WASHINGTON — When drycleaning owners struggle with growth or find themselves constantly fighting financial fires, the root cause often lies in overlooking fundamental business practices that successful owners have mastered.
Hugh Norton, senior director of financial education at Visa Inc., recently shared some of these essential strategies during “Building and Growing Your Business,” a Service Corps of Retired Executives (SCORE) webinar.
Norton, who has worked with Visa’s financial education programs since 2012 and is himself a small-business owner, says that while every business is unique, certain foundational principles apply across all industries — and this includes drycleaning operations.
“Your business is unique,” Norton says. “Just because a decision is the right decision for somebody else doesn’t necessarily mean it’s the right decision for you.”
A Financial Knowledge Foundation
The cornerstone of any successful drycleaning business lies in understanding its finances inside and out. Norton identifies this as the first of eight key success factors that every small-business owner must master.
“You are going to be the expert on your business,” he says. “Obviously, there are going to be people who are experts in the industry, and finding information and developing those relationships with other people is very important, but you are the expert on your business.”
This expertise begins with four critical financial areas: creating a budget, saving for success, planning for financing, and building business credit.
Business Budgeting: Four Simple Steps
Norton says that budgeting can be challenging, not because it’s complicated but because business owners often make excuses to avoid it.
“People often think, ‘I already have an established business. I have a pretty good idea of what’s going in and what’s coming out. I don’t necessarily need a budget. The business is already successful,’” he says. “Or maybe, ‘I’m operating at a loss. I’m not making enough money to have a budget at this point.’”
However, Norton believes that budgeting can be both simple and essential if owners break it down into four manageable steps:
- Add up all revenue — Track every dollar coming into the operation.
- Estimate your expenses — Look forward and anticipate costs, including those large annual expenses like equipment maintenance or balloon payments.
- Calculate the difference — Determine the company’s actual profit or loss.
- Track it monthly — Monitor business progress consistently.
Norton adds a crucial fifth step that many business owners forget: “Take time to adjust. Even if you’re keeping a budget, have you gone back and actually adjusted it to make sure that the assumptions you made are still the case?”
Money Management Beyond Budgeting
Effective money management goes beyond simple budgeting. Norton outlines six key practices that drycleaning owners should implement.
Organizing your finances starts with that budget foundation. Paying yourself first — or in business terms, paying your business first — means setting aside capital for future needs before money goes out the door.
Spending wisely requires careful consideration of every expense. “If I’m buying this now, am I going to be able to manage my bills at the end of the month?” Norton asks. “If I’m buying this now, am I going to be able to make that really big investment in something that I want to invest in to grow?”
The remaining practices — using credit sparingly, eliminating debt as much as possible and setting financial goals — all work together to create financial freedom and flexibility for growth opportunities.
The Right Mindset
Successful money management requires the right attitude, discipline and persistence, Norton believes.
“Small-business owners tend to be the type of people who are going to have this mindset,” he says. “It’s about being able to take the mindset that drove you to start your business and apply it to financial management.”
This means maintaining the attitude that “I can, and I should,” Norton says, when it comes to financial discipline, staying consistent with tracking and planning tasks even when business gets busy, and making financial management “a lifelong habit” rather than a temporary effort.
Come back Tuesday for Part 2 of this series, where we’ll explore how to set SMART goals for your business, understand your market position and create a comprehensive business plan.
Have a question or comment? E-mail our editor Dave Davis at [email protected].
