SMALL POTATOES: New business doesn't have to equal large financial headache
Posted By: Matt in Budget on 05/26/2014 at 08:14:28
The joy, jubilation and excitement over devising a business plan and watching it turn from simple rhetoric to actual money maker is indescribable.
It's also very difficult to do quickly.
But often a mistake made by these would be entrepreneurs is attempting to turn their idea into a million dollar endeavor too soon.
The too soon aspect of the business leads to too much spending initially, leaving you strapped for cash before your idea even gets off the ground. The one easy fix is to follow the don't bite off too much you can chew mantra from the beginning, and that includes the number of employees you decide to hire and not feeling tempted to expand too fast.
Rapid expansion is more acceptable should your business and product take off to the point that you can't fill invoices or work orders in a timely fashion. The wrong way to look at staffing from a financial standpoint is to assume that the more people you have working, the more revenue you'll be receiving.
Volume in workforce doesn't always translate into more money if the work being done isn't productive or essential.
Another budgeting breakdown when you're in the midst of opening business is falling victim to a larger than average marketing budget upon starting. The thinking again is the more you spend, the larger your return will be on that investment.
You have to devise a marketing budget that you can handle, and most importantly stick to it. The temptation to begin spending wildly to earn more business needs to be quelled immediately, and instead a slow and steady mentality must overtake any other thoughts of expansion through marketing.
At some point, you'll want to raise those marketing dollars but doing so gradually make better financial sense. The real savvy financial and business people look for creative ways to implement marketing that is equal parts effective and cost efficient, namely taking to social media to secure a spot in your marketplace. Facebook and Twitter stand out as easy selections when marketing dollars are lean but hopes are fervently high. These web sites aren't enough for a new business to be used as sole marketing materials but work nicely in conjunction with buying ads online or email blasting a list of prospective clients.
And if you want to spend your marketing budget wisely, stay clear of print media, particularly newspapers. This medium still hasn't got the memo that they're nearly obsolete, given that ad rates for newspapers are still incredibly high.
Who doesn't want to be their own boss, and make enough money to be financially secure for the foreseeable future· Even better, who wouldn't want to do all those things on your own terms through your own business· That's certainly more than just a possibility if you're not opposed to spending money prudently rather than devoid of patience.
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