When they start a successful business, two road entrepreneurs often go down.One is to pay too much and threaten the company's health with excessive expenditure on frivolous personal things.The other is hardly to survive on their income.
The latter track must not be admired. Personal sustainability must be integrated into your business model. If you do not practice self-care by investing in yourself, you as a business owner will not function at all after a short time. This means learning and development expenditure or admission to professional events and membership groups, as much as a decent salary. It also means planning your exit or retirement-because no one else will if you don't.
Entrepreneurs are all about bootstrapping and branding and, let's face it, whenever possible, cutting financial corners. This mindset is not wrong-to a point. You'll eventually realize that you and your company must grow or die. And this means investing in tools, services and platforms that can remove menial tasks and responsibilities from your employees ' plates.
If you have a custom socks business, you likely didn’t get into that industry in order to conduct payroll services, or manage a supply chain. You got into it because you love to make and sell socks. Therefore, don’t spread yourself worrying about tasks that can now be taken care of automatically.Payroll, HR, inventory management, asset management, invoicing-all these things can now be delegated to apps and third parties by small businesses.
Whatever nominal fees you pay to use them are most likely to be recovered if you can turn your attention back to what you are doing well and redouble your efforts instead of dividing your attention between tasks.
Most small business owners fear debt and understand their reasoning. Margins for small businesses are often thin, and even a previously robust company can sink in a bad couple of months.
There are, however, times when taking out a loan, or getting a business credit card, or using retirement funds, can be a smart long-term move for your business. If you take the time to calculate the return on investment of a small business loan, you might find that paying the interest will be worth the financial opportunities afforded to you by this influx of capital.
There are times when you’ll have to sacrifice profitability for growth if you want to survive long-term. Responsible and affordable financing is a valuable tool for profitable companies - not a lifeboat for ventures. (In fact, more debt is probably not the solution if you struggle to meet the ends.)
Deal your business funds with Hermition it's free. Send invoices, makes your bookeeping smart with its AI and lets you get paid faster.
In a perfect world, your company would constantly reduce its costs without sacrificing quality while delivering an increasing number of units efficiently snapped by customers.
But since that probably won't happen, let's be clear: It's more effective to control your costs than to try to boost your sales.
Sales are based on a number of factors that you may or may not control. Your marketing and branding efforts might work wonders, or they might not. A product you sell might be a hit during the holiday season, or it might not. Science, art, and luck all play a role.
Costs, on the other hand, are mostly within your control. Are your costs highly variable and occasionally interfering with your business? Consider cutting deals that turn your utility bills into flat rates that you can plan for.Are you constantly losing inventory or having to shut down operations due to malfunctioning equipment? Tracking software can help you better manage your important asset investments.
Pay your vendors early to reap early payment discounts. Reduce hours in slow seasons. Basically, do what you can to control your costs and keep them as consistent as possible. From there, you can focus on boosting sales.
It’s common for small businesses, particularly sole proprietors who offer a service such as consulting, to try to gain traction and customers by offering to discount their rates or prices.
This might be feasible for the first couple of customers in order to get your foot in the door, but you will quickly find that you are pricing yourself too low to sustain your business. If you think you are worth a certain amount per hour, or that your product is worth a certain amount—based on numbers you’ve actually run, not estimates or fantasies—then that’s what you should charge.
Discounting your work early on sets a precedent that can be hard to break out of, especially if you use a site like Groupon. Don't let third - party websites or cheap customers encourage you to reduce your price. If the cost is worth what you sell, you'll find people willing to pay what you charge, and the results will be happy.
Your goal as a business should always be to find and cultivate leads for your business to convert to sales. Don’t get so bogged down in servicing existing clients and investing in new ways to keep them that you forget about this fact of business life.
Yes, a loyal repeat customer is more valuable than a new customer—the cost of generating new customers far outpaces the cost of keeping existing ones. But customers can, and often do, leave at any time—even when they’re happy.
Things happen and you need to be ready for the possibility that a long-time client will suddenly up and disappear. Invest some of your profits in lead generation techniques, whether that’s social media marketing.
Doing business should always be about the numbers. Choosing one tactic or tool over another based on a whim, gut feeling, or anything other than calculating what the return on investment will be for your business is bad financial planning.
When moving in a new direction—a new ad campaign, or opening a second location, for example—you should take into account what the ROI will be for your bottom line. Are you running ads on Facebook because you heard that’s what small businesses do? That’s a nice idea, but does your target audience use Facebook? Would you be better served using that money on a different platform?Such thinking will get you farther than just throwing things on the wall to see if they stick.
Whenever you make a decision, ask yourself: How does this add value to my company? Go back to the drawing board if you can't answer that question.
If you didn't take these concepts into account when planning for the financial future of your business, it's time to start. These are all central principles of a business plan: Write everything down and it will be much easier to see where your company is and where it should go. In addition, you will have a success plan that you can share with potential partners, investors, lenders or anyone else who will also be involved in the success of your business.
Just ask yourself whether your financial goals are being planned is a good start. Now it's time to do it.