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4 Money Hacks for Starting and Growing Your First Business

4 Money Hacks for Starting and Growing Your First Business

Starting a business is equal parts of excitement and anxiety. On the one hand, you’re ready to chase your dream. On the other hand, you’re worried about the ramifications of failure. It’s important that people understand how to put themselves in the right financial situation to be successful.

Do you know what it takes? Here are a handful of money hacks that have helped countless entrepreneurs get off on the right foot.

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1. Understand Your Loan Options

Very few people start and grow successful businesses without any sort of financial help. Some entrepreneurs need a little more assistance than others, but the majority of small business owners have some measure of help – and it’s usually financial in nature.

If you need some money to get your business going, it’s important that you understand your different loan options. At first, it might look pretty confusing, but remember that loans are like products. Each product has unique features and the goal is to find the one that best serves your needs. When it comes to term loans – which are often used to generate long-term growth – do your homework and understand the differences between secured/unsecured, short-term/long-term, fix/floating interest, and repayment options.

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2. Safeguard Personal Money

While there may seem to be little division between your work life and personal life, it’s imperative that you create some separation financially. If you’re running your business out of your personal bank account, you’re walking a very fine line.

Go ahead and open up a separate business account. It doesn’t matter if you’re spending small amounts or writing checks with lots of zeros, avoid co-mingling assets and you’ll sleep much easier at night.

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“Experts recommend opening a separate business credit card and business bank account as well as putting an accounting system in place to track your expenses,” says entrepreneur Jennifer Woods. “Accounting software such as QuickBooks is a good low-cost option but if the business requires more extensive expense tracking it might be prudent to hire a bookkeeper.”

3. Calculate a Break-Even Point

Knowing your break-even point – both on a monthly basis and overall – is extremely important. This allows you to make strategic choices that are based on the numbers, as opposed to decisions that are based on feelings and emotions. Once you understand your break-even point, you can shuffle things around until the numbers work. If you don’t know this tipping point, you’re essentially playing a guessing game.

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4. Have a Team of Advisors

“One big difference I see between startups that build a framework for success and those that get isolated is the ability to nurture talent,” executive Jyotsna Pattabiraman says. “Many startups believe that the way to get that expertise is by hiring a senior consultant. Yet others believe that they can figure it out through trial and error. Both approaches are expensive, one in terms of cash and the other in time.”

So, what’s the correct answer? Pattabiraman and others point to the need for an advisory board. Advisors are different from consultants in that they don’t come and go for specific projects or needs. They stay on board for the long run and will push you in the right direction. As a result, there’s a lot of continuity. And while advisors can help you with a lot of things, they tend to supply a lot of financial expertise, which can be invaluable in your pursuit of growth and stability.

Take It Easy

There’s nothing easy about launching and growing a small business, but it suddenly becomes a lot simpler when you understand how to approach the financial side of things. Think about these concepts and make sure you’re constantly reevaluating.

Featured photo credit: Chicago Tribune via chicagotribune.com

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Anna Johansson

Anna specializes in entrepreneurship, technology, and social media trends.

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Last Updated on March 4, 2019

How to Use Credit Cards While Staying Out of Debt

How to Use Credit Cards While Staying Out of Debt

Many people will suggest that the best thing to do with your credit cards during these tough economic times is to cut them up with a pair of scissors. Indeed, if you are already in huge debt, you probably should stop using them and begin a payback strategy immediately. However, if you are not currently in trouble with your credit cards, there are wise ways to use them.

I happen to really love my credit cards so I will share with you my approach to how I use mine without getting into deep financial trouble.

Ever since about 1983 when I got my first Visa card, I continue to charge as many of my purchases as possible on credit. Everything from gas, groceries and monthly payments for services like my cable and home security monitoring are charged on credit. Despite my heavy usage, I have maintained the joy of never paying any interest fees at all on any of my credit cards.

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Here are some tips on how best to use your credit cards without falling into the trap of paying those nasty double-digit interest fees.

Do Not Treat Credit Cards as Your Funding Sources

Too many people treat their credit cards as funding sources for major purchases. Do not do this if you want to stay out of trouble. I use my credit cards as convenient financial instruments so I do not have to carry around much cash. In fact, I hate carrying cash, especially coins. When you buy things on credit, the purchases are clean and you will not get annoying coins back as change.

I do not rely on my Visa, MasterCard or American Express to fund any of my purchases, large or small. This brings me to my golden rule when it comes to whether I will pull out any of my credit cards either at a retail or online store.

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I never purchase anything with my credit cards if I do not have the actual cash on hand in my bank account.

If I really cannot pay for the item or service with cash that I already have at the bank, then I simply will not make the purchase. Remember, my credit cards are not used as funding sources. They are just convenient alternatives to actual cash in my pocket.

Make Sure to Always Pay Off Balances in Full Each Month

The next very important part of my overall strategy is to make absolutely sure that I pay the balances in full each and every month no matter how large they are. This should never be a problem if the cash has been budgeted for my purchases and secured in the bank. I have always paid my full balances each month ever since my very first credit card and this is why I never pay interest charges.

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Using Credit Cards with Rewards

Most of my credit cards are of the “no annual fees” type, including one MasterCard on a separate account I keep at home as a spare in case I lose my wallet or incur any fraudulent charges. However, I do use a main Visa card which does have an annual fee because all purchases on that card reward me with airline frequent flyer points. For me, the annual fee is worth it since I do travel and I get enough points to redeem many free flights.

You have to decide for yourself if you will charge enough purchases on credit each year without paying interest charges to warrant a credit card that rewards you with airline points (or other rewards). In my case, the answer is “yes” but that might not be the case for you.

I occasionally use a MasterCard or American Express card on small purchases just to keep those accounts active. Also, I have been to the odd retailer that accepted only a certain type of credit card, so I find that having one from each major company is quite handy. Aside from my main Visa card which earns the airline points, the rest of my cards are of the “no annual fees” variety.

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So this is how I use my credit cards without getting into any financial trouble with them. This strategy is recommended only if you are not in debt, of course. In fact, it is worth keeping in mind once you’re out of debt so that you can keep your credit cards active and treat them responsibly.

What are your credit card usage strategies? Let me know in the comments — I’d love to hear what methods you use.

Featured photo credit: Artem Bali via unsplash.com

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