Business Ledger: 5 Financial Tricks For the Entrepreneur
Many first-time business mistakes are easily avoided, yet entrepreneurs lack the knowledge and experience to swerve around them as they gather funds and build their empire. You, however, don’t have to become a statistic. Here are five tips and tricks for controlling your finances as you start your own business.
Never Start Without Capital
Would you jump into a bottomless ocean with nothing but the faint hope that someone will throw you a life jacket? This is the scenario faced by eager entrepreneurs who start marketing a business without the money to cover their operation. They simply assume that they’ll find investors, lenders and other financial backers in the future. This is one of the major reasons that so many start-up companies fail.
To find the capital needed make sure you take a close evaluation of exactly what your costs are going to be in the short term and the long term. Obviously each field and industry is going to be different, but determine how much time you need to start growing your profit and decide when your company can stand on it’s two feet.
Don’t Over-Dilute Your Shares
As your business grows, you may be tempted to give away equity as repayments for loans or even gestures of confidence to new investors. Resist the urge, because you’re only decreasing your ownership percentage, which is critical in keeping your voice when you eventually form a board. You may be founder and CEO, but unless you’re also an owner, decisions will be made without you.
Save Retirement Plans for Later
It goes against the conventional wisdom that it’s never too early to start saving for retirement, but experts suggest that it’s actually a good move to put those plans on the back burner when you’re a new business. You’ll have more money to spend on relevant, time-sensitive enterprises.
Don’t Cut Corners
When you’re starting a business on a budget, it’s easy to trim costs by buying used equipment or off-brand supplies. These shortcuts, however, can come back to haunt you in terms of quality, production and even safety, especially if you’re in a high-risk field like industrial operations. Avoid lawsuits by purchasing your pumps and cylinders from reputable, professional brands like Apex Hydraulics.
Save, Save, Save
Even if you’re enjoying a profitable year, you never know when the market might turn or your bank might suddenly crash. Make it a point to set aside at least 10 percent of your annual earnings for unexpected twists in your company’s future. Preparation is the key to weathering any storm.
These are just a few tricks you can employ to start your own business and keep a tight grip on your finances. It may seem like a lot to take in, but remember start your business knowing it will be hard work and that you will have to put in that extra effort to succeed. Once you realize this you will know exactly the direction to take.
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Category: Business
