Navigating the financial complexities of entrepreneurship can be daunting, so we’ve gathered wisdom from seasoned business owners and founders. From the importance of hiring multi-skilled employees to the crucial advice of avoiding passing trends to focus on core values, explore the diverse financial management strategies in these fifteen comprehensive tips.
Hire Multi-Skilled Employees
Don’t hire resources simply to increase the count for additional projects. Instead, focus on hiring people you think are capable and possess multiple skills. Entrepreneurs need to pay salaries to their employees, and sometimes, when the company starts to face losses, cost-cutting is the only option left to save it from the situation.
However, addressing this from the beginning works great to ensure you are safe. That doesn’t mean you shouldn’t hire resources; it means to carefully consider the projects and work assigned and then make the decision. Many businesses have multiple employees who don’t receive adequate work.
Also, when hiring, make sure you are hiring someone who has a broader skill set so they can be utilized properly, instead of hiring an employee with only one skill, which leads you to hire another for a different skill.
Len Gauger, Owner, Connect Space
Employ a Certified Public Accountant
I hired a CPA (Certified Public Accountant) at the end of last year, and I regret not doing it sooner. The CPA manages my financial situation by preparing me for audits, filing my taxes, and even helping me create a budget. This way, I can focus on running my business while my CPA takes care of the financial side of things.
If you own a small business, then this might not be necessary. But if you’re a bit larger and you struggle to find the time to handle the financial side of your business, I highly recommend hiring a CPA.
Scott Lieberman, Owner, Touchdown Money
Bootstrap for Resilient Growth
Simply don’t scale faster than absolutely necessary. Bootstrapping isn’t sexy, but it builds resilient habits.
Forced, diligent budgeting—prioritizing must-haves over nice-to-haves—is essential. No lavish retreats until profitability lets those perks self-fund. If I wanted a raise, increased sales had to justify it.
Had I plunged into debt chasing hockey-stick growth, one hiccup might have shattered the entire operation. Instead, our commitment to self-sustaining expansion created a sturdy foundation.
Nitai Aventaggiato, Founder & CEO, Helpmonks
Prioritize Cash Flow Management
Forget fancy spreadsheets and expensive accounting software—the most crucial financial tip I can offer any entrepreneur is this: Fall in love with cash flow. Treat it like your business’s lifeblood, because that’s exactly what it is. Cash flow isn’t just about how much money you have in the bank; it’s about understanding the rhythm of your income and expenses. When will that big invoice get paid? When are your rent and payroll due? Knowing these dates like the back of your hand is your superpower.
Why is cash flow king (or queen)? Because even profitable businesses can crumble if they don’t have enough cash on hand to meet immediate needs. A delayed payment from a client, an unexpected inventory expense—these seemingly small bumps can throw your whole operation off balance. But if you’ve got a firm grasp on your cash flow, you can anticipate these hurdles and navigate them smoothly. Think of it like whitewater rafting—knowing the rapids ahead lets you adjust your course and avoid getting flipped over.
So, how do you cultivate this cash flow love affair? Start simple: track your income and expenses religiously, even if it’s just in a basic spreadsheet. Forecast your cash flow for the next few months, and update it regularly. Talk to your accountant about strategies to manage your receivables and payables. It might not be the most glamorous part of being an entrepreneur, but trust me, mastering your cash flow will be the single biggest factor in your business’s success and your own peace of mind.
Remember, a business with healthy cash flow is a business that can weather any storm and, more importantly, sleep soundly at night. Now go forth and conquer that cash flow dragon!
James Parker, Co-Founder, LEONID
Focus on Net Profit
One financial management tip I’d offer to other entrepreneurs is to focus on the net profit of the company instead of revenue. It can sound very sexy to be focused on one’s revenue, especially if one is focusing on high-ticket sales such as real estate or coaching packages.
However, what is often missed is the percentage of that sale that needs to be put aside for taxes, the portion of that sale that must be put aside for unexpected expenses; both of these things, and more, can drastically change one’s perception of how well they are doing in business. If one freely spends the revenue, then come tax time, they will be in major trouble.
By focusing on the true net profit of the company, entrepreneurs are able to work carefully, and they are also operating from a much more realistic and centered headspace.
Sebastian Jania, CEO, Ontario Property Buyers
Allocate Budget to AI Marketing
Through founding the MBC Group and guiding it toward embracing AI-driven marketing solutions, I’ve acquired a deep understanding of the importance of financial management in fostering a business’s growth and adaptability. A crucial tip I’d offer to entrepreneurs, drawn from my journey, revolves around the strategic allocation of your marketing budget, particularly toward innovative solutions like AI-driven tools.
Investing in AI-driven marketing, as we did with AiDen, our intelligent chatbot, wasn’t a decision taken lightly. The initial costs and development time were substantial. However, the long-term benefits in terms of customer engagement, personalization, and ultimately, conversion rates have been immensely rewarding. For example, by reallocating a portion of our traditional marketing budget to develop and integrate AiDen, we were able to see a significant increase in user interaction on our digital platforms. This shift not only saved costs in the long run but also increased our ROI beyond initial projections.
Moreover, this experience taught me the value of continuously reviewing and adjusting your budget allocation based on performance metrics and industry trends. Keeping a close eye on our expenditures and returns from various marketing channels enabled us to identify underperforming areas and redistribute funds toward more profitable ventures. It’s this agility in financial planning and willingness to embrace new technologies that I believe are paramount for any business looking to stay competitive and financially healthy.
My advice to other entrepreneurs is not to shy away from investing in new technologies like AI for marketing purposes. The initial cost and effort might seem daunting, but the long-term benefits in customer engagement and cost efficiency can significantly outweigh these initial investments. Always review your financial performance across all channels regularly, and be ready to pivot your budget toward the most promising technologies or strategies. This approach not only aids in better financial management but also ensures your business remains at the forefront of innovation.
Matthew Montez, Founder, The MBC Group
Automate Financial Transactions
As a business owner, there are many tasks and responsibilities that take up most of your time. Instead of manually handling your finances, consider automating them.
This can include setting up automatic payments for recurring expenses, such as utility bills or loan payments. You can also automate your savings by setting up automatic transfers from your checking account to a savings account each month. This not only saves you time and effort but also helps you stay on track with your financial goals and avoid late fees or missed payments.
Additionally, automating your finances can reduce the risk of human error and ensure that everything is organized and accounted for in a timely manner.
John McDougall, Founder & CEO, McDougall Interactive
Set Aside Budget for Innovation
Embrace dynamic budgeting that allocates a small, flexible portion specifically for innovation. This pool allows for experimentation with new ideas, technologies, or marketing strategies.
While the majority of the budget maintains stability, this set-aside fund encourages calculated risk-taking, for instance, investing in emerging technologies or unconventional marketing campaigns. This approach cultivates adaptability, encourages creativity, and positions your business at the forefront of industry trends, ultimately fostering long-term growth and resilience.
Jon Torres, CEO, Jon Torres
Track Every Dollar Earned and Spent
If there’s one financial tip I’d give to fellow entrepreneurs, it’s to keep a close eye on your money.
Make sure you’re keeping track of every dollar you spend and every dollar you earn. Whether you use accounting software, spreadsheets, or even just a good old-fashioned notebook, staying on top of your finances helps you make smart decisions for your business. It’s all about staying organized and being proactive so that you can set yourself up for success in the long run.
Andre Oentoro, CEO Founder, Breadnbeyond
Buy Below Market Value
One crucial piece of advice is always to buy below market value. This strategy isn’t just about securing a good deal; it’s a safety net. In the unpredictable world of real estate, where I focus on raw, unimproved property, this approach guarantees a margin that allows for immediate profit through flipping.
It’s not gambling; it’s strategic planning. Embracing this practice has been a cornerstone of success for Land Boss, ensuring we thrive regardless of market conditions.
Bart Waldon, Co-Founder, Land Boss
Implement Rolling Income Forecasts
As the founder of a digital media platform reliant on ad and affiliate revenue, forecasting unpredictable income streams is vital for success. Though earnings fluctuate wildly month-to-month, financially modeling different scenarios informs smart spending decisions. That’s why the best tip I can give fellow digital entrepreneurs is to implement rolling income forecasts.
For example, I estimate my next 90 days of advertising and partnership earnings using metrics like past performance, seasonality, and pipeline deals. With projected top-line revenue ranges set, I build an expense forecast to inform sustainable budgeting on costs like payroll, hosting, software tools, etc.
Mapping out expected cash flow cycles quarterly allows me to play out “what-if” situations. What if a new affiliate program drives a 20% bump in Q2 income? Does that support hiring another writer? By modeling different scenarios against projected earnings, I make calls aligned with realistic growth.
Of course, with so many variables at play, no forecast is perfect. But having directional visibility into potential earnings growth for the next quarter and next year is invaluable. I can confidently make big bets or conservative moves based on data-driven predictions.
While most media companies deal with volatility, taking an analytical modeling approach enables me to operate strategically despite industry chaos.
Brian Meiggs, Founder, My Millennial Guide
Plan for Legal and Regulatory Costs
Based on my extensive experience advising businesses on regulatory compliance and optimizing their operations for both growth and legal soundness, I’ve learned that one of the most crucial financial management tips is to be proactive about understanding and planning for the legal and regulatory requirements of your business. This includes budgeting for the costs associated with obtaining necessary licenses, permits, and insurance.
Many entrepreneurs underestimate these expenses and the impact they can have on cash flow. For instance, failing to allocate funds for workers’ compensation insurance or not understanding the financial implications of hiring employees versus independent contractors can lead to significant unplanned expenses.
From my work at Basecamp Legal, I’ve observed that businesses that take the time to develop comprehensive policies, such as for employee management, and who ensure all their contracts are in writing, are in a better position to manage their finances effectively. They avoid the pitfalls of costly legal battles or fines from non-compliance with labor laws. For example, a technology startup we advised implemented a detailed contractor agreement for their freelance developers, minimizing the risk of misclassification and the resultant fines.
Moreover, this clarity in relationships can lead to better budgeting and forecasting, as it mitigates the risk of unexpected costs. My advice is to invest in solid legal and regulatory groundwork; it not only protects your business but also provides financial stability by preventing unforeseen expenses.
Adrienne Fischer, Founder, Basecamp Legal
Review Subscriptions and Memberships
Make it a habit to regularly review your business subscriptions and memberships. This is one type of expense that can easily be overlooked by business owners, especially if the charges are automated.
Before you know it, you’ve spent X dollars subscribed to software you stopped using long ago. It’s important to monitor, assess, and filter out which ones you’d still like to continue and which ones you can do without. Making this a habit will prevent unnecessary expenses on your end that you can otherwise allot to more urgent and important areas of your business.
Baidhurya Mani, Founder, Sell Courses Online
Build a Business Emergency Fund
One key financial management tip I’d offer to fellow entrepreneurs is to prioritize building a solid emergency fund for your business. Having a financial cushion can help you weather unexpected challenges, such as economic downturns, cash flow shortages, or unforeseen expenses. If there’s one thing entrepreneurs know, it’s that nothing ever goes 100% according to plan.
By setting aside funds specifically for emergencies, you can protect your business’s stability and ensure its long-term sustainability, even in uncertain times. In 2024, the accessibility of cash has dramatically decreased, so removing that reliance on banks can propel you further than entrepreneurs who are not prepared.
Erika Kullberg, Attorney, Money Expert, and Founder, Erika.com
Avoid Trends; Focus on Core Values
The best advice I’d give to any entrepreneur is simple: Don’t let yourself be influenced by trends and FOMO. Instead, stay in your lane and work on your core values, services, and offerings without being bothered by flashy new gadgets or technologies.
Over the years, I’ve seen how other companies or my clients implode because they start spending huge amounts to keep up with trends like incorporating AI, investing their precious capital in cryptocurrencies, etc. These trends may make you feel as if you’d be missing the train if you don’t jump on it right away, but instead, you really just need to focus on your core services.
I’ve learned over the years that your clients will always keep coming back to you because of those core principles and services you offered them in the first place—they don’t care about new, shiny technologies. Don’t spend your funds on new gadgets; instead, invest in developing your existing services further and strengthening the brand.
Viktoria Krusenvald, ANWPB Board Certified Nutritional Consultant, Wellness Patron
Brett Farmiloe is the founder of Featured, a Q&A platform that connects brands with expert insights.
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