Business and EDU

3 Financial Tips for New Business Owners

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By being financially responsible you can lay the groundwork for a large, thriving business venture. Most businesses go belly up because entrepreneurs dream big but get stuck with their head in the clouds instead of making rational, sound business decisions here on earth.

Be disciplined. Make responsible financial choices now to grow your business today. Build a prospering venture by making smart fiscal decisions from your first day as CEO of your business.

Boost Your Savings

Increase your savings to safeguard against business down cycles. Build up a sizeable nest egg before starting your business venture. Even if you take out a small business loan and go the financing route you will need a cushion for unexpected emergencies. Going heavily into debt without any savings to tap into can be a disastrous situation for any entrepreneur. Release your attachment to friends, outside investors and loan options. Save up.

Profit turning might take months or even years. How can you live a normal life trying to make your business pay your bills? Investors and lenders might split if you are not showing any profitability within a reasonable time frame.  Using your credit cards or taking out a 2nd or 3rd mortgage on your home are high risks options. You may even have to quit your business if things get financially dicey.

Fund your personal expenses for at least 1 year through your savings to safeguard yourself against a severe cash crunch. On a related note, it is always a good idea to familiarize yourself with financing resources well before you may actually need them. This can help you develop a plan should you need to seek funding.

Hire People You Trust

As your business grows from a one man or woman show into a larger venture do not forget your roots. Trusted freelancers who helped you grow your business from the ground up can be invaluable employees. Remember former colleagues when building your short list of potential co-workers. Going with trusted individuals is the smart play for any budding entrepreneur because your business’ viability will largely depend on the skills and dependability of your workforce.

Profitable businesses generally employ a driven, trustworthy workforce. Nobody knows your mission better than people who grew your business from a small venture into a rapidly expanding enterprise.

Do Not Fear to Start Small

Even if you are dreaming big it makes financial sense to start small. Building a solid foundation without breaking the bank is a sound, fiscally-responsible approach to expanding your venture. Instead of taking out ridiculously large loans focus on the fundamentals. Provide a valuable product or service. Build strong relationships with your customers. Network with successful business people in your niche. Learn from their mistakes and study their successes. Choose a mentor from your niche. Pick their brain to shorten your learning curve quickly.

Work out of your basement instead of signing a 2 year lease for expensive office space. Even if you want to impress clients think about the little steps you need to take while seeing the big picture. If Google started out of a garage so can your new, budding business venture. Don’t hire employees until business dictates that they will be busy and that you will be able to pay them. Use independent contractors to fill your needs in a pinch.

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