Money management rules for entrepreneurs

April 9th, 2015 Chase Stafford
entrepreneur

Look at you! Starting your very own business.

Your vision has led you to this point and it’s likely been a whirlwind of excitement. If you’re like a lot of other small business start-ups, it’s likely been a roller-coaster of uncertainty, too. A lot of the uncertainty new businesses face stem from making major financial decisions for your new company.

There are a lot of factors to consider, especially when attempting to fuel the success of your new endeavor. What do you need to purchase to begin? How much should you pay your employees? How do you keep cash coming in so you can stay in business? While these questions are important to answer, you should start with a framework that will serve you well and increase your chances for success.

The five following money management strategies will help you feel more confident in growing your business.

1. Be open with your banker

Your banker has likely been through a lot of different business scenarios. He or she will know what to watch out for, where you should be focusing your efforts and how you should be spending your time. They are a great resource. The more open you can be with sharing your plan, the more they will be able to understand your vision and help you.

2. Know where you want to go

It helps to have a clear vision of where you want your business to go. That allows you to focus your energy on the activities that will get you to your goal.. Prioritize the tasks that need to be completed first and keep a calendar of upcoming responsibilities. Make weekly and monthly goals you can measure and keep yourself accountable to them. This will help you retain your drive for success.

3. Find the right partners

As a way to save money and have more control, some business owners attempt to do everything. This can be a very costly mistake over time. Building relationships with bankers, accountants, attorneys and other professionals who can help you with your business is a wise use of time and money, even if it is a higher cost up front. Make sure you find reputable professionals who are well-respected in their fields and can help you review and understand business aspects like lease agreements, purchasing contracts, etc. The cheapest and low-cost providers usually do not provide the value you need to sustain your business.

4. Take your time with new hires

The biggest expense for small businesses is usually paying employees. Owners need to be certain their income can handle the salaries required to compensate employees. When a business is in the beginning stages, it’s not uncommon for all employees to stretch their capabilities and do a little more to help save money. It’s also important for owners to hire good employees who will do the work asked of them and be a positive influence on the business. Poor employees can cost your business a lot.

5. Keep track of (and pinch) every penny

This may be the most important aspect of owning a small business. If you’re not sure where your money is going you will have a tough time making decisions. If you don’t have an accountant (even though it’s recommended that you do have one) you can use accounting software on your computer. Your income and expenses are fluid and will vary from month to month. When you have good record-keeping you will be in better shape for quarterly audits, preparing your taxes, etc. Plus, the less you spend when you’re in the early stages of starting your business, the more you dedicate to investing and establishing your business.

These tips will help you keep you focused on creating a solid foundation for growing your business.

About the author

Chase Stafford is Vice President of Commercial Banking at MidWestOne Bank.

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