4 Financial Hacks for New Entrepreneurs
Building businesses from the ground up can be unfamiliar territory for a new entrepreneur that is looking to break into a market. There can be many hurdles that have to be overcome in the course of the business. Getting a business off the ground is one of the tallest obstacles that an entrepreneur can face. Many aspects go into a new business, including finances. When starting a new business, money can be extremely tight as you begin to operate at full capacity, even with a flow of revenue. Learning how to operate within a budget or find new ways to save money while running a business can be the difference between success and losing money. There are four financial hacks that any entrepreneur can use to create and maintain a budget.
Calculate a Break-Even Point
One of the easiest financial hacks to take advantage of for a new business that is beginning to grow is to calculate a break-even point. Finding your break-even point will enable you to determine when your total cost and total revenue will be equal. At this point, your business has no net loss or gain when operating. A Break-even point allows you to make better, more educated, and strategic decisions based on numbers rather than emotions. Once this point is determined, you can see where your business stands financially. If this point is undetermined, it is hard to know where the tipping point for your business is and leaves you to play a guessing game on if you are gaining or losing. The break-even point is an essential operation for any business to understand where they may begin to see gains in revenue and profit.
Separate Your Money
There are some entrepreneurs that are working their way into a business that keeps their businesses money in the same places as their personal assets and allows for it to be the same. It is imperative to keep the two assets apart. Running a business out of your bank account pushes you to walk on a very fine line with both assets. It can become difficult to notice the difference between a business expense and a personal expense when both pools of money share the same account. If you are spending a lot of money, or even just a little, separating the accounts will help you in the long run.
Visit your local bank to open a separate business account for your business. Business accounts more than likely can be opened for free, or for a very small fee. Having a separate account for your business allows you to keep track of your finances, as well as your expenses and have them centralized in their own account. A business account also helps give your business credibility and will help customers feel more confident about doing business with you. Banks may also feel the same. When you begin looking for credit opportunities under your business, some banks will look at the account for you when deciding on if they should loan to your business.
Understand Your Loan Options
It is rare that a business does not require any kind of financial help when beginning to grow. When you feel that it is time to look into loans for your business, it can become confusing. Loans can be looked at just the same as a product. Each loan has its features and terms. The best thing that you can do is find a loan option that works best for you and your business’s needs. Loans are often used to generate long-term growth. When you do your homework and research what kind of loan you want to utilize for your business, it is essential to learn the differences between loans.
Different loan types are available to fit the needs of the borrower. There are secured and unsecured loans, just as there are short-term and long-term loans. When looking at interest rates of the loans, you can find that some have a fixed interest rate or a floating interest rate. All of the different options come with their repayment terms. Learning everything that you can about these loans and what loan type you need for your business will save you money in interest and overall undertaken debt. Learn about all of your available loan options before you take out a loan.
Protect Your Income
One of the best practices that any entrepreneur can do is to create plans for rainy days. No matter how well you think that you have planned for a worst-case scenario, keep planning. Every business has some sort of Achilles’ heel that can be targeted. The best thing that you can do for your new business is to identify threats that could potentially impact your business. These threats can be price fluctuations, a reduction of resources, or even a new business coming into the market at the same time as yours. Completing a SWOT analysis for your business allows you to identify your business’s strengths, weaknesses, opportunities, and threats. You can find free templates for a SWOT analysis here.
Protecting your income and planning for potential threats will make all of the difference in the world to your business. Determine the minimum processes that your business needs to say operation and create a list of contacts that you can call when for when you may need it.
As the owner of a small business, there are a lot of things to remember, and a lot of ways you go wrong. You may need help in some situations and having a little help can go a long way. If you still feel like you have questions about starting and running your own business I encourage you to reach out to me at email@example.com.