One of the most difficult parts of being an entrepreneur is the never-ending need for cash. You have your idea locked in place, a solid team put together and the sky seems to be the limit – if only you had the means to pay for it all. You may chose to bootstrap your business, crowdfund it or rely on investors. Sometimes all you need to do is revisit your budget in order to get on the right track. Read on for a few ideas.
Start with the Non-Negotiables
Personal finance expert Dave Ramsey created a series of baby steps that individuals and families can take in order to take control of their money. While his steps are geared toward personal finance, some of the same concepts still apply to business. Make the first part of your budget the things you can’t survive without like food, utilities and shelter. With your small business, do likewise and think of what’s essential for survival first.
In order to keep your business humming, you need to have the materials for your product and the people who build it (and sell it). The fundamentals of your budget should be around people and supplies. If you have a physical office, rent and utilities are also important. Focus on figuring out how much it takes to make payroll each month (and cover health insurance if you offer it), as well as how much it’ll cost you to have the necessary materials for your jobs. Even though this can vary, you should be able to establish an average monthly expense. Continue moving outward from these basics to include other costs you typically incur, and don’t let any dollar go unaccounted.
One final note on non-negotiables: payroll taxes are one of them. Avoiding payroll taxes can net some serious monetary consequences, if not criminal charges and prison time.
Practice Prevention
Many things in business can be considered niceties, but some of these should take center stage more often than they do. Whether you’re in a tech business or not, you should seek to prevent two major disasters: loss of important files and breaches in security.
It’s easy to think that paying for the infrastructure to prevent this or a service to help in these areas isn’t essential, but think about the catastrophic cost of either of these scenarios coming to fruition. Look into a service like Mozy, which can handle backing up your files and your online security in one fell swoop. You’ll gain peace of mind, and prevent a devastating outlay of cash should something of either nature occur.
Get Creative
Once you know what needs to be paid first, and what is worthy of funds for safeguarding, it’s time to think creatively. Let’s say you’ve worked on your budget and you’re still not going to be able to make ends meet. What to do then? Throw up your hands in despair and get a corporate job? No. Now is not the time to abandon your business. Instead, get scrappy.
If you’re a product-based business and have to handle production, your building is part of what you do. But if your business is services-based (or largely computer-based), do you really need an office? Consider taking your entire workforce remote, and letting go of the physical space for now. Or what about moving from where you are into a co-working space that will save you money, and still give you room to hold meetings and collaborate? If you haven’t yet, try reading “The Lean Startup” which will give you some important keys to keep overhead to a minimum while you grow your brand.
Remember to pay your people first (and payroll taxes), along with materials. Look into the prevention of loss and security compromises, and get creative in order to make ends meet. You can do it, and you’ll likely look back at this time with fondness once your business is far past cashflow concerns and on the upward trajectory you envisioned.
