The Best Advice for Handling Money to Fail-Proof Your New Business
Starting your new business venture should be a thrilling adventure in your life.
You’re grabbing the reins and on your way to becoming your own boss.
Pat yourself on the back for starting your entrepreneurial journey – not everyone can hack it.
Here’s the kicker: this exciting new journey also comes with risks.
When you’re fresh to the business scene, you want to jump right in feet first.
That’s a great attitude, but don’t let the fun and excitement of starting your new business lead to economic woes.
One of the main reasons new businesses and start-ups fail is due to the big ‘M’ – money.
New business owners are often limited on their knowledge of how to run their business, and often times make mistakes that could potentially tank their new venture.
Avoid becoming a statistic by following the best advice to fail-proof your new business!
The Best Advice for Money Management
Maybe you’ve done your Google research and read every book at the library to make sure you’re completely aware of the risks you’re taking by starting a new business.
Or maybe you’ve gotten great advice from other business owners in your area.
But the best advice?
Learn from your mistakes when it comes to your business’ money.
Manage Your Money
This may be a no-brainer, but you have to learn to manage your funds.
Whether or not you are an excellent bookkeeper, the best advice is to invest in hiring one.
Starting and running your own small business can be very time consuming, hiring a professional accountant or bookkeeper can help you run your business effectively.
While a professional is a great start to making sure you’re money is managed, the best advice is to make sure you’re also aware of where your money is going, and how it’s coming in.
Investing in software like QuickBooks makes for a simple and effective way to keep track of your expenses.
And it will save you time and money.
A huge setback for most new companies is that new business owners aren’t aware of who has been paid, and what’s been paid to them – investing in a professional and some accounting software will pay off in the end.
Know the Cost of Your Goods
In short, your cost of goods sold (COGS) adds up to the total cost of production, plus the sale.
This is an important figure to be aware of.
The best advice is to be aware of what your service or product costs to produce in order to set a price that will bring you a return.
So, you wouldn’t charge $10 for a t-shirt if the COGS is above $10 per t-shirt.
It sounds like simple math, and for the most part it is, but you should be able to name to the dime exactly what your COGS is that way you’re able to make a profit from your goods.
Diversify Your Business
Stagnation is a death trap for businesses, especially if you’re new to the game.
The best advice is to make sure you’re moving with your customers.
Check trends and keep up with them.
It helps to be aware of what your customers are interested in.
As long as you switch things up, you will never become stale. That’s the beauty of business!
Document, Document, Document
Leave a paper trail. Always leave a paper trail.
You never know when a receipt may come in handy during tax time.
The best advice is to keep receipts of whatever you’ve purchased or sold, document sales, and create a spreadsheet documenting the expenses you have paid out.
In regards to filing your taxes, you want to make sure you’re getting the most out of your return.
By keeping track of all your financial ins and outs, you will be better able to get the best return.
Your best friend, also known as your accountant, will be able to look into the best tax programs for your business.
Take advantage of your accountant’s knowledge, and make it easier for them by documenting everything you spend.
That way, come tax time, they’ll better be able to sort through your pile of receipts and know exactly how much you’ll be responsible for paying, and what you’ll be able to get back.
It may go without saying, but the best advice is to save where you can.
Putting your money towards the important things, your t-shirt line’s printer service, your marketing strategy, and your software will help grow your business in the long run.
Scrimping on things like your desk and your office coffee machine is completely acceptable. Because really, who needs a $1,000 desk?
If you want your business to succeed, the best advice is to stay frugal (but not too cheap).
Know when to make the big purchases, and don’t be afraid to start at the bottom with a cheap coffee machine.
Time = Money
Surely you have heard the phrase, “time is money.”
The phrase should always be put into practice when running your first business.
Are you being productive during work time?
When starting a new business or startup, you may be constantly busy, but not productive.
So consider that when you are delegating tasks to your team.
How is time spread out among your team members? Are you yourself proactively ensuring that time is spent wisely?
Think of these things to cut down on wasted time:
- Cut the menial tasks out of your schedule. Seriously, taking the time to clean up the office yourself is totally a waste of time – and your time is precious. Spend the little bit of money it would cost to hire an assistant to handle the small stuff. That way, you can focus on the big stuff.
- Work when you feel best. Some people are super productive early in the morning. Others work better under the moonlight. Whatever works for you – do it. It’s a waste of time (and money!) to try and work when you’re feeling less than your most productive.
- Take a break. Okay, you weren’t expecting this one, were you? Give yourself a break. Productivity does not mean constantly beating your brain into submission 18 hours a day. Your brain needs a rest, or else you’re just wasting time.
Carelessly perusing the internet when you could be making business calls costs you and your business serious dough – remember that the next time you Facebook on the clock.
But also remember that a couple minutes to take a breath are okay, too.
Business vs Pleasure
Don’t let your business mix with pleasure.
You’ve probably heard that advice before.
But it’s also so very true, especially when you are dealing with business versus personal finances.
Some things to think about when separating business and personal finances:
- Make it a separate legal entity. Establishing your company as a Corporation creates a separate legal entity in the government’s eyes and also gives you limited liability. Registering your business as a Corporation doesn’t have to be complicate, but should be something you think about when starting a new business.
- Start a separate bank account. When it comes to business banking the best advice when you’re starting a new business is to open a new bank account. This ensures that you don’t get your funds crossed when you are cutting cheques for expenses. It also makes it easier for you come tax time.
Make Those Payments
This may seem like rookie information, but make sure you are paying your bills on time.
If you are just starting out with a new business finances might be tight.
That’s perfectly normal – but nothing will take your business down faster than making poor financial decisions in the beginning.
You definitely want something to fall back on, and by not making payments on time you can seriously damage your business credit and cost you unnecessary interest payments.
Make paying your business loans and credit cards a top priority. Watching your dream business fall apart because of carelessly paying your bills late isn’t worth it in the long run.
You’ve started your new business and are ready for the exciting journey ahead.
To keep up with that momentum, always remember the financial risks you’re taking by being an entrepreneur.
By making sure you’re managing your money, are aware of the ins and outs of your finances, and remembering that time is money, you’re on your way to a successful entrepreneurial journey.