There are some common mistakes first time entrepreneurs make when starting a business, which in itself is not an easy thing to do, so if you’re considering taking this big step, have a look at these tips. They will help you avert some of the most common financial boo-boos that are made by startups trying to set up a new business.
1. Manage Your Cash Flow
Running out of money is one of the most frequent reasons for startups failing in their business endeavours. The secret is knowing exactly where every cent is coming from and where it’s going. Your business will be in the danger zone unless you stay abreast of your cash flow. You might have the best business idea since the invention of the wheel, but if your funds run dry you’re up the creek. The answer is to set up a budget and stick to it come hell or high water.
2. Monitor and Track What is Spent
Expenses are going to fly at you from everywhere when you are a startup business and if you hire a full-time person to handle the books at the start it will hurt your budget. The answer is to use accounting software to keep you on track and organised. This will go a long way in managing your cash flow, and it will make it easier for you when you have to do your tax. As your business develops, you should consider hiring a professional bookkeeper.
3. Limit Fixed Expenses
The key to business longevity and survival is to keep your expenses low. Do you really need a caterer to bring you three meals a day in a luxurious office in the middle of the CBD? No, not until you’re making millions in profits. If you can operate on a shoestring you can use most of your capital on growth and this will allow you to have any of the perks you hanker after one day. Many startups fail because they have their priorities all wrong. Fancy offices don’t make profits, they eat them. Generating revenue should be your first priority.
4. Be Optimistic But Be Prepared
Anything could happen when you start a business so you’d be well advised to prepare for a fall. The worst mistake you could make would be to quit your job because you will need that income source until you get on your feet. You will need plenty of reserves in your personal account and also in your business account and these are best placed in a savings account solely for emergencies. Remember, there’s no such thing as being too prepared for a downturn, and the truth is, they do happen and usually at the worst time. As a business person you will be responsible for preparing for your retirement, so as soon as you begin to make a profit, that’s the time to start investing, even if it’s in a small way at first.
5. Every Moment Must Be About Money
Yes, it’s an old saying, but it’s true - time is money. Your time is more valuable than anything else and you get only so much so consider this when you plan your schedule - every second you spend on something irrelevant is money and time wasted, and you won’t get it back. So stay focused on your business.
6. Focus on Acquiring Customers
No customers, no business. It is simple as that. So, the faster you can figure out how to attract customers, the more chance you will have of succeeding. Identify where to find your customers, and work hard to optimise ways of lowering your costs. Keep your eye on the most lucrative channels to acquire customers because it’s too hard to just go testing every possible pathway. Once you are successful, you can look at other channels.
7. Pay Yourself
Paying yourself for all your hard work and dedication is crucial to your success Nd without a salary you can’t pay your personal bills and feed your family. This doesn’t mean a huge salary while you’re just starting out but you will need enough to live on in comfort so you can stay focused on your business. Once you rid yourself of any stress over your personal financial situation you can focus even more of your mind, energy and time on your business.
8. Set Firm Financial Goals
Anyone can say ‘I want to build a huge company worth multi-millions of dollars’ but to do it you will need to set realistic financial; goals and strive to reach them. Break down your goals into bite-sized ones that you can achieve because success breeds success and If you reach the smaller goals you can start increasing them. Make goals every month or even every day or week and this will help you stay on the right path, adjusting them if need be, which will assure you of continued growth. By reaching the smaller goals you’ll also build your business confidence which will help you on what could be the rocky road of a business startup.
Disclaimer: This post is only for your information and is not financial or legal advice.
Author’s Bio
Alex Morrison has worked with a range of businesses giving him an in depth understanding of many different industries including accounting, recruitment and IT support. He has used his knowledge and experience to work for clients as diverse as BYO Group, Simple Biz and Me Bank to help them reach their business goals.