How to Plan Your Agency Finances Before You Spend A Dime | Budgeting Tips | Avi Arya |

How many months you can go without getting a client? Once you get a client, what happens? So I would say very comfortably, at least a six month budget should be there so that I can have a sleep full sleep night without any tension. Because if you don't have results and a fancy website nobody cares about, people want to see what was the challenge that people had and how did you or your team overcome that challenge? Hi, my name is Avi Arya. Father of two girls, six dogs, husband to a superwoman, a streetcar, raised in a turn hotelier then marketer and founder of Internet moguls. What up Internet moguls Namaskar. Ladies and gentlemen, boys and girls, my name is Avi Arya, 20s or 30s as a digital marketing agency owner finances and you're doing a job. When I jump in, the parachute will open. Parachute because you don't have the money or desperate situation or apko low ticket offer Karega or up low ticket salaries, substandard work agency time pick entrepreneurship. So don't do that. Do not start an agency without money. Don't think that you're going to jump and the parachute will open. The parachute may not open or may take time to open. Therefore always have reserve funds with you. How much for a business? I would say make your calculations on how many clients you're going to get. How many months you can go without getting a client. Once you get a client, what happens? What are the expenses? Because the client is going to pay you in two to three months time. During that time you will have electricity, you will have your office rent, you will have your Internet, you will have your team, you will have your Facebook ads, all of those spends. To be able to market yourself and to be able to then get customers. So I would say very comfortably, at least a six month budget should be there so that I can have a sleep full sleep night without any intention and be able to work and focus on delivering best value. See what happens is value. The second thing I would like to tell you, fantastic job Machori Agency. Because again you will have no money and then you will make all the wrong decisions. Thirdly, while you're doing a job, you must plan a three to five year trip down whichever agency you're working in. Because I want you to be able to work in every department. I want you to be able to work in the departments that you like and some maybe you don't like so much. But just to understand how this whole model works. How do the pricing happen? What? How are values created? What are the sales people talking about? How does operation work differently from sales? Why is it that there is always collections team is always under stress trying to get payments out. But you must understand all the workings of the business before you start planning your own financial activity in as a digital marketer. Next point. Yes. You can work with a colleague. Yes. If you have a colleague who's putting in the money can be made into a partner. Yes. But let me tell you one thing. A lot of people borrow money from the bank thinking from the first or second month they're going to start getting revenue. That may not happen. And so therefore don't borrow money with a pressure that you have to return it very next month. Like I said, the first six months you should have absolutely no pressure. Next point. Is it okay to have three, four multiple streams while running an agency? Absolutely. You can be a freelancer taking some projects. You can be working in an agency depending on if your agency allows you to be able to do multiple roles. Most agencies don't because they want you to have dedicated flow focus and I understand that. But if you're working part time in an agency, part time as a freelancer, then you have different multiple options as well. Do not rush into investing time and money building a website. Instead build a portfolio of work that has got proven results. Because if you don't have results and a fancy website nobody cares about, people want to see what was the challenge that people had and how did you or your team overcome that challenge. So remember one thing, do not invest in things which are not going to give you direct revenue. Especially when you're starting out. You can have a LinkedIn page, you can have a Facebook page, you can have an Instagram profile. And I don't think anybody needs to look at your website to be able to see if you need the work or not. A conversation with you for 15 minutes will tell the client clearly if you are the right candidate for the work that he's looking for. A lot of people start making money in the agency world and then they don't know where to invest. The number one thing is to invest is as an agency. I would say pay yourself. Because if you don't pay yourself, you're not getting any profit from the company and you don't know if the company is working or not. Pay yourself, pay your team, pay your vendors, have systems. If you have a credit policy from a client who's paying you after two months after your salary, your vendors and partners need to to understand that your payments will come after two months. The cash flow cycle has to be Explained. If your vendor is looking for a payment upfront or at the end of one month and you're getting money after two months, you will have money stuck in the market. You have to have that conversation with that vendor partner just the way that your client had with you as a vendor partner. Salaries, of course, need to be paid in time and all the other compliances and everything. The difference between the time that you get the money from the client versus the payout time, if that is more than 15 to 30 days, you will find that you have no money in the bank. You have lots of money in the books. And that's where most entrepreneurs get confused. I called up my chartered accountant, I called up my accountant. He said I would take 50 lakhs from the bank, from the market. But I have 5 lakhs in the bank and I have 15 lakhs to pay for salaries. What should I do? This is cash flow management at its worst. You need to understand and plan your cash flow at least 120 days ahead of time. What are your number of clients? What are the verbal and written communication with them on the payments that they're going to give on what time? What are the verbal and written commitments with your partners and your teams? What is coming in versus what is going out? See, what's going out is fixed. What's coming out is still tentative. That is where your reserve fund comes in. I don't advise you to start pulling out of the reserve fund at the drop of a hat. Your number one, number one. The strictest priority, the strictest care from your team should be to be able to get the money on time. You as the agency owner will decide the terms and then your team will make sure those monies are coming on time. Because if there's that gap, you will be making money, but you will have no money to even buy an ice cream because that money is not with you in the bank. So therefore, work out this cash flow situation. There comes a time when your team builds up, your profitability builds up, your cash flow is good and that's when you start saving. Not in an fd, but I suggest stocks. Why? Because just as you trust your own company, the fact that you can take it to the next level. There are some amazing companies in the world who have amazing teams and management and customers and they're working relentlessly, spending millions and billions of dollars. I think if you can bet on yourself, it's a good idea to bet on some of these companies. Which are these companies? I will not. I'm not the best person to tell you. There are many experts in the market who I feel you should consult with. And if you're somebody who's making money you want, you're making money because somebody is looking for an expert like you. Because they pay you and you do their work. So don't half ass it. Don't be cheap. Like my friend Sid says, don't be cheap on your way to greatness. Spend money. Speak to a financial planner. Invest long term in those big stocks. Now, what happens when you invest? You invest long term. The stock goes up and down. Like right now, it's all crashed, but does not matter because that is not the cash money that you need to run your house or your agency. Don't make that mistake. I'll put this money in my stocks and tomorrow when I need it, I'll take it from here. If the stocks go down, that money is 40, 50% down as of right now. That money, if you take it out, you're going to come back at a 50% discount. Don't make that mistake. Put in the money that you know you can leave aside for five to 10 to 15 years because you want compounding to kick in and big money to happen with that money. So whatever is your household or agency expense, that has to be separate and this is your saving. This is separate. And this is a fatal mistake that many people make by making, by doing one account which is invested and that also is your emergency fund. Your investments are long term and they're not your emergency fund. Next, about buying a house. There are many emotional and practical decisions out there around buying homes. Homes are bought by different formulae. There are places in the world where you can put 10 to 20% down and mortgage the house so that it pays for your installment. That means if you're buying a one million dollar home, you pay only $200,000 plus the closing fee, plus the lawyer's fee, plus all of that. So say $250,000 and $750 is lent to you by the bank. And that 750 is an installment with a 1.5% interest of approximately $3,500 to $4,000. And the bank pays the mortgage, your tenant pays for that. So if it's a rentable property, then you've paid 25%. And if somebody else is paying off your mortgage for the next 20 years. Remember, when you buy a house like this, you have no cash, no positive cash flow or less positive cash flow. So it's not really changing your life, but it's helping you make wealth for the long term. So you still need to be working in your agency full time. Because having multiple assets does not mean that your lifestyle changes. You don't have more surplus cash. In fact, if your property needs renovation or has demand or something breaks down, that's when you need to put in from your existing cash flow into the property that you bought. So properties may need to be taken care of from time to time. Also, when the tenant leaves before, from the time he leaves to the time you find your new tenant, you will have a problem and you will have to balance that gap by putting money yourself. So always know that if you've rented, maybe even if you have 12 months rental, count it as nine months, have that buffer money with you. A lot of us as agency owners get in the hurry of buying properties, buying stocks and everything and everything comes into one pool. Your stocks should be a separate pool and long term, not to be touched. Your six months savings, the way you're putting money to be able to take care of yourself and your family, don't risk that because that's what's going to give you and your spouse a good night's sleep. When everything around you may crash down. Like stocks are down, everything real estate is down and you can't touch it because you don't want to sell it at a loss. You will still not have a problem because of six months to think and for the market to start turning around and for you to be able to make a better judicious decision. So all these things take time. And therefore, when you read a book to make a million dollars in a year or close a deal and get settled, all of you people who are in your 15s, 20s, 30s, 40s, everybody who's wanting to run an agency, let me tell you, no business on this planet is a short term game. Give it at least 10 years for all of these things to start happening. I don't know if you're looking at this video, which stage of entrepreneurship, which stage of success, which stage of money, which stage of saving or investment you're at. Don't worry. Yes, they say saving at the right time is good. If you save at a young age, you have more headway for the compounding to kick in. But let me tell you one thing. If you do not have all your buckets ready, you don't have your contingency fund and you start saving, who will take care of your agency? Remember, the agency is a new being. It needs all the funding, all the love, all the investments at the right time, the right team member, if you find somebody who are charging you extra money and you want to pay that salary because you want that resource, that is a great investment first to be done. If you have the right computer software to be able to do editing and video production so that you can get more work from the market, that is the right investment to do. So remember, you will need investment fund for the agency as well. So keep all of these things in mind. Watch this video once again. Create your own chart and make sure that you and your spouse, you and your family know there's a long term 10 year game. And whatever is happening is being saved, is being invested, is being reinvested because buying a car right away, buying fancy shoes and all of that is it's a lot of fun. But when things go south, so good money invested that can be taken out when you need it is what's going to give you a good night's sleep. So I hope you like this video. Many more agency videos will be coming for all of you people. And if you like this, you want to hear more about, you know, I've got a very nice automated webinar that I've created. If you're in the flow of things and you don't want to stop, you want to continue with the webinar, then click on the link and go in for this webinar. It's absolutely free. It's a video webinar and you'll enjoy it. I look forward to seeing you there. This Take care of yourselves. The link is over here. Continue this journey on that webinar. I'm sure you're going to have fun. Take care of yourself and wish you happy financial planning for your agency business. Take care of yourself. Bye for now.