Starting a small business is a goal most people have at some point in their lives. Despite this, many people never start the businesses they have in mind because of the cost involved. Staying afloat as a new business owner will be difficult, but with the right preparations it is possible. Here are four tips for getting through your first years in business financially.
Keep Costs Low to Start
If possible, it is best to keep initial business expenses low. If you can, run your business from your home or a small office space instead of moving immediately into a larger commercial property. This will limit your financial liability and keep the payments on any initial business loan you take out lower. Once you have built your business to a point of reasonable stability, you can consider scaling up.
Have Emergency Savings
As a new business owner, there may be months that your business does not produce any cash flow. In these instances, it is vitally important that you have some savings to draw on for everyday expenses. Ideally, you should have enough saved back to cover your house payment, utilities, car payments and other routine expenses for six months or more. While not everyone will have this much capital on hand, the bare minimum you absolutely must have is enough to cover these expenses for two consecutive months.
Get a Good Financial Manager
A huge part of financial success is knowing the best ways to manage money. Since you will probably be too tied up with running your business to learn every nuance of wealth management, it’s a good idea to retain the services of a high-quality financial management company. By doing this, you can delegate elements of money management to experts who will help you to keep your finances stable as you build your dream business.
Keep a Part-Time Job
As unpleasant as it may sound, having a part-time job until your business is large and stable enough to reliably support you is the best way to guarantee additional income. While working and running your business at the same time will be taxing, it will give you a degree of security you would otherwise not have. If you have a family to support, this sacrifice may be especially necessary.
The first year or two of any business will be financially difficult, but don’t let that discourage you. Work hard to build your business and take proper steps to manage your finances well, and you’ll eventually be able to reach your overall business goals.
Author: Hannah Whittenly is a freelance writer and mother of two from Sacramento, CA. She enjoys kayaking and reading books by the lake. For your financial management needs, Hannah recommends Home State Bank.