By Lucas Miller
Sometimes the simplest set of rules tend to be the most effective. Think about the Ten Commandments – there are only ten of them, but considered as a single entity, this code of conduct addresses most aspects of human life.
You may be wondering what this has to do with financial practices and small businesses.
As with anything, there are certain rules that should be followed when starting out as an entrepreneur – especially if it’s your first time. After all, the last thing you want is for your financial concerns to get on top of you. However, if you want to retain your sanity, you can’t worry about your finances all the time, and other parts of your small business will inevitably demand your attention.
That’s why I recommend you follow this set of tips for managing your financial practices so that your business can survive (and thrive!) in this volatile economy. Feel free to experiment – after all, that’s what entrepreneurship is all about – but be careful not to break what I’d like to lightheartedly call my Seven Financial Commandments.
As G.K. Chesterton once said, “It is shorter to state the things forbidden than the things permitted; precisely because most things are permitted, and only a few things are forbidden.”
1. Don’t run out of money
This is the first and most fundamental commandment of business building. It may sound obvious, but once your money is gone, your options are gone, too. Your credibility will follow soon after. It doesn’t matter how good your product is or how innovative your marketing – without money, nothing happens.
Those days when all you needed to start a business was a good idea and an initial investment are long gone – if they ever existed in the first place. More startups close their doors every day. The only way to guarantee long-term success is to guarantee yourself long-term profitability, and the way to do that is to watch your budget like a hawk.
Make sure you choose your liabilities carefully. Don’t pay too much in salaries early on. Set aside money every month – businesses need savings, too. If your budget is sound and you stick to it aggressively, there should never be a time when you don’t have enough in the bank to cover your expenses.
2. Don’t forget to monitor your income and expenditures
To succeed as an entrepreneur, you need to watch your money as it comes in and goes out. It’s essential to understand money. Who are your biggest clients? What are your most profitable enterprises? Are all your ventures paying for themselves?
This information allows you to prioritize your spending and saves you from investing lots of money on projects that aren’t going to give you the ROI you require.
The same goes for expenditures. Solo entrepreneurs in particular often work with service providers that operate on a subscription-based model. This means rates can go up without warning. Hidden fees and Go to the full article.
Source:: Jeff Bullas Blog