You and Your Startup Business’s Money
Of course, you want your business to make money. Duh! That shouldn’t be the only reason you’re starting a business, but it’s certainly a big one. You spend money on your business, your customers pay you money, money goes out for this, money comes in for that . . . one glance at your books should remind you that the sheer money aspect of running a business can get complicated.
You have to stay on top of it, or it will climb on top of you and stress you out. Keeping three pieces of advice in mind can help focus your mind when to comes to handling the money for your business.
Charge what you’re worth
No matter how hard you work, if you charge your customers less than you’re worth, you won’t be able to stay in business for long. Why would you charge less than you’re worth? Well, some people do so because they don’t realize exactly how much they are worth. Others charge less than they’re worth because they’re embarrassed or afraid to ask for an amount that reflects their true worth. Whatever the reason, if you don’t get paid what you’re worth, you may very well drive yourself out of business.
If you don’t know what you’re worth, find out what other companies charge for similar products or services by researching catalogs, price lists, stores, and e-commerce and auction websites. If you can’t find written prices or listings on the web, call or email the companies for information. From there, develop a pricing or fee structure that will help you attain your personal goals.
After you figure out what you should charge, use the following tips to get the price you want:
Become a master at selling the value that your products and services offer to your customers and clients.
They won’t know why your products and services are better than others if you don’t tell them, so tell them often and in a variety of ways.
Be creative in how you’re paid.
Many successful business owners take cash out of the equation altogether by bartering their products or services with others.
Get past any hangups you have about charging your customers and clients what you’re worth.
Practice asking your price in front of a mirror or with someone you trust to give you constructive criticism, just as you would practice a request for a raise or a speech. After you go through the process a few times with prospective clients — and discover that they still want to hire you — you’ll find it easier to demand a price that reflects what you’re really worth.
Avoid unnecessary expenses
Shopping for the latest and greatest business gadgets and equipment is fun — a lot of fun. And treating clients to expensive lunches and dinners and driving that snazzy new company car are also fun. The bad news about all this fun is that it can be expensive (and some of it may not be tax-deductible) and detrimental to your company’s financial health and welfare.
Spend your company’s hard-earned money only when you have to. You can often get a lot more mileage out of stuff than your itchy spending urges would prefer. A good example of this is your personal computer. Every other week, computer technology makes another great leap forward, which may constantly tempt you to upgrade to the latest and greatest and fastest computer with all the latest bells and whistles. Unless your older, slower, and less flashy computer — and the software within it — is actually getting in the way of your ability to do business efficiently, stick with it for as long as you possibly can. Eventually, you’ll need to replace that old slug of a computer, but the longer you can defer the expense, the better for your company’s bottom line.
Do your best to hold the line on all the other expenses that simply drain your financial reserves while bringing in little or no additional revenue. If you’re going to eat out, for example, go to less expensive places. Save the expensive meals for your highest-paying customers. Or consider inviting your best customers over as dinner guests in your home.
Manage your cash flow
Cash, or the lack of it, is one of the key indicators of a company’s success over the long run. If you have cash, you can buy and stock new products for your customers, develop innovative new services for your clients, pay for your day-to-day operations, and expand your business. If you don’t have cash, your business will certainly suffer, and so will your customers and clients. You may even jeopardize your own personal or family financial situation.
Simply watching your cash flow — the money going in and out of your business — isn’t enough; you have to actively manage it. Managing your cash flow means looking to the future, planning and scheduling your projected cash inflows and outflows, billing quickly, staying on top of money owed you, and paying attention to the money that goes in and out of your business.