It takes a lot of capital to get a business off the ground. Even those “work from home” business ideas that everyone claims are easy to startup and run cost some kind of cash to get going. Inexperienced business owners are often overwhelmed by how fast the receipts add up to a high-cost venture.
Growing your business takes even more money as you need to often invest money in things you cannot yet see or revenues you do not yet have. Marketing, for example, is one of those investments that doesn’t pay off right away. It takes time, patience, and a big bank account to see a big return on your marketing investment.
Instead of looking at ways to inject money into your business, it’s often a good idea to look at ways to manage your money better so that it feels like you have more. Here’s how to grow your business by doing a better job of managing the money that is already coming into the business before you go out and look for more money to invest in it.
Do a Comprehensive Review
While accounting might not be your strong suit, or idea of a good time, it’s imperative to have a complete understanding of where every dollar your business spends is going. Often, business owners don’t realize just how much they are spending on things like software, entertainment, or even cell phone bills. All of these things can add up quickly.
If you run a one-person operation and are trying to bootstrap your business, those $5 software packages add up over time and suddenly you are spending hundreds of dollars a month on things you not only no longer need, but don’t want. Do the math and do your homework to determine what you are spending right now.
Make Some Cuts
If your first instinct to save money is to cut your employees, stop right there. There are lots of other ways to find more money in your business to give yourself some capital to grow. For starters, you can look at the kind of space you are using: is it being used effectively or do you have lots of excess space that nobody is using. Can you downsize the company physically instead of downsizing people’s jobs? What about renting out that space instead of going to another location?
Everyone is looking for high quality space and fair rent is hard to find. If you are already there anyway and could do with some extra money in your pocket, think about renting your extra office space out. Even better, rent it to a complementary company that could throw you some business and vice versa.
Check Your Savings
First, make sure you have a savings account for your business. Second, start one if you don’t. Third, take some of that money and pay down some of the debts of the business. Rather than carry debt with high interest rates, you can use low-earning savings to save yourself even more money. You can always replace that savings later, but you won’t always be able to pay down your debts. Clear the board to free up some of your operating capital and you’ll be on your way to better-positioned company in no time.
You might feel inclined to invest your savings or keep it for a rainy day, but debt can cripple your business and if you think about it, you keep that money around for times when you can’t pay your debts. It makes way more sense to just get rid of it now and then you won’t need the cushion of the savings to be so high for future use. It can be for real emergencies, or, you know, that vacation you’ve been meaning to take for years.
Bring in an Expert
If you have no money management skills to speak of, it might be time to bring in someone who can help you figure out the best approach to grow your business. Growing your business comes down to thing things: you either have money to throw at the problem or you have time. But you rarely have both and mostly you probably just have time, especially if you are reading an article about how to manage your money. Everyone could use more money!
Instead of circling around that money wondering when it is going to run out, take it and talk to a professional business adviser who can help you create a plan for now and the future. The problem with business ownership is that many people are so caught up in what’s going on right now that it’s hard to imagine what the future looks like, but if you want your business to grow, it’s going to take both time and money in some combination. Your best bet is to use your time wisely to get advice, even a little, to figure out how to manage the money in your business.
Check in On Your Accounts
As you carry on, it’s important that you keep a running tab of everything you are spending and make sure that there are no discrepancies in your business accounts. For example, you might notice that the bank is charging you too much for a particular product, or cheques that you have been waiting on haven’t cashed. The more informed you are about your business dealings, the more success you’ll have.
A lot of business owners don’t want to look at the money, but there’s no doubt that the money is what business needs to thrive and grow. A business owner who is ignorant to what is going on behind the scenes in their own business has far greater problems than money management. Do yourself a favor and make sure you keep your finger on the pulse of how your efforts are panning out. If nothing is changing, you might need to take a hard look at how you are spending and what really is a necessity.
When it comes to managing your money, it is a full-time job. If you don’t want to do it yourself, hire a professional to keep you informed of the important things. Be ruthless in your spending and only take on the most important things that cost money. Do a regular check-up on your business finances and make sure you are not overindulging in too many areas. And finally, make sure you are realistic about the fact that you do have to spend money to make money, but that you don’t have to break the bank to turn a profit.