From personnel matters to inventory control, effective small business management crosses multiple disciplines, calling on owners to address various commercial concerns. Among the diverse affairs handled by entrepreneurs, maintaining a healthy financial bottom line is one of the most important aspects of business success. To that end, prudent spending sits atop the must-do list for the full spectrum of small business entrepreneurs.
Business budgeting mirrors personal money management, so your experience with domestic spending control provides a strong basis for efficiently dispatching your commercial financial responsibilities. The stakes may be higher for entrepreneurs, and the process may encompass more variables, but effective cash flow management relies on the same principles, whether at home or on the job. In either case, if you expect to balance your budget, you must spend less than you earn.
Commercial spending demands are widespread and it isn’t always easy to precisely predict what’s coming down the pike. Calculated spending protects your businesses finances, hedging against catastrophic dips into the red. Prudent financial moves are always important, but carefully measuring spending choices is particularly vital for new and emerging businesses.
Though individual commercial ventures are unique and each business has distinct cash flow requirements, some of the same spending mistakes undermine independent operations, across a wide range of industries and business types. An article recently featured in the small business section of msn.com identifies some of the most common cash management mistakes made by inexperienced entrepreneurs, offering expert advice for avoiding costly missteps.
Who Are You Trying to Impress?
Forming a business and funding its early operation doesn’t always leave a lot of extra money in the till. Spending mistakes during the vulnerable period, following your launch, can leave you in a precarious position. Some startups fail right out of the gate, because inexperienced operators squander their bankroll on unnecessary spending.
Startup entrepreneurs too often fail to translate their high-level ambitions into affordable small business strategies. Spending too much money to impress clients and competitors can backfire, leaving you without adequate resources to fund ongoing business operations. Better to wade in slowly, resisting the urge to overspend on items such as state-of-the-art electronics, equipment, and expensive branding solutions. Will gold-embossed business cards really move the needle, promoting your enterprise? Does your grand opening warrant high-end catering? How much expensive automation do you need, in your production facility?
In the recent msn.com highlighted piece, financial coach, William Ray, reminds budding entrepreneurs to focus on the essentials, rather than making a big splash with the latest, greatest, gadgets and electronic gear. According to Ray, it makes more sense to assemble the basics, achieve profitability, and then move ahead with costly upgrades.
Aimless Marketing Hits Your Bottom Line
Marketing dollars are precious to fledgling businesses, so it’s important to stretch your resources as far as possible. Spending too much money on general advertising makes it hard to bring home the desired returns – the effort simply becomes too diluted to succeed.
When in doubt, direct your marketing budget toward targeted campaigns, leveraging Google AdWords, Facebook, and other cost-effective networking solutions to get out the word about your business. William Ray suggests investing in your web presence, which provides more bang for your buck than an aimless general advertising strategy does.
Make the Most of Low-cost Learning and Networking Opportunities
Green business owners are naturally hungry for knowledge and industry exposure, so conferences, symposiums, and seminars appear attractive, at first glance. However, once you consider the financial impact of retreats, educational opportunities, and networking meet-ups; a thorough cost/benefit analysis may derail enthusiasm. While these types of events may indeed offer unique insight and opportunities to rub elbows with other professionals, you should proceed with caution, spending money on socially-inspired business affairs.
Business and career coach, Makenzie Chilton, suggests choosing wisely and defining your precise purpose, when weighing the benefits of business events. What do you expect to gain by attending? In some cases, you can reach out to past attendees or talk to leaders in your field, without incurring expensive conference fees. Even if you have to buy a meal for a mentoring colleague, you’re still way ahead of the game, receiving all the benefits of attending, without paying a stiff financial price.
Don’t Diminish the Value of Your Time
Delegating duties is easier said than done for small business entrepreneurs. Not only is it hard to relinquish control of key aspects of your endeavor, but you may also believe completing tasks yourself is a viable money-saving strategy. While there’s nothing wrong with wearing several hats (it’s requisite for most business owners), you also need to recognize when to bite the bullet and hire out jobs to well-qualified contractors or in-house staff.
Tackling unfamiliar work often takes you away from other important concerns, digging-in to already limited availability. Chilton offered an example from her own experience, building a website, during the formative stages of her career coaching business. After all was said and done, the cost of buying design themes and how-to instructions yielded only a temporary website, which was replaced within a few months – despite many hours spent completing the project.
There are a lot of bases to cover, starting a business, but financial health trumps all other concerns. Controlling spending and properly allocating resources, particularly when facing startup temptations, is essential for balancing your business budget and achieving profitability. Sidestepping these common spending blunders is a move in the right direction, recently shared online, by business and finance experts.