Starting a new business is certainly not a cheap venture, and the ‘you have to spend money to make money’ maxim certainly holds true. There are lots of financial matters that must be tended to properly to get things moving in the right direction, and maximize your chances of success. Here are just a few helpful tips to help you manage your money better in these crucial early stages.
Carefully Track What is Coming In and Going Out
This tip sounds really obvious, but considering how many businesses struggle with their cash flow, is clearly something that gets overlooked. It is easy to fall into bad habits here, and not even realize you are dropping the ball. You get into the routine of making certain purchases and spending money on certain things without ever stopping to think if there is a better way.
So, the earlier you make this examination a habit, the better off your business will be. Set the time aside to really go over what is happening money-wise in your business. What are all your monthly expenses? How much money are you generally bringing in every month? Where are the weak spots?
Think Before You Spend
Before you just start throwing money around, carefully consider each expenditure. Don’t spend money that isn’t absolutely necessary. For example, if you are just starting out, you may not need any employees, so instead of bringing on people, and dealing with payroll taxes and other issues required of maintaining employees, consider freelancers, contractors and virtual assistants.
Is it really necessary to deck out your office in brand new furniture? Think about purchasing used office furniture for now. You can still get some great looking stuff at a fraction of the price. Or, depending on the nature of your business, do you even need an office right now or would working at home suffice for the moment? Does it make sense to lease some of your equipment rather than buying it outright?
Don’t Fall into Bad Habits with Your Receivables
The importance of this cannot be stressed enough as this is a major pain point with many a business. If you are like many businesses offering payment terms, nothing will put a crimp in your finances like clients not paying you on time. And far too many people handle this situation very poorly. Some are just really bad at tracking their money and are unaware that people aren’t paying on time. Then there are those who are aware, but out of fear of alienating customers, and having uncomfortable conversations, put off contact in hopes the issue will resolve itself.
You provided a good or service, and have the right to timely payment. Taking care of this matter does not make you rude, nor do you have to get all nasty with customers. But, you must act quickly so that your bill moves to the top of the pile. Develop a set process for late invoices and apply it each and every time. Don’t delay on this.