It’s not enough to earn money, as many failed businesses have learned. Knowing how to manage and keep your cash flowing is just as important. Hoarding isn’t enough, nor is it smart – you need to handle money wisely so you can continue to grow and remain profitable. Here are 7 money lessons we encourage you to embrace.
1. Stay in Control
There will be plenty of directions to take your company, some more complex than others. More often than not, complex deals tend to offer more in returns, but you should evaluate them carefully as they tend to take up enormous resources—both in time and people. The more moving parts and entities there are, the less control you have over the deal. A large part of running a business well is risk management. If you don’t have control, you can’t manage the risk effectively. This isn’t to say that complex deals are off the table, it just means you should assess whether the amount is acceptable based upon the stage of your company.
2. Diversify Your Revenue Streams
A single product may have been the origin of your business, but it shouldn’t stay that way forever. There are plenty of reasons to diversify your revenue streams, but they all stem from the vulnerability of having a single offering. A competitor with a wide enough reach and more resources, for example, can replicate your product or service and potentially push you out of the market. This will leave you unable to recover and adjust, as you’ll find revenue dropping and your company without the resources to rally.
The moment you’re stable enough to do so, create new ways of making money. Create different iterations of your product or service that have different price points. Look for ways to monetize other parts of your business.
3. Look for New Opportunities Daily
No matter how well your business is doing now, there’s always room for growth. Opportunities will come your way almost daily, and if you want your company to keep growing, you need to spot those opportunities as they come. They can come from anywhere, like a conversation you overhear about new technology, to a random comment that inspires a new idea. Pay attention, and you will find them.
Keep in mind that not all opportunities will be appropriate, or even practical, to take on. Consider what it would cost your company before you try something new. At worst, if it really isn’t the cards, you can slip it into your sleeve to pull out and use another day.
4. Money is Power
Money may not buy happiness, but it can buy a lot of things. It can pay for rent, employee wages and production costs — for your business, cash flow buys life. With it, you can transform and grow your company into an amazing force.
Understanding that money and power can put you in the right mindset. It’ll remind you that you can do things, and that it does nothing if not used well. With profitability, you can recover from setbacks. Without it, you lack options.
5. Hoarding is Not Money Making
The difference between a successful business and a failed one is in how they spend their money. Some companies fail because they’re too afraid to spend their money out of fear of not having it. This leaves them unable to take advantage of important opportunities that could take them to the next level. While it doesn’t mean you should spend everything, it does mean that you should make good use of what you have. Having a budget for sales and marketing, product and service improvements will ultimately help you grow your business.
6. Focus on Long-Term Returns
If you have a choice between something that gives an immediate benefit versus something that takes time but has way more to offer down the line, go for the latter. A nice set of chairs for the office, for example, may make it look more presentable, but it’s not something that pays for itself eventually. This isn’t to say that you shouldn’t spend on a few extras to keep employees happy. It just means that there are often better things you can spend your money on. The employees themselves, for example, will pay for themselves if you use your resources to train them and inspire loyalty.
7. Your Money Doesn’t Determine Who You Are
The most important lesson about money all business owners should realize is that their self-worth shouldn’t be tied to their bank account. Just because you’re rich doesn’t make you a good person. And, having money problems doesn’t make you a bad person. It’s entirely unrelated and shouldn’t determine how you feel about yourself. Once you separate yourself from your money, it’ll be easier to treat it as it should be: a tool to help you and your business flourish.
Your business is counting on you to use your money wisely and to treat it the way it deserves. It is by no means an easy task. Adjusting the way you think about and approach money may take time, but the payoff is truly worth it.
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Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 844.334.1856 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.