Once you know what your interests are, it becomes easy to start a business. You just find a type of venture and stick with it till it makes a profit! Is it that simple? Is the cash-flow always that streamlined and transparent? The road to success starts from the point where you figure out the source of your financing. Most entrepreneurs bypass crowdfunding and angel-funding to fund their own businesses. If you want to approach venture capitalists and banks, they will surely want to know how much of your own money you are going to invest in your new business.
In reality, building a company from scratch is NOT easy. It takes stamina, patience, mental strength, understanding of the market and quick decision making power. Successful business owners may not have specialized training or a lot of fancy certificates, but they know how to avoid the most common financial mistakes that can bring an empire down.
Always manage your cash flow firsthand
One of the most obvious, yet most common reasons start-ups fail is terrible cash flow management. We have seen far too many businesses run out of cash before they could even take off. You need to follow every penny keenly. You need to know where the moolah is coming from and where it is going. Not taking a thorough interest in your cash flow can help your business fall into a pit of debts and unpaid utility bills. It takes only a couple of lapsed payments to turn any solid idea into another failed plan.
Track your spends
There are owners and CEOs, who spend money out of their business accounts for their personal expenses. Where did the new Xbox at your VP’s new home come from? Are your employees billing their personal Uber fares to the company account? Is the office Christmas party way out of budget? Inevitably no owner or boss can ask that out loud, but having a capable, smart and well-trained accountant to take care of company expenses and manage employee accounts helps companies monitor the costs. You will enjoy the added benefits when the tax season rolls in. Having a trained accountant can help you file tax returns and make better tax plans throughout the year. It can save companies thousands of dollars in the process!
Set a limit for your company expenses
It is something you need to do before your business kicks off. You need to limit your costs and find cheaper solutions to costly problems. For example – if you have five employees, in the beginning, do not go for a fancy significant office space. Start with anything small, and even Apple started out of a garage space! Always begin with spending less for the amenities, spaces, and luxuries. When the company sees steady growth, you can still scale up your office space, meal plans, and travel expenses accordingly. Add travel accounts and meal accounts as expansion perks for your employees and offer bonuses for great performances. It will keep the budget in control and at the same time hold the office morale high.
Decide financial goals for your company
Companies should be able to meet specific business goals in each quarter. Without short-term monetary plans and profit targets, it will become challenging for any super-accountant, CEO or owner to find out how well the company is doing. Short-term financial goals are vital even for multi-million dollar conglomerates. If you break down the nebulous goals into achievable, you will see that measurable objectives help the workers envision the short term plans and reach them too. If you think quarterly goals are becoming too cumbersome, you can go with monthly, weekly and daily goals as well.
Focus on debt payment
Start-ups begin with loans. That’s the unwritten norm. Most start-ups owners take loans from banks, 401(k) accounts, money lenders or collateral loans against their homes to begin their businesses. It puts their assets in danger, in case the company fails to do well. Paying loans is the first task every business owner must fulfill before taking the next leap to a new project. Entrepreneurs need to sit down with their accountants and find out how much they need to pay for clearing all kinds of business debts.
You will find loan calculators online that can help you understand how much APR you are paying in total, which interest rates are creating a dent in your profit and how you can get out of the hamster wheel of business debt without compromising business operations. Business loan consultancy services are there to help entrepreneurs out to prioritize their debts and provide easy consolidation loans to pay off the costliest of them in due time.
Stress on customer attraction
Customer acquisition is something that sounds very simple, but it is not. Every business we see around is going digital. Digital ads and promotions are not as simple as placing a mascot with a sign by the end of the block. They need finesse, proper schematics, working activation ideas and analytics on the friendliest advertisement platforms. Working on specific platforms allows the business owners to reach out to specific customers at the right place, at the right time.
Most famous of the acquisition channels include social networking platforms, social media channels and PPC on browser based on customer behavior. You will surely need help from social media marketers and digital marketers to perfect your acquisition strategies on each available platform. However, once you have improved it, the process is most rewarding in terms of ROI.
Rounding it up
To understand if a business is making progress, you need to test the finances periodically. Testing should include looking after tax proceedings, checking finance goals, evaluation of recovery plans and limiting regular expenses to a minimum at the very beginning. Monitoring the cash flow is one of the best ways to assume control over company finances, and it is indeed much better than backtracking after a severe financial fiasco!
Isabella Rossellini is a business credit counselor with experience in debt management and debt consolidation. As a business writer, she analyzes loans and credit management. Learn more on her debt consolidation loans made easy blog.