One thing that can confuse first-time entrepreneurs and business owners is their finances
One thing that can confuse first-time entrepreneurs and business owners is their finances. It’s easy to assume that your business is the best thing since sliced bread and there’s no way it will fail, after all- this is your venture, your whole life. But throwing money at the wrong things and falling into debt could quite easily leave you in the red and then bankrupt before you’ve even properly had the chance to get started. In your new business, you need to be so careful when it comes to managing your money, here’s how you can go about it.
Stick to a Budget
When you’re first starting out and don’t have a whole lot of money (as you’re yet to make a profit), it’s so important to use every penny you have wisely. You need to know where you should be spending money and how much, there’s a fine line between spending to get a quality product and service and spending so much that you’re not making any profit. There are some areas that you can’t really skimp on such as a good business website, as doing so will put people off and will actually hinder your success rather than help your finances. Plan, plan and plan some more. Use budgeting software and seek professional help if needed.
You might think that outsourcing is something that should be left to bigger businesses but it’s simply not true, not only can outsourcing make your life easier but it can save you money too. When you hire an employee to manage an area of your business, you’re then responsible for them, even if workload goes down you still have to pay them and you have all of the costs involved in recruitment to hire them in the first place. When you outsource, a third party company can take care of an area of your business for you. If your workload fluctuates you can hire them as needed (instead of being stuck paying an employee permanently) and you’re safe in the knowledge that they’re doing things to the highest standard. Whether you need a company to tackle excel automated reporting, your content creation, marketing or accounting, it’s a great way to keep your business finances in check.
Have a Contingency Fund and Insurance
In life as well as in business, you always need to expect the unexpected. Anything from burglary, fire, or flood could hit your business and if you’re not prepared you could be left seriously out of pocket. Good business insurance not only protects your business from material loss but can also help replace lost wages if your employees have a work-related injury or illness and need time to recover.
Have some reserve funds in case any of these occur or even if business slows down for a while. Have the right insurances in place, so that if the worst happens you’re not left out of pocket. If this isn’t always possible then keeping a visa card for business in your wallet/ purse could prove invaluable. Not only does this keep a backup plan on your side, but it also keeps things in one place if you do choose to use it as a tool. It goes without saying that access to funds in an emergency situation is very important.
With the right planning and management, you will be able to keep your business finances in check and ensure you’re not falling into the red. Getting through your first year can be tough, but after that, it should be profit all the way.