It’s commonly said that failure is the best teacher, and while this is true when it some to launching a new business, failure is not something that you want to come across. While making mistakes are what help us to learn, for new business owners mistakes can be costly and can lead to serious consequences. That’s why when you are running a new business, it’s vital that you get things right from the start, especially when it comes to your finances.
The number one reason why small businesses go bust is because of a lack of financial understanding and effective management. Studies have shown that the main reason small businesses go bust in the first year of launching is for financial reasons. Which is why it’s even more important that business owners understand what they can do to ensure that their finances are managed more effectively in those first few months of launching.
The good news is that there are a range of financial hacks that can be utilised to give your business a better chance of succeeding. Having the right knowledge, experience and skills can put you and your business in the right place to succeed. Wondering how you can gain this knowledge, experience and these skills? While you may not be able to gain knowledge and experience that quickly yourself, what you can do is take note of what other business owners have found worked best for them.
Bearing that in mind, below is a guide to some of the very best life-saving hacks for surviving that first year of business and building a company that is set to last.
Invest in tools to save you time and money
A common mistake that many small businesses make when first launching is trying to do everything themselves. To save money, far too many small business owners make the mistake of attempting to deal with various tasks themselves, from their accounting to their marketing. However, this is a mistake, because by doing so they are wasting time and money that could be better spent in other ways, and aren’t actually saving any money. Unless you are an expert in a certain area, don’t attempt to deal with it yourself. It’s far more beneficial to invest in specialist tools to deal with these tasks so that in the long-run you can save yourself time and money.
So, what areas should you invest in specialist tools in?
- Accounting is one area that it really does pay to invest in. The time you spend on your bookkeeping could be spent dealing with another, more necessary area of your business. Of course, accounting is a vital part of running any successful business, but that doesn’t mean you have to deal with it yourself. It’s much better to outsource the task and save yourself precious time and money – yes, doing so comes at a cost but it’s much more cost-effective to outsource the task to a specialist or invest in specialist software. It’s all about efficiency.
- Project management is another area that you may want to consider investing in support for. While your company might be small right now, which means that you most probably only have a small number of projects to handle. What a lot of smaller businesses struggle with is to manage these projects effectively. By investing in project management software, you can keep all important information in one central location, making it accessible by all.
- Email marketing is an area that should also be invested in, to save money in the long run and grow your business. Almost everyone has an email address, which is why every company should utilise email marketing. Of course, what a lot of business owners struggle with is sending out suitable marketing emails. The issue is that no one likes spam, which is why getting the emails that are set out right is so important. By investing in email marketing software, you can ensure that attractive and responsive emails are sent out, that are worth the time and money put into them.
Know how to protect your income
Every company has its own Achilles’ heel. That’s why every company needs to have a plan in place for rainy days – every business owner needs to know how to protect their income. The truth is that by taking steps to prepare for future issues, you can ensure that whatever happens, your business’s income will be protected. Of course, to be able to do this, you will need to take the time to consider the potential challenges that your company will face, because of you are going to protect your income, you need to know what threats will potentially impact your company.
What it’s important to understand is that all companies have pitfalls that can impact their success, but if you take steps to determine what these could be, you can take steps to protect your income. The best way to do this is by taking out adequate business insurance. If you pay to have insurance in place, you can rest assured that no matter what happens, your business is covered, and should be safe from financial ruin. Remember, when taking out an insurance policy, to make sure that your policy has the coverage that you need. If the policy that you take out doesn’t give you the right amount of coverage, then there’s no point having it in place.
It’s also beneficial to put a business continuity plan in place. This should be a plan that details the minimum amount of processes that your business needs to have in place to stay operational. It can also be highly beneficial to create a list of contacts that can be used for when certain situations occur. The truth is that if you have a plan of action in place for when disasters arise, your company is less likely to fall foul to financial problems because you have an action plan in place that details the steps you need to take to stay afloat.
Be smart about sourcing money
As a small business owner, you know all too well how little money smaller companies have to operate with. Which is why you know how important it is that you are able to source money as and when you need it, especially in those first few years of launching.
A great tool that many business owners find useful is using factoring companies. These are companies that pay your invoices for you, and then seek the amount owed by the person paying the invoice. Many small businesses can’t afford to wait overly long amounts of time for invoices to be paid, which is why factoring companies can be so useful for smaller businesses.
One option for sourcing money is to get a loan. This is something that a lot of small business owners choose to do – take out a loan to put away and save for a rainy day or only take out a loan as and when they need it. But either way, this is something that many small business owners choose to do, and something that can work quite well.
However, not everyone is able to take out a loan – if this is the case, finding a financial backer for your business could be another option to consider. Don’t want to have just one person in control of a large percentage of your business? How about crowdfunding instead? If your business needs financial support, then perhaps crowdfunding could be one option that it’s worth considering.
Understand your cash flow
It doesn’t matter if you have someone else managing your accounts, as the owner of your business it’s vital that you understand your cash flow. The last thing that you want to be doing is spending money that you don’t have, which is why it’s so important that as a business owner you understand how to budget effectively and run your business within its means.
If you put more money into your business than you can afford, then you will end up bankrupt. However, if you are smart about your spending and budget carefully, then you can ensure that when it comes to your cash flow that you don’t mess things up by overspending. Make sure that you are only spending what you have, and not using money that you can’t afford to spend.
The truth is that running a small business is no easy task, which is why it’s so important that you are mindful of your finances. The number one reason why small businesses fail is because of a lack of funds, which is why it’s so important that you take the time to ensure that your business’s finances are in tip-top shape. By taking note of the tips and advice above, you can ensure that when it comes to your business’s success, that you are proactive about what you need to do to guarantee that your business grows into the successful brand that you always dreamed it would be. Running a successful business isn’t easy, but if you are mindful of your finances it is possible to succeed.
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Your Creative Coaches @ CoSydney & ArtSHINE industries