Startups and small businesses make up a staggering portion of the American economy. They truly are in many ways the financial backbone of the nation, helping carry it through difficult times, helping to elevate employment numbers, and working to create a culture of greater uniqueness and individuality. But who helps these smaller businesses and startups when they struggle…
Certainly there are various grants and potentially some programs available that might assist that floundering small business, but when it comes right down to it, it is up to the owner to save their own company.
So let’s first examine the issue of why so many smaller businesses and startups falter. The small business owner tends to be a dreamer. They have this killer idea, this innovative new approach to solving one of life’s great problems and they are just going to go for it. It is of course, thinking like this that gave birth to the term bootstrapping and thus the American dream. But what often gets overlooked are the more nuanced and critical financial matters.
This is a big no-no when starting a business. Financials should be at the very crux of what you do. So to help you along in your new or small business endeavor, here are three essential strategies for dealing with financial matters that just may help!
1. Discipline, discipline, discipline!
Yep, a pretty simple concept but a terribly important one. Your budget needs to be all-inclusive, factoring in market fluctuations, forecasting potential revenue, and accounting for absolutely every expenditure you can possibly think of. And don’t just look on the bright side, you have to consider worst case scenarios as you construct your comprehensive budget.
Adhering to this budget—living and dying by this budget—must not just be a practice, but a habit that becomes instinctual. You and your employees, if you have any, have got to exercise discipline when it comes to consulting and sticking to that ever so important budget.
2. Get to Know Your Cash Flow Situation
If you are a small business owner, odds are you have a pretty good idea of what is going out versus what is coming in. But do you know every single component that makes up your cash flow situation? I’m sure you can find these numbers, but honestly, if you are going to succeed, they should be at the forefront of your mind, accessible quite readily. Things such as miscellaneous expenses, loan payments, necessary business purchases, office supply purchases; it’s not just about how much you spend to make the product and then how much you consequently get for it—it’s about all of the other financial factors that go into it. The big picture!
Once you know your cash flow situation, you can better manage it. It’s really that simple. So study those numbers, memorize them and use them to help foresee anything that may arise.
3. Consider Outsourcing Some of Your Financial Duties
You are the idea person; your startup is founded upon your vision and your ability to make it happen. You may not be good however at keeping on top of and/or forecasting all financial data. And this is okay. We all have our strong suits. Recognizing what those are and what our limitations may be is a skill in and of itself.
But a small business has to have somebody within it to deal with financial matters—otherwise that business isn’t going to be around for very long. There are plenty of firms that specialize in financial consulting and helping get your business exactly where it needs to be. Financial consultants do everything from business planning, to market forecasting, to helping with payroll and taxes.
Whether for the immediate term or on more of a long-term basis, a consultant might be just what you need to solidify your startup’s financial picture and head toward that golden ring of success!
Did we miss any? Let us know in the comments below!