Published on March 1st, 2021 | by Luke Fitzpatrick0
How To Create A Financially Stable Business In 2021
Becoming a new business owner can be a very exciting and happy time in your life. Maybe you’ve just secured your first-ever large loan from the bank and can now open your very own coffee shop, or woodworking business, or even start your own online retail store.
Regardless of what type of business you’ll be opening, your face will be wide with smiles as that first large deposit comes rolling into your bank account and you’re able to begin building your dream business.
However, you shouldn’t get too far ahead of yourself and get lost in the throes of that excitement. Take a minute to calm down and think about how you’re going to carefully execute your business plan, so you don’t get lost in the euphoria.
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At this point, you need to pay particular attention to your finances – your bank certainly will be. Not sure where to start? Here are some tips on how to make your loan go as far as possible and start off your business in the right way.
One of the biggest mistakes that new entrepreneurs make is hiring every person and their dog, because, hey, you have the opportunity to create new jobs in your community – why wouldn’t you? Well, you want to be careful just how many people you hire.
Yes, you have positions to fill, but you don’t want to hire everyone just because you can. Make sure you hire smartly, that way you won’t be having to pay wages you needn’t pay and your money will go farther as a result. Don’t over-hire and don’t underpay. Strike a balance.
Don’t outsource too much
It’s a catch-22, really. You have the money and need to hire people. But it’s also really important you don’t outsource too much of your business from the get-go, because that’s going to cost you more money.
One of the best things you can do for yourself is to take a long, hard look at the things you can still do yourself while running your business, and then do those things before you hire anyone else to do them. Outsourcing too much of the work will cost you more than DIYing it, at least for the time being.
Don’t buy new things too often
Depending on what your business is, you might not have a choice but to buy brand new things. But, if you are given the option of buying used or brand new – buy used! As long as you ensure it’s in good condition when you’re just starting out, there’s no reason almost anything has to be brand new.
If you’re building an office space, the old office chair from a friend will work just fine, as will the old desk. Don’t spend all your loan on buying brand new when it’s not necessary. It will save you money in the long run and if you find you need to replace something after a year with something brand new, then your patchwork solution will have been turning you over profits for a whole year because you saved the money upfront. Buy smart, not new.
Have an emergency fund
Every business goes through hard times, if 2020 has taught us anything, it should be that we can’t prepare for every eventuality, but those who had a slush fund of some sort certainly fared better than those that did not.
It would certainly be fitting for you, depending on your business model, to have that emergency fund and be actively contributing to it each month. The emergency fund, ideally, should be enough to get you through several months of slow-to-no sales.
Keep your assets secure
One of the most important you can take as a new business owner is to lock down your assets so that they cannot be taken legally by another party. This may be even more pressing if you are in a relationship with someone who co-owns your business – you and your significant other should have some sort of prenuptial or other financial agreement in place.
This may seem unnecessary because you’re perfectly happy right now, but that might not always be so, and you need to cover your own backside in the event that things go south. It’s critical you discuss this with your partner and ensure them that it is a necessary formality.