There are few endeavors more challenging, or more rewarding, than starting your own business. Ask anyone you know who’s got their own enterprise off its feet and they will all tell you that there are countless little difficulties and pitfalls to be avoided on the road to success. Even those who have come to failure (and many don’t succeed on their first attempt) will still have a wealth of knowledge to impart from their experience.
Success comes with even more trials, especially when it comes to financial management. This is what many business owners come to realize once they have managed to get their idea up and running. A good start is still just that – a start.
Let’s take a look at some of the nuggets of wisdom everyone trying their hand at running a successful operation, whether on a small or large scale, would do well to take note of.
Keep some cash reserves handy
Every business is bound to face some rough whether at some point in its lifetime. How well you are able to weather the storm will often depend on your ability to access some emergency reserves of cash to keep your enterprise afloat in the hard times. In many cases, accessing credit facilities from financial institutions may not be a viable option for a small business still finding its feet.
Besides, the required help might be too little, and come too late to save your concern from the calamity it faces. Even those who trade commodities for their daily bread have emergency stashes readily available to help cushion their riskier trades. Let the same wisdom guide you. Always strive to have a reasonable amount of money laid by for you to use in case of emergency.
Planning is Key
As they say, failing to plan is planning to fail. This is all too true when it comes to the world of business. You shouldn’t expect to hit your targets if you failed to set them in the first place.
By running your operations with a half-baked financial strategy, or no strategy to speak of, is a sure recipe for disaster. You might be lucky enough to survive without a clear objective in mind for a while, but luck always runs out eventually. Set out yearly or quarterly objectives and budgets and try your best to stick to them in order to prevail.
Avoid needless expenditures
When it comes to running a business, one of the foremost points to keep in mind is the fact that it should offer you a profitable return on your input for it to qualify as a success. You aren’t running a charity. This reality, when kept at the forefront of your mind as a business owner, should inform your commitment to keeping your expenses as low as possible. By keeping your overheads at the very minimum, you give yourself and your business room to breathe and grow profitably.
Don’t spend extravagantly on office furnishings if you are running an online company, and resist the urge to pay your employees overly-generous wages – even if you consider them your family. You want your business to be a success, and those very same employees will be among the greatest beneficiaries if that should come to be a reality, so don’t be afraid to tighten the purse strings, especially in the beginning stages of your growth. The payoff, when it comes, will be all the sweeter.
Organize your accounting systems
Every business needs to keep proper track of money coming in and money going out. When this is not done, the point of running a business lies at risk of becoming lost, as you will have no clear way of knowing whether your enterprise s running as it should or whether you are throwing away your investment. Whether it’s printed out or in digital form, a running record of accounts is mandatory.
Clearly demarcate business and personal funds
One of the biggest rookie mistakes those operating small business find themselves guilty of is running their operations as though they were personal piggy banks. They don’t see the harm in dipping into their business finances to take care of personal expenditures such as rent or other minor purchases. Even though they will always promise themselves to put the money back into the business account, the reality is that such habits have ways of coming back to haunt you, potentially messing up your entire budget regime, and potentially spelling doom for your enterprise.
Discipline is the fundamental principle here – don’t dip into your business accounts for personal expenses.