9 Techniques for Avoiding Financial Disaster when Starting a Business
We all know that it takes money to make money. There are always going to be expenses when you run a business, but when you are first starting out, they can seem insurmountable. In fact, many businesses fail in their first year of operation. You don’t have to be part of this statistic. You just need to make sure that you are taking every step to avoid financial disaster. The following are some techniques you can use to keep your head above water and enjoy success with your business.
#1. Show Your Value
Before people are going to give you their money, you need to be able to show them that your business has value. You need to be able to demonstrate that your business is unique, and that it can offer things that other businesses can’t. Sometimes all it takes is just going that extra mile to get and retain customers. There are all kinds of things you can do to be different. Develop your own special approach to customer service, or anything else that is going to attract attention and get your business noticed. If people don’t notice you, no money is going to be made.
#2. Have a Cushion
If at all possible, try to have an emergency cash cushion. There are likely going to be lean times, especially in the beginning. It is a good idea to have at least two years’ worth of money for expenses. This way, you don’t end up stressed out when there is no money coming in and you have bills to pay. Remember, you are your business’ only asset. If you are not meeting expenses, no one else is going to, and your business is going to fail.
#3. Know when to Hire
While you may not need to hire any employees in the beginning, if your business takes off, you will need to have help. The trick is to know when the best time to hire people is. If you hire someone too soon and the business doesn’t do well, you still have someone to pay. If you wait too long, you could find yourself overwhelmed because you are doing everything yourself and business is booming. There is a fine line to walk here. You have to keep track of everything, and once you see things picking up, it is time to start looking for employees.
#4. Find the Right Storage Space
You probably don’t need to rent an expensive office right away. If you do need space to store equipment, goods, etc., consider getting a self-storage unit. This is a lot cheaper than renting an office, and you won’t be locked into any long-term contracts. You can use it for stock, files, and anything else you need to store for your business. You get to choose how long you rent the unit for, and there are various sizes to choose from, depending on the needs of your business.
#5. Get Insurance
Many people think that as long as they don’t have employees or there is no one working around anything dangerous that they don’t need to have business insurance. There are actually several reasons why you need to have coverage for your business. First, you need to have disability insurance. You are the business. If anything happens to you, there is no way that you are going to be able to keep the business going. Talk to an insurance expert about the various types of business insurance, and decide what is going to be the best coverage for your business.
#6. Know Your Customers
One of the biggest mistakes new business owners make is not learning about their customer base and target audience. In order to be able to effectively market your business, you need to know who you are marketing to. You need to know their needs, their shopping habits, etc. Use the tools available to you that will help you to measure all of the metrics that will show you what you need to do in order to get more traffic and make more money. If you don’t get to know your customers wants and needs, you may as well pack it in now.
#7. Stay in Touch with Customers
It isn’t enough to learn about your customers. You need to let them know that yours is a business that cares, and that you are thinking about them. It only takes a couple of minutes to send out emails that are personalized for each customer. Again, there are many tools you can use that will make this fast and easy. If you aren’t using CRM tools effectively, you aren’t going to make money, and it won’t be long before you are losing money because your expenses will be a lot higher than your revenue.
#8. Learn to Manage Your Finances
If you are not great at managing finances, you are not alone. But, as a business owner, this is something that you need to get a handle on. There are many accounting software packages out there that will make tracking all of your business and personal finances easy. You need to be able to get your hands on all types of financial information at any given time. Using the right software will ensure that you are able to do just that. You will always know where your business stands, and you will know where changes need to be made so you can make profits.
#9. Don’t Grow too Quickly
Seeing your business succeed is exciting, and it may have you considering expansion. Don’t be too quick to jump into expanding your business. For instance, if you are making a lot of sales, don’t assume this is going to continue and order extra inventory. You could end up with a lot of stock you can’t sell. Strategic planning is the key to business growth and avoiding total failure. In a case like the example here, create a plan that lets you fill orders quickly without having to buy a lot of stock first.
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