Six Best Financial Hacks for New Entrepreneurs

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One positive the pandemic left was a surge of new business startups. This has continued. In 2023, a record 5,481,437 new businesses started. However, these entrepreneurs face many challenges to creating a successful business. The odds are stacked against them.

That’s because 70 percent of new businesses don’t survive beyond two years and 50 percent don’t survive past five years. But you can hedge your bet by incorporating these six hacks into your business plan.

1) Follow a Business Plan

When starting a business, everyone develops a business plan. Financial institutions or investors probably won’t even look at you if you don’t have one. If you don’t have one, develop one now.

These documents are more than just a way to attract financing. They are the blueprint for how you will be setting up and running your business.

That’s because part of a business plan includes:

• company description
• market analysis
• organization and management
• service or product line
• marketing and sales
• financial projections
• etc.

All these elements contribute to the success or failure of your organization. Keep your company description handy; it will help you stay on course.

Initially, how you plan to market or sell your products/services may change slightly, but using the business plan’s original description will help you.

One of the most important elements of business plans is the financial projections. This benchmark will allow you to see how you’re tracking. And it helps define a budget.

Your business plan is the most important set of documents you have. Use it to ensure success.

2) Budget All Resources

Don’t shoot from the hip. Establish a budget. This doesn’t just mean a financial budget but also a “your time” budget. Your time is valuable. Many entrepreneurs try to do every job, and, in the beginning, you almost must. But learn to let go once your business picks up.

Use technology to help you accomplish basic tasks. Hire a freelance virtual assistant to help you with invoicing instead of an expensive full-time employee. Do what you can to free yourself from mundane tasks so you can work on the bigger ones.

Keep your eye on the day-to-day operations but also make time for the big picture items.

3) Cash Flow Management Imperative

One of the most common reasons startups fail is that they simply run out of funds. Businesses fail 82 percent of the time because of a negative cash flow. Cash is king! And if you want a successful business, positive cash flow management is necessary.

You need to constantly make adjustments daily, weekly or monthly. The point is to keep revenue goals staying on path. So, if sales are down one week or month, keep expenses down. Learn what your business’s sales cycles are and prepare.

Keep tabs on every dollar and study your cash flow. This means monitoring what is coming in and what is going out. Sound business owners know exactly where they are financially at any given moment.

Pay invoices strategically. Try to negotiate quick payments on accounts receivable and extended payments on accounts payable.

Your business idea may be the best worldwide, but if you don’t have the cashflow, you’re out of business.

4) Separate Business and Personal Accounts

It’s all going into one pocket at the end of the day, right? No statement could be more wrong.

It may seem tedious to set up separate accounts, but keep in mind the business money isn’t your money until you distribute income to yourself. The business money fuels the business.

A designated business account makes it easy to track expenses and income. It will allow you to manage your cash flow and file your taxes.

If your business is not fully established or registered, open a separate account anyway. Make it a personal account for business only until you’re ready to go.

Once you have everything set up, resist the urge to take money out of the register for dinner. Because it’s not yours, it’s the company’s money. And you’ll need to justify this missing money on your books.

Many new entrepreneurs find themselves in trouble because they did this, and the results were that their books were a mess.

5) Focus on One Goal

Succeed before you expand. This means accomplishing one goal successfully at a time. If you open a shoe shop, concentrate on that one shop until it’s financially successful. Don’t open another shop with the thought you can build two businesses at once.

Many entrepreneurs expand or take on other lines of business way before they’re ready. They forget about the number one goal and that’s making the original business profitable.

6) Find a Good Accountant and Listen

Tax-planning strategies are not the only item that a good accountant can help you with. They can help keep your company successful.

A balanced set of books is imperative. Help your accountant help you. Use software like Quickbooks (Intuit) or FreshBooks as financial tools. Since negative cash flow is the number one reason businesses fail, keeping on top of your cash flow will help you succeed.

Follow the Money

The best idea in the world will not help you if you don’t keep an eye on the books. It may not be the glamorous side of your business, but knowing where every dollar is coming or going will save you.

The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.