Starting a business can be financially tough, especially when you are younger. Check out these life-saving financial tips for young entrepreneurs.
There are over 25 million entrepreneurs in the US alone and it should be no surprise that this number is continuing to rise every year.
This is because there are numerous benefits of being your own boss (higher salary, better control, more freedom, choosing your hours, etc.) and it’s no wonder new businesses and the gig economy is booming.
Of course, being your own boss also means taking on all the risk yourself. The following financial tips will give you everything you need to navigate the difficult waters of running your own business.
1. Work Smart Not Hard.
This cliche is actually one of the most critical pieces of advice for any entrepreneur because any time you waste is money you lose.
Before undertaking any new task ask yourself these three questions:
- Is this necessary?
- Does the survival of my business depend on this?
- Is there an easier or faster way this can be done?
Every decision you make has to have money in mind because if there’s something more productive you should be doing then it isn’t worth your time.
2. Financial Tips: Budget.
Most entrepreneurs start their own business because they have goals and dreams they want to fulfill.
Often, spending hours doing mathematical projections and budgets are not part of these dreams. It may bore or frustrate you, but if you truly want to achieve your goals then you must create a realistic budget.
3. Expect the Unexpected.
A supplier could go bankrupt or an angry customer’s tweet could go viral, there is an infinite number of things that can cripple a new business.
For that reason, you must think about what you would do if something went wrong. Whether it’s having a PR plan or back up finances, being prepared will ensure your business can survive.
4. Record Every Transaction.
There is nothing worse than a business which doesn’t know where its money is coming from or going.
Setting up the infrastructure to record transactions means that if anyone tries to claim they don’t owe you money or that you didn’t pay them, you will be able to easily protect yourself.
5. Secure Repeat Clients.
Every business has their “bread and butter” clients who they rely on for stable income. Having a contract that guarantees a source of revenue gives you a lot of breathing room.
It lets you create more concrete forecasts, projections, and budgets while also giving you the ability to be a bit riskier and more selective of your other clients.
6. Figure Out a Salary for Yourself.
When you’re stressing about all the costs and budgeting, it can be tempting to pay yourself nothing at all.
Sure, this keeps costs down on paper, but realistically you need an income to continue living and running your business.
No matter what, always make sure you pay yourself at least enough to get by.
7. Cut Unnecessary Costs.
What’s inefficient about the process? Is there anything that could be done to make things smoother, faster, or cheaper?
Again, time really is money so if anyone’s time is being wasted then it takes away from other projects they could have been working on.
Read more for other ways you can help save on costs.
8. Create and Follow Distinct Milestones.
It is crucial that you and your team have a clear direction and goal to follow.
By achieving goals, you’ll be proving your ability to accurately forecast to potential investors.
Even if you get your forecasts wrong, it’ll give you plenty of experience to learn from so you can improve goals you set in future.
9. Learn About Taxes.
Businesses big and small enjoy an extensive range of tax breaks for a wide range of expenses.
For example, if you buy a laptop to use exclusively for work it can be deducted as a business expense.
Learn about the options available to you, you may be surprised how much money you can save.
10. Save for Retirement.
While retirement may seem far away it’s actually better to start putting in money now.
Every year, the money you put aside will gain interest and help secure future income no matter what happens to your business
It’s easy to get caught up in the excitement and stress of starting your own business. Hopefully, these financial tips have given you some perspective on where your priorities should be.
Check out our other articles for more advice on how to take your small business to the next level.