How are you managing your money these days? Money mismanagement is among the leading reasons entrepreneurs (and their startups) fail. The following tips will help you fix any cash flow problems you may be having, as well as set yourself up for positive gains moving forward. Success isn’t all about the Benjamin’s, but your ability to attain your business goals means you’ve got to pay your bills on time.
1. Diagnose Your Money Issues and Make Changes
The future of your business is riding on your ability to diagnose issues, and analyze your successes and failures. This is what’s known as a win/loss strategy, and it’s an excellent way to solve cash flow problems. Basically, every few months you use customer experience analysis, win/loss analysis, and industry insights to determine exactly where you’re losing money, where you’re gaining, and how you can use this information to increase your revenue. Learn more about these kinds of analytics by visiting the Primary Intelligence website.
2. Create an Emergency Cash Savings Account
As an entrepreneur, consistent income isn’t guaranteed. You need to set aside funds fairly regularly to prepare yourself for those unforeseen events. This is what’s called a cash reserve, and it could save you in the event of a cash flow emergency. Your cash reserve should be approximately 5 percent of your regular paycheck or returns, and never stop saving. There’s really no need to cap an emergency savings account.
3. Bootstrap Your Business Instead of Funding with Borrowed Dimes
Bootstrapping: “Finance your company’s startup and growth with the assistance of or input from others.”
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When you’re able to drum up bootstrapping funds, you’re not borrowing from banks or other lenders. That means little to no interest fees. It means improved cash flow. Here’s a few sources for obtaining bootstrapping funds:
· Factoring
· Trade credit
· Leasing
4. Outsource to Stay Liquid
Even a part-time employee may be too costly for your startup to succeed. If something goes wrong and you get low on funds, you can’t just fire someone. If you’re outsourcing for different jobs, you’re saving money on the overhead (weekly paychecks, benefits, retirement savings, etc.). As your business grows, you may find it more economical to hire full-time employees, but while you’re building your company, consider outsourcing these tasks:
· Accounting/Bookkeeping
· Legal tasks
· Daily office tasks
· Marketing/advertising
· Website design
· Financial advice
5. Crowdfund Your Business
Crowdfunding is a great way to secure business funds you don’t have to pay back. Websites, such as Kickstarter, allow you to build presentations and share them with the entire Internet community. If your idea is successful, you can garner thousands of dollars to kickstart your business. Who knows, you may even be the next Elevation Dock (a charging dock for devices), which requested $57,750 and raised $1,464,707.
When it comes to your businesses’ success, it’s a combination of hard work and smart finances. A lot of entrepreneurs struggle with money, and that’s a leading cause for failure. If you’re unable to fully sort out the cost of supporting your business, it’s a good idea to invest in a financial advisor. He or she can help you create a cash cushion, sort out your cash flows issues, and recommend strategies for better money management.
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