Business

Why Financial Savvy is Especially Important for New Businesses

Posted at September 17, 2013 | By : | Categories : Business | 5 Comments

New businessI’ve often been asked the question, “What should I do about my business finances?  I haven’t made a $1 yet.”

 

That’s a legitimate question.  It can feel a bit silly to put a whole bookkeeper/cloud system in place when there’s a zero in the income column.

 

I liken it to a 7-year-old baseball player.  I remember spending many hours on the baseball field while my younger brother practiced and played games.  Sometimes there was action, usually there wasn’t.  If someone got a hit, which was rare the errors in the field meant it was often a “home run”.  I know nothing about baseball, but those early years were bad, really bad.

 

Did the coaches think, “these kids are a hot mess, we’ll just play on our iPhones while they practice.”  No.  They poured every bit of knowledge, tactics and guidance they had into those squirrely boys.  Why?  There’s no other way to build good baseball players.

 

Likewise, there’s no other way to build financially savvy entrepreneurs.  You start at the beginning, your first time at bat.  You figure out the basics and build from there.  What can that look like with a new business:

 

  • Open a business account and fund it with a specified amount you’re contributing to the business each month.

 

  • Keep your business and personal expenditures separate.  If it’s a business expense, it comes out of the business account.

 

  • Categorize business expenses, web services, rent, advertising, office supplies, etc.  It’s important to know not only how much you spend but what you spend it on.

 

  • Figure out how much it costs you to make each product or offer each service.  When the time comes, and it soon will, you can connect the dots between the expenditures and income and see which offers are most profitable for you.  This is KEY.  So many businesses skip this step and end up spending time and money offering things that don’t increase the bottom line.

 

You can do all this with a spreadsheet – or if spreadsheets make you nauseous, a Word document – or if no Word document (for now) old-fashioned paper.

 

Don’t wait until you’re trying out for the college team until you try to gain some skills.  That’s brutal and you’re likely to fail.  Give your 7-year-old self, your new-business self, the training you need to succeed.   Invest in yourself and plan to win!

 

Why Financial Savvy is Especially Important for New Businesses. [TWEET THIS]

 

If you’re looking for resources, you can find them here.

About Emily Chase Smith

I’m an experienced attorney and entrepreneur. With my background in bankruptcy, I’ve seen the end of the business lifecycle and use that knowledge as a lighthouse to help others avoid the rocks. I counsel with entrepreneurs to provide custom solutions to help you get back in the game. You can contact me at (949) 391-6063, Google+ Twitter emily@emilychasesmith.com

  • Barry

    September 21, 2013 at 2:16 pm

    Thank you fit this piece. Just starting something that is growing fast and I haven’t done any of this. Probably an old money wound I’d do well to attack had on.

    • Emily

      September 21, 2013 at 5:14 pm

      Thanks Barry. I’m thinking that if you can do 30 days sugar free, this stuff is easy!

  • Stacie Walker

    September 24, 2013 at 9:25 pm

    Hi Emily,

    I just discovered your blog. Actually, you are following me on Twitter. Your advice is golden. It’s so important to take care of business finances from day one, even if they haven’t made their first dollar. Thanks for sharing this priceless information. Keep up the great work!

    To Your Success,
    Stacie Walker
    Woman in Leadership Founder
    Stacie Walker recently posted…W.A.H.M. Advice: 3 Awesome Tools to Make Redesigning Your Office Painless by Charlotte EllisMy Profile

    • Emily

      September 25, 2013 at 4:46 pm

      Thanks so much Stacie – it’s great to connect. I realized in talking to a friend that many business owners don’t know where to start with their finances, especially if they’re just starting. They need something that will start them off with good habits and that will grow with them.

  • Stephen Lahey

    September 26, 2013 at 11:05 pm

    Excellent advice. It all starts with a a little guidance and a desire to master the fundamentals.
    Stephen Lahey recently posted…Neal Schaffer on Social Media Strategy and His New Book: ‘Maximize Your Social’My Profile

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