Most people struggle to get to grips with their own finances, let alone steer a business and manage that workflow correctly. While starting a business is a challenging task, you are taking a financial risk. It’s your responsibility to ensure that you handle your business’ workflow with its best interests at heart.
Often times, the money you save or lend from a broker is usually not enough to make it through the beginning stages of your startup. However, if you work according to a strict budget, you should be able to restrict yourself from unnecessary expenses that may have a negative impact on your company’s future.
Many people think that budgeting and setting goals aren’t important, but, usually, those are the businesses which end up having to close their doors because they cannot seem to work with their money properly. So, if you want to look after your company’s financial health and guarantee a fruitful future for years to come, here are a few important cash flow tips you need to consider with your small business.
Request payment upfront
When you’re a small business owner, you constantly want to please people and offer support with the hope of a trade exchange in return. This is certainly the wrong approach to have, as people and companies which take advantage of you from the beginning will continue to do so. While networking is an integral part of growing your business, you cannot assist everyone who needs help. This is only going to set you back in hard times. The same goes for your payments structure. Of course, your payment structure will differ from business to business, but you need to request payment on delivery when possible. Do not allow delayed payments and always encourage upfront payments on jobs. This will help you to predict your month’s turnover in advance without relying on people to pay you when they “can”.
Become up to date with your admin needs
When you start a business, you need to dedicate time to your admin needs and always stay on top of what goes in and out of the business. If you need to send a client an invoice, make sure that you send it long in advance without having your customers wait for their invoice. This type of behaviour will lead to customers being just as casual and carefree as you are. Make sure that you also have a penalty system in place for late payments or consistent follow-up messages. When customers know how strict you are about your payment policy, they will respect your needs and adhere to your rules. If you need to outsource your admin needs, or any needs for that matter, to ensure they are done, do so.
Try and limit your free offerings
Whether you’re selling a product or a service, it’s important to offer complimentary demos if, for instance, you’ve met a potential customer or partner at an investment conference. This will spark their initial interest, and hopefully, lead to a business opportunity. However, with regular customers and trade exchanges, you cannot let people take advantage of your free offerings. Try and limit what “free” items you give out to people at your next entrepreneurship conference as these freebies need to benefit your bottom line in the near future. Starting a business is tough because you need to be restrictive in the type of interactions you have. If someone wants to try your product, very well, but make it a once off trade.
Always be accountable for your actions
If you know that you’ve gone overboard with your finances on a particular experience or business asset, you need to be prepared to suffer the consequences. This is why it’s so important to have a budget. In the first year or three, you need to accept that you won’t be able to spoil yourself or the company until you really start making an impact in the market. Always hold yourself accountable for your actions and try your best to spend your money wisely and record every purchase.
Being a part of an ever-growing and changing tech innovation ecosystem requires resilience and dedication to keep moving forward. If you know that your product or service has tons of potential, work hard at making an impact in the industry. If you’re not earning money, you simply cannot be spending a lot either. Think of many different ways to market your product or seek investor assistance if you really need it. The last thing you want is to find yourself in debt, having to shut the door on your dream.