Starting your own business is hard, and it requires organization and management, especially when it comes to your finances. One of the main reasons that small businesses go bankrupt is mismanagement of cash. Many first-time business owners put too much focus on their potential profits and forget about how to have enough cash on hand to keep the business running. To succeed as an independent business owner, you need to keep three things in mind: cash flow, tracking performance, and recruiting talent.
Cash vs. profits
Profits are what you make when all the bills have been paid and collected. Cash flow is the amount of cash you have on hand to keep up with monthly expenses. Understand what it costs to operate your business, from buying office supplies, to fluctuating gas prices, to loans and interest that need to be paid back regularly, to utilities and payroll expenses.
You need to understand what your monthly expenses are going to be and manage your cash flow so that you don’t fall behind, become delinquent, and eventually, have to file for bankruptcy. You also need to have a plan for collecting payments from clients to keep a steady cash flow. Allowing clients to fall behind on payments is often the downfall of a small independent business.
Technology to track cash and data
The more informed you are, the more research you perform, and the more data you can track, store, and analyze, the more equipped you are to make the right decisions about your business. Technology is the friend of any small business owner. Tracking your performance and successes, as well as failures, will help keep your business on the right track for growth and success.
Recruiting the right talent
Tracking performance and data will help you determine the type of talent that you need to keep you business competitive. To recruit talent, you need financial incentive, as well as be able to prove to new hires that you understand how to run a business. Understanding the above two points will help convince industry experts to join your team, despite being the new kid on the block.
Affordable American Insurance provides a turnkey business model, industry insights, business development programs, tools, and training for small independent business owners in Colorado, Arizona, and Utah.