Entrepreneurs face an enormous amount of financial stress. They’re (usually) the sole source of their own income. Being in business for yourself can be very rewarding but it does not guarantee success or a stable monthly income. So until they reach a level of profitability that sustains their lifestyle, pays the bills, and leaves a little extra for savings, most entrepreneurs are constantly looking for ways to achieve financial security.
There are ways to help alleviate the financial stress of being your own boss. With the proper mindset and financial plan, you can feel better about your finances. Here are a few tips to get you started.
Create a budget and stick to it
Budgeting is the fastest way to understanding your bottom line. You can’t gain better control of your finances (business or personal) if you don’t first know how much money is coming in and how much is going out. Most people make the mistake of not carefully watching their spending habits, but as an entrepreneur, every penny counts.
Tip: The same way that you do for your personal expenses you may need to start creating shopping lists for supplies that you need for the business. Think about it this way: the same way you overspend when you go to the store for just one thing… is the same way you overspend for business. I can’t tell you how many times I’ve gone out for office supplies and bought all this cute stuff for the office that I neither needed or had a use for.
After you have a better understanding of where your money is going, look for ways to save. If you travel for your business, look for the best days to book flights and save on your tickets. Use sites like Hotel Tonight to save on last minute hotel stays – especially when you don’t want to skimp on quality but are limited in funds. If you use a lot of ink in your business, consider remanufactured ink.
If you’re intentional about finding ways to cut back on your expenses your money will go further for you.
Be okay with a simplified life
In the beginning stages of your entrepreneurial journey, you will likely be focusing all of your resources on building your business and getting things going. As an entrepreneur, you have to start thinking about money differently. You never know what emergency or expense may come up. A customer may be late with paying an invoice, or you may have a shipment delayed that causes you temporary stress.
For a while, you may need to sacrifice a little even on the personal front. For example, instead of going shopping in your free time, start exercising. Instead of going to the cinema, stay home and watch Netflix. Instead of going out, invite friends over for dinner and drinks. There are many ways to make this work… if you have the right mindset. It’s not about limiting yourself, it’s about setting the foundation for success.
Have a backup plan
When you’re in business for yourself there will inevitably be pitfalls. Some entrepreneurs will have the luxury of being able to ask family for financial help when things get tight. Other’s will tap into their retirement savings or contingency funds… but others may not have either of those options. If you find yourself in this situation, here are a few things that you can do:
1 – talk to your local bank – while you may not qualify for a small business loan, you might be eligible for a personal loan or line of credit. This may be just what you need to get things in order.
2 – sell off extra inventory – you may be holding on to items that haven’t sold or that no longer fit your business model. Try unloading these items on eBay or Craigslist and generate some cash flow for your business.
3 – consider a PayPal line of credit – if you pay for supplies or inventory with PayPal (or have the option to) having a line of credit with PayPal may be a lifesaver for you.
Tip: When you have a good revenue month in your business, open a secured business credit card. Wells Fargo has a good program. That way when things are tough you have a backup plan already in place and you’ll have the added benefit of establishing business credit.
There are quite a few creative ways to generate extra funds for your business fast but there are also a few that you should stay clear of like:
1 – avoid mortgaging your home or trading the title of your car
2 – steer clear of predatory lending labeled as small business loans – the fine print always reveals ridiculous terms and interest rates
3 – never use a payday loan service – according to the Personal Money Store Google won’t even allow payday loan companies to advertise in its searches