As any experienced entrepreneur can attest, the first year represents a make-or-break period for most small businesses. A fledgling enterprise’s ability – or inability – to balance its finances is often the determinant factor in whether it’s able to keep its doors open after the one-year mark. That being the case, meticulous money management should be at the top of every small business owner’s list of priorities.
However, if this is your first time owning and/or operating a small business, keeping your finances in check is liable to seem easier said than done. To help ensure that your enterprise is able to stay afloat throughout this tumultuous period, consider putting the following pointers into practice.
Limit Full-Time Hiring
Going overboard with full-time hiring can put you in a bad place financially, particularly if your business has yet to fully establish itself. As such, it’s recommended that during your first year, you limit full-time hires to essential personnel. For other positions, part-time workers and contractors should prove sufficient. In order to simplify the process of hiring and payroll, some companies partner with PEO companies.
If you’re impressed by the work ethic displayed by any of the part-timers or contractors your business regularly utilizes, consider floating them full-time offers when your financial situation allows it. Alternatively, if you’re not particularly impressed with someone who works for your enterprise on a contract basis, you can simply part ways with them without dealing with all the awkwardness synonymous with firing regular employees.
Rent Sensibly-Sized Office Space
When scouting out prospective office spaces, the temptation to go big can be overwhelming. Since size is commonly associated with success, there’s little wonder as to why so many small businesses seek out large office spaces. However, depending on your budget, renting an office that encompasses far more space than your enterprise needs can leave you perpetually strapped for cash. The larger the space, the larger the rent.
With this in mind, seek out sensibly-sized office space. Additionally, before proceeding to tour prospective offices, take an accurate accounting of the exact amount of space your business needs to operate. This will prevent you from inadvertently renting out an office that far exceeds your space requirements.
If your first year proves successful, you can always change offices in the future, but when you’re just starting out, it’s best to avoid getting carried away with regard to your base of operations. To help keep track of how much of your budget is being allocated to rent, open a business bank account.
As a growing number of businesses are discovering, telecommuting is a great way to keep employees happy while keeping operating costs down. The fewer workers you have in your office on a daily basis, the less powered is consumed. Furthermore, if you provide onsite snacks and refreshments, you’ll be able to reduce your food budget if a sizable chunk of your workforce is carrying out their duties from home.
Telecommuting can also prove helpful at keeping your rent costs in check. As previously stated, large offices come with hefty rents. However, if you have a fairly small number of employees working onsite on a daily basis, you’ll be able to make do with a smaller office space and save yourself a small fortune in rental costs.
Allowing members of your team to work from home can also help foster loyalty. For example, if one of your team members receives an offer from another business, they may be unwilling to accept it if they’re not given the same level of freedom they enjoy at your enterprise.
Employees with families are sure to appreciate the schedule flexibility telecommuting affords. Working a traditional nine-to-five tends to interfere with family time and can make tending to childcare-related responsibilities an uphill battle. More importantly, with the COVID-19 pandemic getting worse by the day, letting your workforce conduct their job duties from the safety and comfort of home has become more crucial than ever.
To call a small business’s first year of operation a tumultuous time would be an understatement. The decisions made during this crucial period often determine whether an enterprise sinks or swims. Since money can be scarce before a business is able to fully establish itself, it’s in the best interest of every fledgling entrepreneur to make financial management a priority. Small business owners looking to ensure their enterprises’ long-term solvency should consider the measures discussed above.