Believe it or not, even when you are running an online business such as virtual assistance, you too can incur costs that will drive your profit margins down. Virtual assistance is all about rendering services that improve organization and efficiency. But ironically, even virtual assistants themselves could use some assistance in managing their own enterprises.
Here are smart ways to reduce the cost of running your virtual assistance business:
Work From Home – It sounds counter- intuitive but some virtual assistants prefer to rent a small space to conduct their work.
It may be because home presents too many distractions or the available facilities are insufficient to carry out work effectively. It could also be because an office space is just more conducive for productive work.
However if rental payment accounts for more than 20% of your monthly earnings, you should re-think your strategy and just work from home. Work as a Virtual Assistant could be sporadic. There will be periods where work will be few and far between.
Unless you have been contracted for long-term work, save up your money for the dry periods.
Manage Your Finances – So you think you’re making money? Do you know where it is going? Are you maximizing your earnings? Many businesses fold up simply because the owners became complacent with managing their money.
When you generate income and you’ve paid off your costs of business, you have 2 choices: save or invest.
To invest means either you plow money back into your business to grow it by funding projects or improving infrastructure. Or you could park your money in higher yielding financial instruments that give a higher return than a savings account.
Either way, you should always track the flow of money so you will have an idea of how you can fund your business.
Outsource Services – Yes even virtual assistants should outsource services. This way, you needn’t have to say “No” to projects that come your way.
If you know other virtual assistants and are assured of the quality of their work, get them on-board to help you run the business. Even if you don’t make as much, you still generate net income. There is no incremental cost to your business by hiring other virtual assistants.
This means you can further distribute your costs to other streams of income and further improve your profit margins.
Limit Credit Spending –Do you need to buy a new PC? Are you planning to upgrade your spare laptop? Are you thinking of renovating your home office?
This is why you should manage your income flows.
If you are familiar with your income flows and are on-point with your projections, you can cover these upgrades and improvements with cash rather than credit. You can even negotiate term payments with suppliers or contractors that can be covered by your stream of income.
Credit carries interest charges that will accumulate over time. Credit spending can lead to a situation which could potentially drag down your business.
Remember that profitability is a function of 2 variables: revenues and costs. Your hard work and productivity will help you bring in revenue but smart and savvy money management strategies will take your profitability to another level.