For the most part, starting a business can be time-consuming and slightly expensive. But this is only in the beginning, when you have to pay for your launch expenses and have a steep learning curve. Later on, you will be paying for your expenses out of your revenue and you will have acquired knowledge and skills, as well as a talented team.
The journey to financial freedom involves more than just learning the multiple aspects of how to run a business; it’s also learning how to manage your money better. You could create a profitable business but mismanage your revenue and end up losing your business.
Let’s take a look at 5 ways to launch a small business that fuels your financial success:
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Talents and Systems
When considering your overheads, go beyond the cost of rent, utilities, and physical inventory and think in terms of talent and systems.
Talents are the people on board. You need to hire people who can help your business grow because of their knowledge, skills and attitude.
Systems are all the ways you will do things. The set procedures you will follow to expedite the work.
It’s not enough just to have outstanding products or excellent customer service. You also have to know you will collect payments. Checkout.com is a good resource for how to process all major credit cards.
Additionally, if you have to dropship products, then look for a fulfillment service as they will be able to take care of your growing list of customers while you focus on sales.
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Stay Independent
Your first order of business should be protecting your assets. In the beginning, you will be an owner or a co-owner with partners. You are responsible for your capital, and you should guard it well. If you run low on it, and you can’t get a bank loan, you may have to give up part of your equity to get support from angel investors.
Many business owners think of angel investors as better than banks because they don’t require the money to be paid back with interest. However, it’s not free money. You have traded some of your equity and they will now have a say in how you run your company.
The best situation is to stay on top of your daily finances and to not spend more than you earn. The only time you should look for an angel investor is if you have financial problems and it is the only way you can save your company.
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Keep Accounting Simple
You should do your best not to overly complicate your accounting. Either get an accountant or do it yourself with accounting software.
You don’t need to hire the best accountants or the most sophisticated software. When your business expands, then you can upgrade your accounting system. Until then, most of the professional expertise of a top accountant or the bells and whistles in an accounting program will go to waste.
In the beginning of a business, you only have to deal with a few numbers, unlike say a mid-sized firm or a large corporation.
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Theory vs. Practicality
There are many moving parts to a business and you have to get good at understanding and managing them. Even if you hire a number of people and can delegate much of the work, you have to know what is going on.
When it comes to business administration, many business owners either take the formal education route, getting a business administration degree before launching a business, or learning on the fly as they grow their business. Neither of these alone are enough. Academic knowledge does not often translate well into real business. Conversely, business people who only learn in the field miss out on many breakthrough ideas discovered from business studies. New research could help them overcome many problems they are facing or seize even more opportunities.
So, you need to learn from your work, but also be a student of business.
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Be a healthy pessimist
While optimism helped you launch your business, a healthy dose of pessimism will keep it running. What is healthy pessimism? It is trying to anticipate worst-case scenarios before they occur without dwelling on them.
Healthy pessimism consists of taking the following steps:
- ● Thoroughly vetting all your employees, business partners, and people you do business with. Many people are not as disingenuous as they seem and many businesses have been ruined by dishonest other people.
- ● Saving a part of all you earn. Your goals are to have at least 6 months of savings, and ideally 9 months of savings.
- ● Good insurance to protect you from unexpected misfortune.
- ● Getting excellent legal protection.
In conclusion, starting a small business requires courage. Many studies show that only about 20% of small businesses succeed. Using these 5 steps will help you get your business on the right track. Remember, it’s not only how well you run your business that matters but how well you manage your financial planning.