Starting a business is not easy, no matter what kind of business it is. You will have to make a significant investment in your business and you need to be sure that investment will pay off. If you want to help ensure the success of your business, it is important that you have a solid financial game plan.
Keep a Cash Stash
Don’t stretch your initial funding so tight that you don’t have room for the inevitable problems that will occur. Allocate what you need to get started and set the rest aside for unexpected complications. Additionally, you may have months where business is slow and you need to make sure that you still have money to cover your overhead. If you have money put aside, there is a lot less chance that a slump in business or an equipment problem will put you out of business. Ideally, you want to give yourself as much financial cushion as you possibly can; especially during the first year you are in business.
Don’t Skimp on Necessities
While it is important to give yourself some kind of financial safety net, don’t do it by not getting the proper legal paperwork and insurance that you need to do business. Skipping on these necessities in the beginning might hurt your business more in the long run. You also want to make sure that you have enough inventory or whatever supplies you need to successfully run your new business. If you have to start tapping into your business savings because you did not plan ahead well enough, it violates the point of putting money away in the first place.
Pick the Right Bank
You and the bank you choose to use for your business are going to develop a very close relationship. Shop around different banks to find the one that is best for your business. The two most important things to look for are fees and customer service. Bank fees vary widely for businesses and as your business grows, the number of transactions you conduct with the bank will increase. Make certain that you are happy both with the banks’ fee structure and their responsiveness to your business needs.
Know Your Marketing Plan
Many new businesses make the mistake of investing too much of their initial funds into marketing strategies that don’t work or drain their accounts. A solid marketing plan should go hand-in-hand with a solid budget. If you don’t know much about marketing, work with an expert who does. A marketing budget that is too high can put you out of business within a matter of months if it doesn’t generate enough new customers to pay for itself.
Don’t put your finances, or your business, at risk by being financially irresponsible. Think of your business like a child. You should invest in its future and make sound decisions so that your business will grow and prosper over many years to come.
About the Author: Irvin Quam is a small business owner who can appreciate budgeting and outsourcing to keep costs down. He uses a local temp staffing service to help reduce employment costs until he can offer full-time employment.