Published on September 23rd, 2015 | by Millennium Magazine Staff0
Five Financial Management Hacks for Savvy Entrepreneurs
by Lizzie Weakley
You have a brilliant idea for a start-up, and you want to introduce your concept to customers as soon as possible. After all, if you don’t act fast, someone else could develop a similar business model. Still, you hesitate to proceed because you don’t feel confident about your money-management skills. Set aside your worries! As you prepare to launch your business, apply the financial management hacks below.
1. Create a Business Plan
This tip may sound less like a hack and more like a no-brainer, but don’t knock the value of a business roadmap. A solid business model proves your idea’s value to potential investors, lenders, and customers.
Always write your plan down. Justify that your company has customers who want your product and will pay for it. Also include more nitty-gritty details, such as what your day-to-day responsibilities will be, how many employees you’ll need, and how you’ll market your product and your company.
2. Apply for a Business Loan
With your business plan in hand, you’re ready to get a loan for your start-up costs. Request enough funds to pay for essential expenses during a set time, such as your first year of operation. However, unless your business model demands it, don’t borrow money for expensive equipment and fancy office space. If you practice frugality early, you set your business on a surer financial footing.
You also may want to consider building your own loan through a company like Loan Builder. After you have created your business plan and have gone through the loan application process, you should be able to see what loans your business can qualify for and the amount you qualify for. By building your own loan, you will know your financial limitations which will allow you to better manage your money.
3. Prioritize Your Expenses
Once your loan comes through, you’re ready to launch. Consult the business expenses you outlined in your business plan, and use them to guide your first purchases. Adhere to this budget as closely as possible.
Follow a monthly operating budget too. Avoid buying anything on impulse, even if a new tablet or a trip to an upcoming conference seems vital. Give yourself at least a week to consider major purchases. You may discover less expensive alternatives or decide the purchase isn’t essential after all.
4. Save Some Early Earnings
You may assume that every dollar that comes in should go right back into your company. Not so. Create a savings cushion that can cover unexpected expenses. This philosophy means slower growth in the short term but gives your company more longevity over time. Put aside at least 5 to 10 percent of your profits every month. In months when you earn a lot, save extra.
5. Always Pay Yourself
When the profits start coming in, don’t unify your personal finances with your company’s. Keep the two separate so you have money for living expenses. Treat yourself like any employee: give yourself a paycheck on a set schedule. As much as possible, ensure that your personal earnings stay steady from month to month. Don’t pay yourself more or less depending on recent profits or expenses.
It’s time to apply your business savvy. Use the tips above to turn your brilliant start-up idea into a profitable business.