect your mom to pay for the flour, butter, sugar, etc. You have to set aside part of your profits to buy the items you need to stay in business.

Once you've bought what you need to get your business started, you have to take care of your things – be careful with them, clean them, and put them away. You've bought equipment once – you don't want to have to dip into your profits to buy it all over again.

Pricing

  1. Total up what you pay for materials for each job. If you're pulling weeds, once you make enough money to pay for your garden gloves, kneepads, sunscreen, and your weed sticker, the rest is pretty much profit. On the other hand, if you're baking cookies, you will have to buy flour, chocolate chips, milk, etc. for each job.
  2. Add on how much you think you should be paid for your work – that's your profit.
  3. Think about how much profit you want to make.
  4. Check out the competition. Is there any competition? Are their prices higher or lower? Do you offer more or less service? You may have to raise or lower your prices, depending on what you find out about the competition. If you charge less than the car wash down the street, (and do as good a job) you might attract customers.
  5. Do you have to spend money to advertise? (See Getting the word out below.)

What about different pricing levels? If you are in the car washing business, washing a van takes more soap, water, and time than washing a car. You should charge more for vans, trucks, and utility vehicles. If you're a baby sitter, you should charge more for taking care of hard-to-handle kids. You should also charge more for taking care of two or three kids than you would charge for just one.

Getting the word out

Can you just hang a sign on the bulletin board at the grocery or hardware store? Email your contacts? Or must you go door to door? Hand out flyers? Do you have to spend money on advertising, like putting an ad in the newspaper? If you must spend money to get the word out, you must charge a little more to make up for the money you spent to get the job.


Did you know?

Keep a money diary that tracks what you save and spend. It will tell you about when, why, and how you use money.