Entrepreneurs can be a quirky bunch of individuals to try to advise and understand. On one hand, entrepreneurs and other people bitten by the entrepreneurial bug do not necessarily want to work in a rigid and traditional environment, and are often focused on upending the status quo. But, on the other hand, some of those very corporate structures that frustrate entrepreneurs provide much needed information to help managers deliver on business goals.
Put another way, and despite the movie narrative of entrepreneurs flying by the seat of their pants, there are definite benefits to having some structure in your business operations
Specifically, I have seen too many small business ideas and concepts never get off the ground, or fail within a few years of a launch, due to simply not having a solid financial base. Especially for Millennial entrepreneurs, trying to bootstrap a startup or business idea while juggling student debt and a full-time job, the importance of keeping an eye on your business finances cannot be overstated. With all of the articles talking about debt, social media, specific technology tools, and (of course) networking, it can be difficult to know just where, or even how, to start.
Coming from the perspective of a CPA who works with entrepreneurs on a regular basis, I have boiled down some (a small sample) of the key finance and accounting concepts you should know. You should, however, always have a financial advisor and business coach on speed dial that can help answer and address your specific questions.
Let's take a look at some of these tips -- some of which may surprise you.
1. Know your fixed costs
Fixed costs are items like rent, utilities, and insurance -- you are going to end up paying these expenses regardless of how your business performs. Putting in some research and legwork upfront to identify which options, like a flexible workspace arrangement, work for your firm and save you money is well worth the time.
2. Use smart pricing
This might sound abstract, but it is a relatively straight forward idea. If a product or service is always being discounted, your customers are not going to be as willing to ever pay full price. Just take a look at the state of retail to see what can happen if customers get too used to discounts. You can discount and have sales, obviously, but don't have that be the only reason customers choose you over the competition.
3. Think about insurance
Insurance comes in many forms and applies to different individuals and organizations in different ways, but what I am talking about here is business insurance. Every industry and business will be different, but I strongly recommend you pick up some kind of business insurance, such as errors and omissions, to help protect you in case something goes wrong.
4. Make sure to set goals
This might seem pretty obvious, but once you get into the day-to-day stresses and headaches of running your startup or side hustle, it is easy to get lost in the weeds. Setting goals for the short, medium, and long term will allow you keep an objective view of your business, where you stand, and what changes you may have to make along the way.
5. Focus on the bottom line
Building a business, developing creative products and services, and satisfying current and new potential customers are inevitably the focus of any entrepreneur. That said, it is important to keep an eye on your bottom line for the following reason. The better your finances are, the more value you can deliver to your customers and the marketplace.
Entrepreneurship, and building a new business is not an easy task It is certainly not for everyone, but if you have been bitten by the entrepreneurial bug there are a host of resources available to assist you. On top of these great resources and information, that run the gamut for marketing, to product development, to building an effective social media campaign, it is always important to remember that your side hustle is a business. Getting your money right is good for your business, good for your bottom line, and good for your customers.
What more could you ask for?