When running a business, especially selling recurring subscriptions it’s very important to keep good accounting records. I can’t begin to describe the number of times I’ve dealt with customer issues wondering if they’ve paid, why their account was suspended, etc. By keeping good accounting records you take all the guess work out of this.
My first suggestion would be to use an automated system such as WHMCS to keep track of all of this. This software will automatically provision accounts that have successfully paid and will also suspend those who are late on payment. When they catch-up on their bills, it’ll also un-suspend them, saving you much valuable time. Without this at NameHero, I would lose my mind.
I also suggest using a good piece of accounting software to track all of your outflows (or expenses). Over the last five year’s I’ve successfully used Quickbooks online to track over $20,000,000 in revenue! My “old school” accountant once told me that when I got this big I’d have to have more sophisticated software, but I believe that was his way of up-selling my account. It works perfectly!
Using a cloud-based solution like Quickbooks online, you’re easily able to sync most bank accounts, PayPal, and other merchant accounts to keep track of all of your business activity. If you’re like me and spend five minutes each morning updating it, you always have critical business financial reports at your finger-tips such as balance sheets, profit and loss, etc.
I mention all of this now because it’s MUCH easier to start this from the beginning than to get a couple of months behind and start it. Since you’re going to be running your own business, you are in complete control of your finances, so accurate tracking ensures you know where every single penny goes. If you get nothing else from what I say, please take this piece of advice!
Accounting aside, the business-end of things is also very important. You need to constantly be evaluating areas you’re spending money as well as making money to find pockets of optimization.
While recurring billing is an excellent source of income for your business it can also be an easy way to blow lots of money by subscribing to services that you don’t always realize. Make sure you spend some time each month to analyze your financial reports and “cut the fat” where you can save some money. When you’re selling web hosting accounts for $10/month, money going out can mean several customer’s revenue, so you want to stay on top of it!
Also, you’re going to want to make sure you meet regularly with good accountants and/or lawyers. Sometimes in business you’re able to take advantage of tax-savings depending on where you live. I know here in the United States, several states have what’s called an “angel tax credit” for tech businesses. If you qualify, they’ll basically cut you a check at the end of a year for a portion of what you invested. This is an excellent way to leverage additional capital that your competition may not be aware of!
Ryan Gray is the founder and CEO of NameHero, one of the fastest growing independent web hosts in the United States. Ryan has been working online since 1998 and has over two-decades experience in Internet Entrepreneurship.