The dream of starting a business is something that no entrepreneur should decide to do without thorough preparation. I have learned that if you are not ready, the cost of getting prepared while running that business is astronomical in price and overwhelming emotionally. One of the major frustrations for new and emerging entrepreneurs is that they are often unaware of the responsibility and strategic thinking necessary to manage all aspects of their enterprise. The ability to manage fiscally is a complicated task for entrepreneurs at all levels. There are some fundamental principles that I believe are important to be aware of that can help guide entrepreneurs in their efforts to be fiscally responsible.
Most new entrepreneurs go into business with unrealistic expectations. It is crucial to adjust personal spending habits that are within your control. Starting a business is an investment that will require all aspects of your life to be changed. Until your business generates a positive profit margin consistently, you will need to learn how to live below your means. Honestly, it is a wise practice to live below your means as a lifestyle practice. One of the issues I’ve discovered is that most people utilize the same financial management practices with their business that they do with their finances. Let’s start thinking about the future and become more responsible with how we manage our resources and if being accountable is a strategy that you need to use then get help so that you can accomplish your goals.
NO LONG TERM COMMITMENTS
Be careful of long term commitments in the early stages of business. It is standard for a company to have a 3-year history to base your plans. It’s not wise to enter long term contracts or commitments that will keep you locked. One of the reasons this can be a challenge is because as the proprietor you will have to maintain paying that bill personally if your business gets in financial trouble. It is common today to be in a situation where a personal guarantor is needed, especially with bank loans and lines of credit. I understand that some businesses will need to acquire a bank loan, line of credit, or a commercial lease because of the kind of business. However, I caution you to know the terms of the contract, loan or line of credit and make sure you have a contingency plan in place to cover these liabilities if your business hasn’t produced what is needed to take care of these obligations.
BECOME A STUDENT
Every entrepreneur should have legal and accounting support for their business. Besides, as an entrepreneur, you should remain teachable and continually seek resources that can help you be knowledgeable in the area of financial management. Having an understanding of investments and money management is essential. My advice to entrepreneurs is that they should be involved in the management of the financial affairs for their company. You should have a working knowledge of what’s happening and an idea of where you’re going with regards to your business finances.
Fiscally responsible entrepreneurs will be successful in their ventures because they understand that the success of their venture rises and falls on the decisions they make in managing well.