As an entrepreneur, you should have a nose for business that can help you predict the fluctuations on the market and went to invest (and went with drawer money). In fact, what constitutes an entrepreneur is a mix of various skills and expertise that all combine together to create a knowledgeable individual who is business-savvy. Becoming an economic Renaissance man is no easy task, as there is bound to be a skill that you lack and that is preventing you from making it in the world of big business
For many entrepreneurs are self-made or lack sufficient formal education, problems arise when it comes to the financial part of their enterprise. Not everybody’s good with numbers, nor can everybody be good with numbers but there are several tricks that you can master to avoid the usual financial traps.
Let’s face it, when it comes to the finances of your firm, it’s all about where to invest your money and whether to invest your money. With so many options available, entrepreneurs often forget that the most lucrative investment is the one in the growth of their enterprise. The harsh market situation of today conditions companies to either grow or go bankrupt as there is no such thing as stagnation in the world of business.
Investing in the growth of your business means spending less money on current affairs and focusing on increasing revenue. Over time you will accumulate large sums of money you can later use to invest back but at the very beginning or during financial hardships it is not very wise to waste money on risky projects. Your end goal should be steadily growing and expanding your business, rather than making big investments that you hope to make a profit from overnight. Always choose growth over risk.
The learning process never stops
You weren’t born into entrepreneurship but you learned the trade by carefully observing and soaking in all knowledge you had access to. One thing about learning that you have to understand about learning is the fact that it is a process rather than a one time off occurrence. Try to avoid the notion that you have learned something for good and always be open for new info and ideas.
The best way to acquire new knowledge is to read relevant books as they come out of print, attend all the conferences and seminars, as well as converse with experts in your area of business. The latter is perhaps the best method of learning because it allows you to ask questions and actively seek advice from successful businessmen.
What to do when things go downhill?
Regardless of how much time effort and money, you invest in growth and education, there is always a high chance that your business will hit the rocks at some point in time. In fact, it is really a question of “when,” rather than “if” you will experience financial difficulties. Being well-prepared and keeping your composure are essential traits of a successful entrepreneur that refuses the possibility that financial setbacks could ruin his/her business.
So as not to beat around the bush, we are talking about the worst case scenario that most business people refuse even to utter: bankruptcy. Ending up in the red means putting the key in the lock for most owners but it doesn’t have to be so. Before you start liquidating your accounts, try seeking bankruptcy advice regarding the issue of insolvency and how to overcome it. Consistency and not giving up are trademark traits of a good entrepreneur and financial hardships are the ideal time to demonstrate them!
Control your expenses
How many times before have you heard the entrepreneurial adage that you have to spend money to make money? In general, this piece of advice couldn’t be truer but the “spending” part actually refers to controlled spending. You literally have to account for every dime, cent, and dollar you spend, not because you’re a miser, but because you have to keep financial records relevant for future investments.
We presume you are closely keeping track of the money you earn but it is equally important to keep track of the money you spend or lose. By controlling what you spend your money on, you can determine whether a certain investment was indeed profitable. Without these figures, you would never be certain if you have met your preset financial goals.
Setting clear goals
A good entrepreneur knows that it is all about meeting deadlines and goals. The more realistic they are set, the higher the chances that they’re going to be met. Conducting operations from day to day is destined to fail because you lack both short-term and long-term goals. The former are usually defined within quarters of a fiscal year and the latter regard the future growth of your company and long-term development strategies. It might be a cliché but try to ask yourself where do you see your business in 5 or 10 years’ time and then do your best to realize these visions.
Invest in the workforce
Once they start earning big money many entrepreneurs forget who were the people who helped them reach such financial heights. Even if you are solopreneur, it doesn’t mean that you shouldn’t invest in people (in this case, in yourself). Manpower to business is what horsepower is to a muscle car, never forget this!
Enable your workers to educate themselves continuously by organizing seminars, training sessions, workshops, and similar business-related activities. If some of them express the wish to get a degree in a field related to the industry you work in, encourage them by giving them a loan or sponsoring their studies. Even if you are bad at managing money, investing in good workers to make them the best can hardly be considered a bad investment.
The road to business success is loaded with financial snares that are hard to navigate even for experts in their areas of study. However, if you know beforehand what you are faced with, then it will be easier to overcome all financial obstacle, including the worst case scenario of going bankrupt.
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