Smart money management and focusing on the bottom line is essential for business success. These principles apply to all forms of business ownership, from the one-man internet entrepreneur, to the large retail merchant. The basic rules of business apply to all.
Keeping a close eye on your cash flow can’t be emphasized enough. By monitoring your bottom line, and making the necessary changes, you are toughening your enterprise against downturns in the economy and unexpected day-to-day hurdles. This is how smart businesses stay competitive and continue to turn a profit.
One of the first things you can do when starting a business is to really look at what you need, versus what you want. Think of the practicality of your purchase, and always take a step back before making a major purchase – think about it, then proceed if you believe it is absolutely necessary. Above all; never allow yourself to be talked into buying something. Salespeople can be very convincing. They are good at it – it’s their job.
Having said that, not all salespeople are motivated strictly by money; there are many that are genuinely interested in establishing a good relationship with their customers and ensuring that they stay in business and continue to make a profit – It’s really in everyone’s best interest.
Though you might have to toughen up and play hardball during the lean times, a good salesperson will understand that when things improve, you will be there to purchase things that will grow your business.
Are you an impulse buyer? Do you often come to your senses with buyer’s regret a few days later – knowing that those precious dollars could have been spent on more essential items? You must resist impulse purchases if you want your business to survive. Think smart – think savvy.
Tight money management is especially important if you are operating as a sole-proprietor. Every decision (good or bad) is dependant upon your own good judgment. You won’t have anyone disagreeing with your decisions.
As a corporation or partnership, you must answer to others before making purchase decisions. This is a great way to ensure that money is not being wasted.
While it is imperative that you show good judgment when it comes to business expenses, there are certain things that you should not hesitate to pay good money for. Advertising and professional services are two such expenses.
Advertising (when done right) will create more profit for your business. Professional services (bookkeepers, accountants, lawyers) will save your company money.
Again, the key here is “smart” spending. Don’t just throw your money away at advertising and professional services – make sure you do your homework and research first. It is time well spent.
It’s important to keep your expenses under control, but just as important to keep money coming in. Getting paid is the other side of a healthy bottom line.
As a new business owner, you have undoubtedly made a pledge to excel in customer service. After all, what better way to keep ahead of your competitors? However, there is a difference between providing great customer service, and allowing yourself to be manipulated by people that owe you money.
This is where experience and technique come into play. Of course you don’t want to upset and drive away your customers; however, you do have to settle outstanding invoices and get that money coming in.
Professionalism will go a long way here. Reminders should be written in a courteous, yet forceful, way. You must let them know that their bill is overdue and payment is required immediately. Walking this tightrope between getting paid and losing a customer is one that most business people dread, but is necessary to ensure a positive cash flow.
The most important thing is to be proactive about overdue accounts. A well written letter will take care of most situations. In rare instances, you might be forced to pursue more serious collection methods, such as hiring a collection agency.
As a startup business, you should avoid invoicing your customers altogether. This is the best way to avoid having to chase people for payment. There is nothing wrong with demanding to be paid upon completion of a sale or service. In fact, people do not expect a small business to invoice at all.
Spend wisely and ensure that you collect every dollar that is due your business. That is how the savvy business owners do it, and that will ensure that you will still be around this time next year.