Money has always been the lifeblood of any business. It keeps a company alive and is crucial to its survival, particularly startups which are still in their early steps in the market. Here are eight essential tips you ought to know if you’re an entrepreneur who is building a company from the ground up.
1. Prioritize cash flow management
Starting a business does not always guarantee positive revenues. Even with well-thought-out business ideas, entrepreneurs struggle to make a profit in their first three years. That’s one reason that many startups fail.
One meaningful way of keeping your business afloat is to maintain–as much as possible–a proper balance between revenues and expenditures, ideally with the former being more significant than the latter.
Be sure to follow up with customers to make sure they are timely with their payments. You may be disrupting your cash flow by allowing customers to pay late. An option consider is invoice factoring where you sell your invoices or accounts receivable to get immediate capital and relieve yourself of the administrative burden of collecting payment from customers.
2. Monitor your spending
While many may like the idea of spending money to invest in their own business, there is still such a thing as risky spending when allotting some cash for the business. Learn how to keep track of your company’s expenses by tapping into available resources, particularly software such as QuickBooks or FreshBooks.
3. Limit spending from the beginning
As a startup, it may be easy to fall into the idea that starting out grand is good leverage. While this may be true for some, it is not necessarily a requirement for most cases. If you want your startup business to last through its early years, keeping expenses to a minimum is critical. Knowing which expenses yield the greatest return is essential to controlling your costs.
4. Be optimistic, but plan for some bumps along the way
As with most endeavors, going through a business in its early stages is best played with optimism. However, any successful business person will tell you their journey was mired with ups and downs and plenty of failures. The failures helped them grow and eventually defined their success. Plan for success just as much as failure, and you will be less disappointed.
One thing to consider is, if you are an employee who still relies on a weekly or monthly salary or other forms of income, do not throw in the towel just yet so that you can dedicate all your time and energy running a freshly started business. You may want to wait until you are confident that your company’s revenue outweighs your present wage or you have enough savings to provide you a buffer for a period of time that will allow you to pay your bills. There is no perfect time, only you know what you are most comfortable with.
5. Remember that time is money
It might sound cliché, but time is indeed money in business. Every movement of the hand of the clock is a chance to turn a profit, not to mention that time itself is an asset you cannot reclaim once spent. As a startup, you would not want to miss an opportunity to use this finite commodity to make an income.
Make your list of goals and priorities and live by them. Warren Buffet’s “2 List” strategy is a great start where you identify 25 goals you’d like to achieve. Highlight the top 5 and the other 20 goals now become the “Avoid-At-All-Cost” list no matter how tempting they may be.
6. Gather as many customers
Whether it is building a large loyal fan base or expanding your presence to a broader audience, acquiring faithful customers is key to a successful business. You cannot sustain a business without them in the equation.
Understanding your customer and their needs is one of the key ways to build a strong relationship with them and likely to lead to referrals from them. Pay attention to both positive and negative reviews as wells as comments on social media channels.
7. Reinvest in your company, your team, yourself
When your business begins to generate profit, look for ways to reinvest that money that will lead to further growth. You may find that a lead generation or customer referral program was particularly successful. Devoting more capital in those areas could lead to further growth.
Don’t forget to reward your team who helped you get you to the next level. Finally, repay yourself for the initial cash you may have invested in your business.
8. Set financial as well as business goals
Money may not be your only goal, but it’s still important to set financial markers for your business—at one year, two years, and so on. Without financial goals, your business plan will be incomplete and you will find it hard to get financing or investors.
Building a business takes time and effort. With the right management techniques, you can rest assured with a greater sense of confidence that you can drive your business into a long-standing success.
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Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay, Universal Funding can help your growing company. Call us at 800.405.6035 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.