Ask The Entrepreneurs is a regular series where members of those involved in the Young Entrepreneur Council are asked a single question that aims to help Lifehack readers level up their own lives, whether in a area of management, communication, business or life in general. Here’s the question posed in this edition of Ask The Entrepreneurs:
What is one financial resolution that all aspiring entrepreneurs should make for themselves in 2013?
1. Track Your Monthly Income and Expenses
This might seem a little too basic, but if you’re not doing at least some bookkeeping on a regular basis, you don’t have your pulse on your business’ numbers. Being able to look at how much money came in and went out in one month is crucial to any startup or aspiring entrepreneur. Even if you’re not bringing much in, you need to know that.
2. Increase Your Rate of Savings
Becoming an entrepreneur can be a scary proposition, and one factor that keeps many people from making that leap is finances. If you’re living paycheck to paycheck, then it can be hard to make those tough decisions that may be rough in the short term, but very beneficial in the long term. Once you answer how you’re going to eat and where your’e going to live, you can then focus on your business.
3. Can You Really Live on Ramen?
It’s easy to assume that if you quit the high-paying day job, your expenses will decline in tandem with your income. In reality, that’s a lot harder after you’re used to nicer meals, vacation travel, etc.
Before you quit your job, figure out what you can really live on for two months and test your ability to stick to that budget. It’s a great way to see if you’ll be happy living on ramen noodles.
4. Take an Accounting Class
Even if you never have to do any accounting work at any company you ever start, understanding the basics of accounting will be very useful. Just being able to read accounting reports may save your bacon if there’s a potential issue in your company that your accounting software or a human accountant haven’t managed to pick up on.
5. Create a Personal Budget
Sometimes, amidst all the startup craziness, entrepreneurs forget to plan and organize their own finances at all. Then, all of a sudden, you’ve ordered expensive sushi delivery for dinner every night and the numbers keep stacking up. Take some time over the holidays to plan out your own budget.
6. Join the Peer Economy
The Peer Economy, companies that help you buy, sell, or transact with your peers (think eBay, Etsy, Airbnb, Getaround, Taskrabbit, Zaarly, Odesk or dozens others), is a great way to make money or save money. So participate—either by renting your couch out or staying in an Airbnb place when you travel; finding a developer or selling your services on Elance; or more. But just participate.
7. Give Yourself Permission to Fail
Every aspiring entrepreneur should give themselves permission to fail in 2013 because the greatest obstacle that every entrepreneur must (and always will) encounter is fear; especially fear of uncertainty and the unknown. When you give yourself permission to fail—financially or otherwise—you really give yourself permission to try in the first place.
8. Pay Down Debt
If you have personal debt, try to dramatically reduce or ideally eliminate it prior to starting your business. Having lower recurring expenses will give you more freedom to take risks as you build your company.
9. Real-Time Visibility
Establish a system to access financial data about your company’s performance on demand and in as close to real-time as possible. This will allow you to feel highly in tune with business growth and tackle challenges as early on as possible.
10. Launch Their Company
Too many people network, brainstorm and whiteboard continuously and just keep adding ideas and layers to their concept. Aspiring entrepreneurs need to draw a line and say “this is our MVP and now we will build it.” Sitting on an idea does not help you or make you any money but building your idea into a product or business will help you validate it and test the marketplace.
11. Find Great Clients
Improve profit through better clients. Having great clients really does matter with overall happiness of a company. Make an effort to improve profits by taking on the right clients, not just more clients.
12. Keep More of the Money You Make
Keep more of the money you make! Strive to make sure that your costs are under control, make customers happier, and focus on stimulating repeat purchases from new customers. That doesn’t mean becoming a penny-pincher, but if you have costs that aren’t advancing your bottom line, cut them out! A business is only as strong as the money it keeps at the end of the year.
- Brian Moran, Get 10,000 FansFeatured photo credit: Beautiful white ceramic piggy coin bank, money savings concept via Shutterstock