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Ask the Entrepreneurs: 12 Ways to Shore Up Your Company Finances

Ask the Entrepreneurs: 12 Ways to Shore Up Your Company Finances

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

Nathalie Lussier

    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.

    Nathalie Lussier, The Website Checkup Tool

    2. Increase Your Rate of Savings

    Lawrence Watkins

      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.

      Lawrence Watkins, Great Black Speakers

      3. Can You Really Live on Ramen?

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      Erik Severinghaus

        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.

        Erik Severinghaus, SimpleRelevance

        4. Take an Accounting Class

        Thursday-Bram

          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.

          Thursday Bram, Hyper Modern Consulting

          5. Create a Personal Budget

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          Derek Flanzraich

            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.

            Derek Flanzraich, Greatist

            6. Join the Peer Economy

            Eric Koester

              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.

              Eric Koester, Zaarly

              7. Give Yourself Permission to Fail

              Dave Ursillo

                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.

                Dave Ursillo, The Literati Writers

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                8. Pay Down Debt

                Elizabeth Saunders

                  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.

                  Elizabeth Saunders, Real Life E®

                  9. Real-Time Visibility

                  Robert J. Moore

                    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.

                    Robert J. Moore, RJMetrics

                    10. Launch Their Company

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                    Aron Schoenfeld

                      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.

                      Aron Schoenfeld, Do It In Person LLC

                      11. Find Great Clients

                      John-Hall

                        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.

                        John Hall, Digital Talent Agents

                        12. Keep More of the Money You Make

                        Brian Moran

                          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 Fans

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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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