08 Oct 7 Tips for Improving Your Small Business Finances in The First Year
No entrepreneur wants to become a statistic. You likely feel a little down when you see the statistics of businesses in their first year. Many of them fail, and that’s the worst nightmare of someone who wants to make their dream a reality. It all boils down to money. The better your small business finances are, the more likely your business is to survive the first year. Intricate money management is the key to success.
1. Go Paperless
Most people are concerned about the state of the environment. You’re showing that you appreciate their concerns and keeping your costs down when you go paperless. A lot of business owners don’t think about how quickly the costs of paper and toner and printer maintenance can become. When you go paperless, you’re eliminating those costs and reducing the amount of waste you generate. Taking green measures where possible is a double-edged sword that slices your operating costs.
2. Share with Like-minded People
If your business is truly in its infancy, you probably have enough room to host another small business in the same office space. If your business and this business can collaborate in some way, it’s a match made in heaven. Open your doors to like-minded businesses that are also looking to save a few bucks while they’re still new. You can network and save money together.
3. Monetize Your Extra Space
What do you have that you aren’t currently using? How about a storage room, a parking lot, or a parking space that isn’t filled? Rent it out to someone who wants to use it. It’s a great way to bring in a little extra income to offset expenses, and it requires almost no effort on your part. Focus on building and managing your business and let your empty space make money for you.
4. Hire the Right People
Why hire a dozen people when you can hire six people that can handle everything? If you’re choosy about who you hire, you’ll wind up getting more productivity out of fewer people. It’s sometimes worth it to spend more money on fewer people and cut down the amount of staff you need.
When you have competent and capable professionals at the helm, things will start rolling smoothly. Top notch experts may cost a pretty penny, but they’ll save you money and boost your efficiency significantly. Take your time to hire top talent – don’t settle for less.
5. Prioritize Customer Service
Customer acquisition can be an insurmountable expense for many businesses in the first year. Aggressive and expensive ad campaigns might bring people through the door, but they can have a negative effect on the books. A lot of businesses find that they aren’t earning nearly enough to justify what they spend. A simple workaround can turn the tides.
Rather than focusing heavily on getting new people through the door, divide your focus between acquisition and retention. Great customer service will create an environment people will want to return to. With repeat customers building the backbone of every successful business, customer service isn’t something small business owners can afford to overlook.
6. Reinvest As Much as Possible
Many first-time business owners will choose one of two paths: they’ll overpay themselves, or they’ll entirely neglect paying themselves. Neither scenario is ideal. You need to have enough money to pay your bills and feed yourself while your business is growing. You also need to avoid excessive spending when the surplus of money you’re bringing in should be reinvested into your business.
Even if you can only put away a little bit here and there, over time, those small amounts saved will turn into a safety net. Set reinvestment goals and pay yourself last to assure you’re not taking more than you can realistically afford to take. Start thinking about the future and how temporary discomfort or light pockets can pay off in spades in the long run.
7. Follow Your Business Plan Diligently
Problems with the business plan means problems with the business. If you thought you didn’t need a formal business plan, you might want to think again. A business plan acts like a roadmap for your success. It’s hard to measure your progress or accurately determine where your next turn is if you don’t have that map.
Some deviation is normal. You might feel as though you need to adjust your business plan based on a crucial pivot or a sudden change in your expectations. These changes can be for better or for worse, and it’s your ability to mold your plan around them that will set you up for a bright and promising future.
Smart financial management is crucial to the success of your business. It’s time to look at the path you’ve set for yourself and be sure that it’s taking you where you want to go.