WEDDING AND EVENT PLANNING: TOP 3 FINANCIAL MISTAKES
May 23, 2011
Last week we discussed at length the importance of getting clients to pay us prior to the day of their wedding or other event. But there’s a lot more to be said about business finances, and I’d like to continue our conversation this week. Let’s start by tackling the months or even years when your business might be cash poor. This can happen regardless of whether you’re just starting out in the wedding and event industry or have had your business for decades. Nor does it matter how many clients you have: you can be cash poor even when you’re flush with jobs.
One of the worst feelings in the world is realizing you can’t pay your employees and/or vendors. Many years ago, when I was struggling with my own serious financial problems, I knew this feeling well. Slowly (very slowly), I learned what I was doing wrong. Here are the top three mistakes I was making. Please learn from them, so you don’t end up running a cash poor business like I did!
1. I thought nothing of doing wedding and event presentations and designs for clients before I saw a dime from them. I thought that was just the way our industry worked. It doesn’t. And even though I still struggle with this one, I now understand that every time I do this, I am taking a huge financial risk. Don’t make a habit of using your own money to finance potential jobs. Yes, it’s true that sometimes this risk will pay off. However, most of the time it doesn’t.
2. Long ago, I discovered that working with corporate clients can sometimes be difficult. Most corporations want to hold onto their money as long as they possibly can. Consequently, we, the small vendors, suffer. I have frequently had to wait anywhere from one to three months after completing a corporate job to get paid.
3. This last practice is by far the riskiest! In the past, I have been reckless and didn’t always have reserve cash available for emergencies. This meant I was always just trying to catch up and using whatever existing money was coming in for other potential jobs… (See #1 above. It was a vicious cycle!)
The very first step in fixing my cash poor business was identifying these three problems. Do any of them look familiar to you? I realize it’s hard to talk about money, but have you been or are you currently in a similar situation? Please share! How did you or how are you dealing with this dilemma? Have you ever gotten a job by showing your designs to potential clients before they gave you any money?
Be sure to check back later this week as on Wednesday and Thursday I’ll be sharing very specific guidelines to avoid the cash poor trap.