FBL Note: The following is a guest post by Nadia Finer. Nadia is a business coach for solo entrepreneurs who want to GO BIG IN BUSINESS, even if they feel little. Join the FREE Pump up your profit challenge and discover the simple sales and pricing strategies Nadia uses to help clients go from pennies to $5k months.
Cash flow: the root of first year problems
One of the biggest issues that businesses face in their first year is generating healthy cash flow. It’s the lifeblood of small businesses, and without that steady influx of cash, your business venture could be consigned to the history books within months.
It’s no secret that in the first year of business you'll overcome endless financial pitfalls – but don’t let that inner voice of crippling self-doubt put you off!
In my work as a business coach helping countless small businesses break down the barriers standing in the way of their success, I’ve seen dozens of solopreneurs identify and avoid these pitfalls and soar through their first year as a business owner. Want to know the secret?
Read on to discover how to identify and avoid the money nightmares that will affect your first year in business.
First Year Business – Things to Avoid & Identify
Avoid: unruly invoicing
Invoices are the golden gateway to cash flow for first year business owners. There’s no point putting all of your efforts into providing a service or a product if you’re not going to be equally as proactive in sending out invoices. You should also be ahead of the game when it comes to chasing up invoices. Late payments can cause cash flow chaos, so make it a priority to chase up outstanding invoices regularly – and add interest for those who are late with their payments.
Identify: a good accountant
Many small businesses spend their first year trying to cut costs as much as possible, in order to keep their heads above water. But one area where you simply can’t afford cutbacks is your business’ books. You might feel that you can handle the financial side of things yourself, but in the first year especially you want to focus on the running of the business itself, rather than tax returns, payroll and other in-depth money matters.
Identifying a good accountant or accountancy service in the first year of business will help you to become more tax-efficient, and will help you to keep on top of your cash flow. They’ll be able to make recommendations about where you can cut back, as well as making sure your business is “future proofed.”
There are plenty of great cloud-based accountancy services out there for small businesses – so it's easier than ever to access to your own accountant and some useful bookkeeping tools without breaking the bank.
Avoid: high overheads
When you first dreamt of starting your own business, you might have envisioned yourself welcoming clients into a stylish office, or standing proudly behind the counter in your high-end shop. But these high overheads could cause real cash flow problems, especially in the first few months of trading when you can’t predict how much you’ll earn.
Avoid high overheads for at least the first six months. Do as much as you can without splashing out on costly premises or fancy equipment. Then, when you have a better idea of your earnings and the trajectory of your profits, you’ll be in a better position to search for a snazzy office or a stylish store.
Identify: a contingency plan
Sometimes in business, things happen that are totally beyond your control. What if interest rates rise? If roadworks outside your store reduce the number of people passing by, impacting the number of customers you get? A key member of staff hands in their resignation after just a few weeks in the job?
It’s impossible to plan for the unexpected, but you should at least have a contingency plan in place to ensure you’re protected if things fall apart. This will prevent you from disrupting your company’s cash flow to solve a problem when it arises.
Know Your Strengths & Focus Before You Grow Your First Year Business
Perhaps your first six months went swimmingly, and you’re thinking of diversifying. Maybe you’re looking at the market forecasts and thinking you’ll take on a few more members of staff to execute a new project. Before you make any decisions about that make sure you understand two things very clearly.
- Your Focus
- Your Strengths
Where do you want to take the business in the next 6 months and what part does your role have to play in that? What areas are you really strong in and what areas might you need some help with? It’s very important to keep on track and super, super focused on your end goals without steering off track onto the latest new shiny thing. You may have had a good first 6 months but in order to keep that trend going focus is key!
Identify: your self-doubts – and overcome them
The single biggest barrier to success in business is your self-doubt. It’s time to push past those inner whisperings that say you can’t achieve – you could triple your income and achieve big business success. If I can do it, you can too.