There are approximately 28 million small businesses operating in the U.S. and few make a profit during their first year of operation. That means making the right investments and financial choices are key to your new business’ survival.
The good news is that you can keep yourself on budget by being careful with your spending and having a backup in place. Here are a few tips you can use to keep your business on budget during your first year of operation to keep yourself financially stable:
- Manage cash flow. One of the biggest reasons why startups fail in their first five years is because of poor cash flow. You need to know where your money is coming from and where it’s going to avoid dangerous gaps in spending. If you’re working with multiple vendors and cash flow is inconsistent, consider working with an invoice factoring company to stabilize your financial situation.
- Make meetings brief and to-the-point. Approximately 18 million meetings and events are organized in the U.S. every year and represent up to $280 billion in spending. Business meetings, especially with potential partners and investors, are bound to happen at some point in your new business career. Make sure that you have the points you need to make lined up and ready to go. Remember that time is money, especially now that you run your own business.
- Remember to budget for taxes. It’s exciting when your business takes off and money starts to come in. But before you celebrate your profit, don’t forget that you’ll need to pay quarterly taxes on the profits you make. Incorporate your taxes into your budget so they don’t hit you like a nasty surprise. Budget for any business license fees as well. The fewer financial surprises there are the better.
- Don’t take out an office space just yet. Unless you’re opening a local retail shop, it may be a good idea to keep your business running out of your home until you start really bringing in profits. With leased office space, not only do you need to pay rent or mortgage on the property but you’ll also have to pay for utilities. OSHA standards mandate that the minimum indoor workplace temperature is between 68 and 76 degrees, too, so there isn’t wiggle room when it comes to utility savings.
- Outsource when you need it. When you’re starting your own business, you’ll often find yourself overworked. In fact, the average business owner in the catering industry works up to 59 hours per week. You can’t always do everything yourself, but sometimes hiring an extra person isn’t enough to handle the workload either. That’s where outsourcing comes in. In today’s digital age, you can outsource a variety of different services from IT services to customer service representatives. Outsourcing gives you dozens of hands for the price of two.
It’s no secret that your first year in business will be one of the hardest. But by following the tips above, you can keep your business alive and keep pushing forward toward financial success.