Sometimes, the simplest set of rules is the most effective. As with anything, there are different rules that you should follow when starting out as an entrepreneur. These are even essential if it is your first time. You do not want your financial concerns to overwhelm you, right?
But if you want to retain your sanity, it is imperative that you do not worry about your finances every now and then. With that said, make sure to follow these tips for managing your financial practices in order to survive and thrive in this volatile economy.
1. Do not ever run out of money
This is definitely the most fundamental commandment when it comes to building your business. Once your financial resources are gone, your options are going to exit the door as well. And, obviously, your credibility will just follow. Your marketing can be innovative and your product can be great, but they are nothing when you do not have money.
Your goal here is to have long-term profitability. How are you exactly going to guarantee that? Well, try to watch your budget like an eagle. Start by choosing your liabilities carefully and do not pay hefty salaries if you are still in the early stages. Set aside money whenever you can. A general rule of thumb is to save every month. As long as your business is sound and you really stick to it like there is no tomorrow, there should never be a time when you do not have any money to cover your business expenses.
2. Always seek legal assistance
Starting a business is not just about securing financial resources. There are tons of paperwork, documents, and other legal aspects to consider. Considering the fact that you are a budding entrepreneur, it is almost impossible for you to have the time to cover them. This is where you are going to need the help of a business lawyer. Think of him as your business partner, only that he covers the legal aspect of the business.
Think of your business as a car you are driving. Unfortunately, you decided to drive under the influence. This is where your lawyer – in this example, a DUI lawyer – can help you big time. With his expertise and skills, he can easily dismiss the case or reduce the charges. The same thing can be said for your business. Your lawyer can help you go through these legal aspects and make sure that you do everything under the law.
3. Monitor your income and expenditures
In order to succeed, you must watch where your money comes and goes. It is important to understand money, especially if you want your business to thrive in the years to come. Find out who your biggest clients are and check if your ventures are paying for themselves. Of course, these are just mere examples. The idea is to prioritize your spending and steer clear from investing in projects that will not really give you a good ROI.
The same thing goes for your expenditures. For instance, you are working alongside a subscription-based model or service. Know that there is the possibility of rates going up without your knowledge. And if you do not pay attention, those hidden fees and/or termination penalties can hurt you big time. Make it a practice to follow where your money is coming from and going out all the time.
4. Avoid making huge expenditures early
There is this idea going on that startups must invest heavily early on. The epitome here is Uber, which followed the so-called “moonshot model.” Yes, the company grew so quickly and massively. But understand that it had a good set of funding rounds before it started. It does not mean that you should not follow the said model. By all means, give it a try. However, keep in mind that it does not always work all the time. And what is worse, the consequences can prove detrimental later on.
Do not take huge risks until you have a good amount of money in the bank. From early promotions to backend systems to launching, you should be careful with your expenditures.