If America loves anything, it’s an entrepreneur.
The story of the self-made man or woman building a business from the ground up is baked into our DNA, from George Hearst and Thomas Edison to Oprah Winfrey and Steve Jobs.
But the mythology surrounding entrepreneurship and business startups—especially recently in the tech industry—means that sometimes people dive into business with too much haste. This can lead to feelings of being overwhelmed and overly rash decision-making.
If you’re a new entrepreneur or thinking about becoming one soon, don’t let this discourage you! Just stay confident in your product, be persistent, and follow these four financial tips. You’ll be glad you did.
1. Know What You’re Worth, and Don’t Accept Less
This is a big deal for creative agencies and other new businesses that sell services instead of physical products. It can be difficult knowing how much to charge new clients, especially without the benefit of hindsight or an established portfolio of work.
Unfortunately, this leads too many entrepreneurs to undercharge their new clients out of hope that it will make them more appealing to prospects, or fear that higher pricing will scare them away.
The problem with this is twofold:
- Undercharging means your bottom line suffers. Every minute you spend charging too little is one you could have spent making more money.
- Customers and clients who are attracted to agencies who undercharge tend to be the difficult ones.
Come up with a solid price for your services, one that fairly compensates you for your time and effort and will be enough to keep your business moving. No matter what, don’t accept one red penny less.
2. Be Frugal, But Not Cheap
When you’re starting a new business it’s tempting to go all out, especially if you’ve got wallet full of startup cash from the bank or a private investor. But that money will probably have to go a lot further than you think.
Luxurious office space, top-of-the-line equipment, and pointless swag like branded apparel and letterhead are all nice to have, but not necessary. When it comes to new businesses, money needs to be funneled toward the necessities. Don’t turn your nose at office space in a strip mall or unsexy tower PCs, at least not to start.
That doesn’t mean you shouldn’t be willing to spend money where it counts, though. Hiring a great staff and marketing your business are two examples of things on which it can be worth it to spend a little extra cash.
3. Pay Yourself
“Your hard work and dedication to your business alone isn’t going to put food on your table—you need to pay yourself,” says entrepreneur Jonathan Long. “Give yourself enough to live comfortably and focus on building your business. When you eliminate personal financial stress, it allows you to stay ultra-focused on your business.”
You don’t need to (and probably shouldn’t) pay yourself a lavish salary, but if you’re sleeping at your office and showering at the gym it might be time to give yourself a raise. You’re a human being like everyone else, and need all the same creature comforts as the rest of us.
4. Keep Your Cash Flow Steady
Billing can be a major problem for established businesses, let alone new ones.
Clients can be late mailing checks (by accident or otherwise), credit cards get declined, and in-house accounts receivable can get stretched thin during scaling.
Of course, it goes without saying that cash flow problems have the potential to sink your entire business.
How can you be sure your cash flow stays smooth and reliable? Recurring billing software like Subscription DNA is a great place to start.
- Multi-Period Recurring Billing
- Virtual Terminal and One-Time Payments
- Rebilling Failures Retry Scheduling
- Credit Cards and Other Payment Methods
- Setup Fees, Tax and VAT
- User management and subscription management
- And more!
Subscription DNA doesn’t give you every tool you need for entrepreneurial success, but it sure helps.
Get in touch to learn more about how Subscription DNA can help your startup thrive.