It is not easy for anyone to leave their jobs and start a company right from scratch on their own. But still, there are many who say goodbye to their 9 to 5 jobs and move towards making a business out of their idea. A lot of these people feel that it is better to work for things that they are passionate about rather than to work in a cushy job for someone else.
Nonetheless, as optimistic and inspiring this is, many new entrepreneurs of today face various types of challenges on the way towards running their own businesses successfully. One of the main hurdles that many face is the cash flow management. There isn’t any secret in the fact that many new companies usually fall into a money trap due to spending a lot on things that are not important.
On the other hand, the fact that a few of the expenses are not necessary, it does not mean that you should be a cheap person whenever you have to spend on something that might turn out to be highly potential for your business. As a matter of fact, there are a few expenses that are necessary. And being an entrepreneur, it is important that you know all the difference.
And for the companies that are new, the expenses are higher than the amount of profits coming in the business. The main reason for this is that you would have to spend money to set up things and make your business get on its foot. In short, you would have to spend money on things like office space, equipment, etc.
Nevertheless, there are some things that you can do to reduce your costs so that you do not overspend and end up in loses. These things include:
1. Go Paperless
An office that is paperless tends to be more productive and cause very little wastage of cash. It is normal for businesses to rely largely on paper receipts, reports, invoices and documents. Think about the money you would save for not using the amount of paper and ink that you use for your business in a week.
Moreover, maintaining a printer or printers is not something that comes cheap. So, in place of using a printer and papers, you can make everything digital. Using digital documents would also mean that you are doing your part in saving the environment as you save money in your business as well. Also, there are many reasons why eliminating paper can be of an advantage for your business like faster payment digitally, and easy knowledge sharing between the staffs.
Another great place where you would be spending a lot is in paying your employees. And the problem here is that you cannot run a business without the employees. So, what do you need to do in this case? Well, there is a way in which you can easily cut the costs without compromising the various responsibilities and roles that you need in your business. And the way out is through — Outsourcing!
Once you begin to look for talents to outsource your work, you would be surprised to find various types of talents that many outsourcing platforms offer like Freelancer, or Upwork. From virtual assistants to seasonal accountants, you would find each and every kind of professional on the platform which you can easily hire on a contract basis. The best thing about places like this is that you would be able to hire professionals for low rates than what you would be paying to your employees.
To be able to hire such people and outsource work, you would have to create a business account on any of the platform and post a job sharing your requirements with the freelancers on the platform. Choose the relevant workers from the applications you receive based on their experience and ratings. Also, do not forget to ask them for a sample of their work and references to be sure you have selected the right candidate.
3. Use Branding Solutions that are Affordable
In case you are a person who wants their startup to be something that is highly successful, you should not ignore any top-notch branding. Nonetheless, you should not have to empty your bank account for it. Branding services are not only available for the large enterprises, but is also available for the small ones these days.
And since the technology is growing and ruling the world right now, there are many affordable and easily accessible branding tools that are on the Internet that anyone can use. For example, there are many tools used for designing a high-quality logo for your business all by yourself and within minutes. And the best thing about this is that you would not have to spend more than $5 for getting a premium logo for your business. The overall process is very simple that you do not need any knowledge on how to do design a logo.
4. Use Money Wisely
Even though it is a very obvious tip, spending money wisely is highly important. If any startup wants to succeed, it is highly vital for them to prioritize the things that they would be spending money on. It is not affordable for small companies to just splurge money as soon as they begin their journey in the business world.
Hence, avoid purchasing the equipment and new furniture that might not be important at the moment. If you can find the same things at a pre-owned conditions that are at a much lower rate. Likewise, you do not have to spend much capital on a commercial place in a prime area in case you can use other cheaper alternatives. Moreover, if using a virtual address is a much more cheaper option, then use the service. When the company begins to earn profits, you can then think about getting a space for your company.
5. Become well-versed with Digital Marketing
Using digital tools in a small business would help them grow their business. To be able to use these tools and make use of the digital era well, you would also need to know all about digital marketing. Learning about the different kinds of digital marketing aspects like blogging, social media marketing, email marketing, etc., you would be able to enhance your company to help it grow faster and better than your rivals. This would also help you save a lot of money.
One of the main reasons why you should use this is that it is very cheap and if you know it properly, it is also free. Marketing all about your brand on the various social media platforms like Instagram or Facebook via a page would help you a lot and cost nothing. Moreover, you can also send newsletters to many email users through some specialized tools that would cost you a little.
But this is not all. There are a lot of other things that digital marketing has where you would not have to spend a penny to reach out to people. Additionally, if you are a person who has no idea of what digital marketing is all about, you can easily learn all about it from various eBooks and tutorials shared online. All you need to do is search for them and select the best ones.
6. Manage Your Cash Flow
Running a business brings a lot of issues when it comes to managing the cash flow. Most of the times, it is not the lack of money that is the issue. But it is the slow recovery of cash from the clients who have availed your services or bought your products (mostly in bulk). The simple truth is that there isn’t any company that is shielded against the lazy clients who take so long to clear their dues. In case you are not able to make any arrangements for such circumstances, that is when you can easily fall into a cash crisis.
For you to be able to avoid any revenue deficiency and enhance the cash flow, you would need to prepare a very strict invoicing policy. This policy should then be shared with the clients letting them know that you would not accept any delayed payments. The policy can have a clause saying that the customer would be fined with an appropriate amount in case the payment is delayed. This would help you get payments on time and manage the cash flow easily.
Similarly, you can offer them little discounts so that they can clear their payments much faster. You can also work towards creating an automated system that works as a reminder for the clients. This system can send emails to the clients after some days have passed since the deadline of the payment. By creating steps like these, you can easily manage the cash flow and avoid having a money crisis.
7. Find Alternative Suppliers that are Affordable
Well, you do not have to feel guilty at all when you know you cannot afford taking the services from a supplier. It is better to look for an alternative supplier instead who might be able to offer better services for lower rates. The supplier can be for services like repairs and cleaning, supplier for equipments or office supplies.
If you do not find anyone who can offer lower rates, it is better to negotiate with your current vendors to make them understand why you need services for lower rates. With this being said, it is important that you do not compromise with any quality of the service that you are getting.
8. Do What you can
In the end, you need to understand that you have just started a business and you need to save as much as you can. This means that you can start off by doing the tasks in the company that you as an owner can do on your own. Like, taking care of your own tasks instead of hiring a personal assistant. There are some things that you can do on your own that would help you save money as well.
Starting a business is a great thing and to make it successful is not that difficult. But for you to do that, you would have to focus on how the cash flows in the business. Moreover, when cash begins to flow in, it would be a great idea to use most of it to grow the company. It does seem tempting to spend cash on things that do not matter or to take the money in your pocket. But, doing such things would put you in a much tougher situation.
On the other hand, when you make mistakes, do not lose hope and get disappointed. Use these mistakes as stepping stones to learn from them and move towards success. And if you follow the tips shared above for your cash issues, you would be able to dodge any big money troubles that could have come your way.