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13 Financial Hacks For New Entrepreneurs (Cash-Strapped Or Not)
13 Financial Hacks For New Entrepreneurs (Cash-Strapped Or Not)
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Money Management

13 Financial Hacks For New Entrepreneurs (Cash-Strapped Or Not)

Money254
Doreen Gathoni
February 3, 2022

Entrepreneurship in the 21st century is all about identifying a need and providing innovative solutions to existing challenges in different sectors of society. 

In the quest to make a profit from solving other people’s problems, many beginner entrepreneurs face a myriad of challenges that may not have immediate solutions depending on the type of business and the environment. 

That is essentially what the journey of entrepreneurship looks like. Hoops and hurdles along the way that when jumped the business graduates to a new level and is what makes trying it out exciting and rewarding. 

As you continue to figure out how to maximise profits, chart a new path, popularise a new line of products, whether to partner or not, or whether you should take a business loan now, here are financial hacks to smoothen your way. 

1. Spend Money Where You Need It

It may be hard to know if you are tightward or are making the right saving decisions. Depending on your savings approach, it could either support or derail your business success.

To start, ask yourself the following questions, in sequence:-

  1. Will purchase or expense save money in the short or long term?
  2. Will an expense such as upgrade costs, downsizing, hiring more staff (and so on) - benefit the bottom line of my business? 
  3. Will this purchase simplify or complicate your business operations/SOPs? 
  4. Do your spending or saving choices free you up from business busywork (which is work that seems productive but only serves to keep you occupied)? 

Next, identify and understand your responses to the above for financial planning before making any financial decisions to buy, save or sell. Here's a breakdown of how to do so:-

  1. Prioritise your business needs by making every shilling count. 
  1. Take into consideration what best serves your business, and compare your financial plan with real-time circumstances. This means – you can accurately update your budget, estimate and plan where to spend your profits.
  1. Next, create a simple, practical and flexible budget. 
Step 1- Divide your expense into three sections, as follows:- 

First, fixed expenses such as rent, insurance, accounting and legal services, transport, and utility bills.

The second section is extra expenses that are avoidable but fall in the ‘nice-to-have’ category. 

Third, set aside some percentage of what would be your total monthly expenditure for emergencies such as unexpected expenses relating to employees as well as for miscellaneous expenses. 

Step 2- Create a budget that factors in step 1.

This is to help you take baby steps towards learning how to manage your finances as you grow your business. 

For example, you learn how to note and avoid unnecessary costs, how to track, and review your expenditure, monthly.

2. Shave Expenses

Money well spent is always worth it. To avoid unnecessary expenses and reduce costs here are a few tips;

  1. Think out of the box – What cheaper alternatives can you go for to avoid spending on a nice-to-have? Can you tweak your existing budget to cater for this extra purchase?
  2. Strictly follow the process. Plan before execution. This way you will fully understand cash flow from source to spending, to when to trim costs or eliminate an expense. 
Other areas you can cut costs as a business owner:
  1. Declutter your business by selling less used, old machines and appliances to either upgrade to more efficient equipment or reallocate the funds to a more appropriate business cause.
  1. Consider contractors - It's economical to hire independent contractors or freelancers for short term, part-time and one-off tasks instead of hiring full-time employees. 
  1. When it makes sense, you should always go for wholesale purchases for regular office supplies. 

3. Find a Partner to Cut Costs

"If you want to go fast, go alone - if you want to go far go together."

Let’s put this in context – so let's say your area of professional expertise is in the medical field but lack the digital marketing skills required to get your business noticed online - and outsourcing is not a suitable option.

You can partner with a skilled professional or professionals to provide the skill(s) required for long-term, affordable solutions to current and future HR requirements. Do your research and recruit a business partner who's a digital marketing expert with a record of successfully generating leads, brand recognition and digital marketing tools proficiency.  

4. Take advantage of free-to-cheap online tools

Every advantage that online tools provide in private or social settings, is also experienced in the business world. 

Adopt relevant technology to generate revenue and save on labour costs. Avoid the stress of taking on too much manually or having too many employees in the nuts-and-bolts of your entrepreneurial venture.

5. Be Smart About Managing Obsolescence 

Appreciate the old or outdated for what it can do before you toss it out. These are the key points to remember about how to manage and deal with obsolescence: - 

  1. Check your perceptions/attitude - Make it a habit to reflect on why you ventured into entrepreneurship and learn how to be disciplined about dealing with FOMO (fear of missing out) and the temptation to make impulse decisions that drain finances. 
  1. For existing obsolete inventory - turn outdated preferences and/or products into resources, which is a money-saving choice that saves time. 

Take, for instance, your photocopier version is no longer used but does produce high-quality copies, don't toss it out for the latest.  

  1. Make purchases based on quality and relevance for longevity and money-saving benefits. 

6. Reduce the Amount of Personal and Business Debt

Learn to separate personal and business funds and stick to each budget.

Ideally, your business is supposed to sustain itself without dipping into your personal funds after you inject in the initial capital. If you are not careful, you might get into personal or business debt just to keep the business afloat. 

  1. Outsource rather than hire a team, which is an expensive choice due to the equipment, remuneration, workplace supplies and furniture, taxes and more, to start and run a business. Use job sites or browse freelance, company websites, and apps to connect you with professionals you can work with and afford. 
  1. Where there is debt, the goal is to cut down debt - Planned debt repayment should be practical by setting realistic repayment amounts and timelines. As a result, you avoid high-interest costs and may select the most suitable debt consolidation service to have all debt under one interest rate. 
  1. For future credit funding, shop around for the best credit terms. The Money254 Business Loan Finder is a great place to start. . 

7. Workplace Safety Saves On Money, Time & Labour Costs

Nobody likes being in situations that they have to tolerate rather than feel at home so don't compromise on creating a safe work environment. It is your responsibility.  

Take the necessary steps and more by training your staff and getting the space fitted with the safety appliances, such as proper ventilation, fire extinguishers, first-aid kits and others.  

The more accidents that happen at your workplace, the higher the monthly premiums you may have to pay for insurance. You may lose important talent if your workplace is not considered safe as well as if you fail to create a great culture that makes your team want to stay. 

8. Manage Marketing Costs

While marketing will always play the most important role in making your business profitable, the costs can quickly spiral out of control. 

Don’t miss out on the affordable offline and online marketing tools that are available for every business. 

To get costs down could mean hiring a professional marketing firm to handle your marketing and in turn get the best value for money, or, wing it yourself and create a bespoke plan that best gets you closest to the market niche you are targeting or build an in-house team (or team member) who can quickly adapt your marketing budget to your business needs. 

The truth is that there isn’t going to be a magic-bullet approach to getting the most out of every dollar you spend on marketing, but as a beginner entrepreneur you definitely have to keep your eyes on that marketing budget as it could quickly increase your operating expenses. 

Your first marketing brainstorm should first be about how much free marketing you can get, and how sustainable can you make it as long-term plan to keep marketing costs low. 

9. File Accurate Taxes

Humans are to err, so this hack highlights the need for due diligence to avoid overpayment and underpayment of your taxes 

  1. Before filing your taxes, search for affordable yet qualified and reputable experts you can hire to calculate and file your business taxes if accounting is not your strong suit or have no clue what to do. 
  1. If you are skilled in accounting - use accounting software and apps to file your business taxes from anywhere at any time on your digital devices and save time, labour costs and money.

10. Choose The Right Suppliers

Did you know that professionalism and cordial relations are non-negotiable in businesses, and it’s a practice that affects everyone who interacts and is associated with your business?

As you start off your entrepreneurial journey, you should seek references from other businesses and trusted, like-minded professionals as a source of professional recommendations. 

So, whether you sell cars or groceries, each entrepreneur must aim to forge long-lasting relationships with suppliers, to support smooth-business operations. 

So, reach out and network. 

Invest in affordable communication tools that help you share your business information like free online directories, and online marketplace apps/websites.

11. Manage Your Time Wisely

Time gone is time gone, and in today's fast-paced world, it takes a lot to stay focused on when to work and when to wind down.

Therefore, how does one ensure that they're making the best of their time? 

  1. Use the affordable-to-free tools to help you manage your professional and personal life effectively
  1. Stop wasting your time - it's easier said than done, but it's a priceless and rewarding feeling to know that you stuck to your schedule, and for entrepreneurs, it's a welcomed motivational push to keep at it.   

12. Enhance the Legal Side of Your Business

There's a common notion that the only time one engages with legal professionals is when things go bad, or very bad – so to start, let's kill this notion.

The legal system protects business rights and liberties, maintains order, establishes standards and resolves disputes in different aspects of a business.

As an entrepreneur, you interact with government institutions, other businesses and individuals. You are likely to experience situations where you'll need legal services to protect and defend you from costly legal suits, penalties and reputation damage. 

So, if you're looking to patent your invention, register your business name, onboarding and handle HR requirements, you'll need legal services.

Here are some tips to enhance legal protection as part of your SOPs:-

  1. If you have a trusted network of legal experts, you can choose to offer to partner with them for more affordable, valuable and expert access to legal services.

For instance, a legal partner-on-board means you save money in cases of lawsuits, as well as they'd provide expert, hands-on guidelines to ensure your business operates within legal boundaries.

If you're looking to start an entrepreneurial venture (and you need help picking what to get into), consult a legal expert to suggest what business organisation works best for you, for example, sole proprietorship, partnerships, corporations or creating a limited liability corporation. 

13. Maximise On Available Opportunities For Sustainable Growth

Anyone can do better with the right help to regularly remember the bright side of entrepreneurship, such as providing employment, gaining profits, growing customer base, industry recognition, and so much more. 

Maximising opportunities - doesn't focus on looking for a financial lifeboat; it focuses on available resources to build on the 'wins' that push you closer to your business goals. 

Here are opportunities to maximise on:-

  1. Networking: This is a good option before starting and while in business. Work with whom you know and trust as an effective way to raise money for a start-up and expansion. 

Consider asking professional peers, friends and family members for financial sponsorship, which often leads to you getting more connections in the professional scene too.

  1. Loans / Credit / Microfinancing: This should be an option for consideration after your business begins to generate positive cash flow (that is, more money moving into your business than out). 

Take advantage of tailored credit options to support businesses at different business cycles, sectors and profiles for various resource access, like loans for cars, start-up loans and so on.

Keep in mind this is a contractual agreement. Legal expertise is required to help you understand the contractual details on what to reject and what to sign off.  

  1. Incubators: This refers to the opportunity offered by public and private institutions as a benefactor to entrepreneurial ventures in specific fields or towards any expertise in the corporate world. This provides up-and-coming' entrepreneurs' resources such as cash, training, office space, and consultants to offer profitable yet sustainable solutions to existent business needs.   
  1. Turn Customers Into Partners: In some instances, you may come across a customer whose passion and capital aligns with your values and entrepreneurial goals.

You may opt to maximise a customer's interaction with your business by providing a shareholder option for mutually beneficial support, financially and operatively.

Bottom Line: Learn to Think About the Big & the Small

Being an entrepreneur is a delicate dance. Do yourself a favour and appreciate your choice to be entrepreneurial by being diligent and choosing to have the right mindset, skills and character.

Every businessperson plans to succeed, so even when it seems like some individuals have the Midas Touch, it isn’t so. No one skips the demanding cycles of entrepreneurship. 

The balance of learning to work with what you have, and to be willing to learn is a core part of the entrepreneurial success.

Gathoni is a skilled content developer with over 5 years of experience in content development as a graphic design and copywriter, in different industry sectors. Her passion to nurture positive, stronger, communication impact continues. You can find her on LinkedIn here.

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