The life of an entrepreneur can be a stressful one. It means working long hours and running all aspects of a business on your own. This is also while learning new skills you perhaps never even realised you needed to know! Add financial stress on top of this and things can soon start to feel out of control. These tips may help reduce financial stress moving forward. They’ll also leave you with more time and energy to focus on your running your business.
Its common that businesses in their early stages simply can’t afford to take on an accountant to manage their day to day financials. As a result, it is left to the entrepreneur or Director to manage cash. Often, a cycle develops where money from customers or clients is only chased near the time that bills and wages need to be paid. Then, cash management is left until the following month when bills need to be paid again. Understandably, this cycle will cause financial stress so here are four simple things you can implement today.
1. Don’t waste money
It sounds obvious but expenses can easily start to escalate. Take a little time to review your overheads, so you can identify where you may be spending unnecessarily and think twice before incurring any future costs. The small savings will all add up and translate to a healthier bank balance
2. Invoice on time
Admin can get easily forgotten about. However, it’s important to make sure you set aside to bill your clients promptly. Also, keep an eye on clients who haven’t paid and chase them up
as soon as they exceed their payment terms. Managing cash flow
is key to business growth. Therefore, stay on top of your incoming cash and make paying month end salaries and bills easier to reduce your stress levels.
3. Know your margins
Selling your product
is one thing, but selling it at the right price that makes enough profit to contribute towards your overheads can be another. Resist the urge to say yes to every job, as tempting as that may be in early business stages. Jobs with low margin will cause stress. Plus, they won’t benefit your business financially, leaving you wonder why you bother. Read up on gross profit margins
4. Consider other forms of income
Multiple sources of income can offer you more financial security. Whether it’s taking a part time job while you get your business off the ground
or finding other revenue streams for your business. For example, a subscription service will not just generate additional money but also give a more consistent cash flow and reduce financial stress.