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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 is a freelance writer, researcher, and business consultant.

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Published on September 17, 2018

How Being Smart With Your Money Leads to Financial Success

How Being Smart With Your Money Leads to Financial Success

Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

1. Avoid being “penny wise but pound foolish”

It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

2. When you want something big, wait

Impulsivity can get you in trouble in most aspects of life. Finances are no different.

It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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So, you get the itch.

You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

Here’s where you have to take a step back.

Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

The impulse faded. And you just saved yourself a ton of money.

3. Live smaller than you can afford

You finally get that big raise. And you want to celebrate – and why not?

You’ve been looking forward to this forever. And after all, it was all due to your hard work.

That’s fine, splurge a little. However, make it a one-time deal and be done.

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Don’t get caught in the trap that just because you’re now making more money, you should spend more.

Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

4. Practice smart grocery shopping

Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

Create a grocery budget

Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

Make a list… and never deviate

Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

These impulse decisions will lead to overspending, which will derail your grocery budget.

Eat before going grocery shopping

It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

This makes it much easier to stick to your grocery plan.

5. Cancel your gym membership

Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

The average gym membership costs around $60 per month. That’s $720 a year.

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Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

It’s baby steps… And baby steps can start now!

I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

Featured photo credit: Unsplash via unsplash.com

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