By : Derek Goodman of Inbizability. (Guest Writer)
Most entrepreneurs are familiar with financial trouble. It’s not uncommon for startups to fail due to cash flow issues, and these financial setbacks can be incredibly discouraging. Investing in another business seems like the worst thing you could do after experiencing a financial loss, but once you get your personal finances under control, launching another startup could be a great move!
Accept that failure is normal and try to view your setback as a learning experience. Use what you’ve learned to avoid the same downfalls in the future! For example, if you encountered cash flow issues due to poor financial management, consider working with financial advisor Stephen Sicoli to get on the right track. Let’s dive into some other steps you should take as you take another shot at business ownership!
Learn From Your Mistakes
Many times, business owners face financial obstacles that are completely out of their control. The pandemic is an excellent example of this. Whether it’s a dip in the economy or a shift in consumer buying behavior, make sure your business is prepared to adapt. For example, businesses that thrived through the pandemic were those that adopted virtual solutions and e-commerce shopping options.
Any business launching today needs to have a solid online presence. Invest in a website so your customers can find information about your company online — and maybe even purchase your products or access your services virtually. To ensure your website stands out from the crowd, invest in custom graphics! Upwork reports that graphic designer freelance rates range from $15 to $35 an hour. Online job boards are a great resource for finding graphic designers and comparing rates, delivery times, and client reviews before hiring.
Set Financial Goals
Financial goals will drive your business forward. Without specific, realistic, and measurable goals in place, how will you know if your business is on the right track? Avoid making goals that are too vague or far off in the future. Evaluate your current financial situation; identify where you would like to be in a month, two months, a year, etc.; and create action plans that detail exactly how you will achieve those goals. While you’re at it, consider setting your personal financial goals, as well!
Avoid Unnecessary Expenses
As you prepare to launch your business, keep your spending under control. Think carefully about what’s essential. Do you need to lease an office space? Hire employees? Purchase brand-new equipment? Skipping major startup costs like these will help you keep your debts low so you have more cash on hand to cover your bills. Calendar.com recommends looking for affordable alternatives like working from home, outsourcing to freelancers, and buying used tools and supplies as you get off the ground.
Create a Cash Flow Plan
Cash flow management is critical to the success of any business, but entrepreneurs tend to forget that cash flow is different from revenue. When you sell a product or land a new client, you don’t actually receive the cash until you collect payment. This can leave you cash-strapped when bills come due.
Ensuring you always have cash on hand to cover expenses starts with good cash flow monitoring. Learn how to create and read cash flow statements, then take steps to improve your cash flow. Establish systems for collecting your accounts receivable faster. Request extended payment deadlines from your vendors so you have more time to acquire cash before your bills are due. Develop a good inventory management system so you can avoid tying up your cash in overstocked inventory. Keeping an eye on your cash flow can help you forecast financial hurdles and sidestep them before they sink your business.
If you’ve experienced a financial setback in the past, you may be hesitant to start a new business. Thankfully, there are steps you can take to ensure your new business can weather any financial storm that comes your way. Prioritize financial planning, goal setting, and cash flow management, and you’ll have the best shot at success!
Are you looking for financial advice? Stephen Sicoli can help you navigate financial and insurance solutions for yourself and your business. Call today for a free consultation! 780-229-3356.