If you’ve already launched an internet business, you’re aware that entrepreneurship entails more than sipping cocktails on the beaches of Anguilla.
There’s a lot to learn about running a business, which means you’ll make a lot of mistakes along the way. But now, I’m going to give you the most important business lesson of all.
“You must learn from other people’s mistakes.” You’ll never live long enough to make all of them yourself.”
Sam Levenson is a writer and director.
The most common mistake made by business owners is to have insufficient cash flow at any given time. This is frequently the result of a lack of a defined marketing strategy, inadequate financial planning, and the incurring of unneeded expenses.
You’re practically exchanging your time for money to bring in new clients and keep your business alive if you don’t have any money to spend. A solid cash flow allows you to invest in long-term solutions for your company, allowing you to scale – without the stress!
COMMON MISTAKES IN CASH FLOW
Although it may seem obvious that you need to earn more money than you spend, it’s important noting that there are a number of ways for business owners to start accruing regular expenses that they can no longer afford, and that there are some costs that you can prevent or plan for ahead of time. Let’s get started with that in mind…
GETTING YOUR BUSINESS OFF THE GROUND WITH DEBT
This one is really poignant for me.
Before I became seriously ill and had to leave my full-time job, I had a previous business idea that I was very excited about launching.
The issue was that I’d taken out a couple of large company loans to fuel my “side hustle” idea.
I’m still paying off my student loans!
“You are a stupid if you start a business with a small business loan.”
Billionaire entrepreneur Mark Cuban
Needless to say, I regret ever taking out those loans, and while I still believe my idea has a chance of succeeding in the future, I would encourage anyone beginning a business with debt to avoid it.
Especially if you’ve never ran a profitable business before!
There is no guarantee that you will discover new clients and become successful, but there is a guarantee that you will have to repay the debt.
NOT KEEPING TRACK OF OUTGOING OUTGOING OUTGOING OUTGOING OUTGOING
Whether it’s a nice office, branded stationery, or a $20,000+ university degree in gender studies, business owners can easily rack up a large expense (and debt) on items that don’t help them grow their company.
Sure, that large vanilla latte may seem insignificant, but you drink one every day, so don’t be surprised when your bank account screams “@#&! you” at the end of the month.
Maintaining a spreadsheet that tracks your business’ income and expenditure over the course of a week, month, quarter, or year is the easiest approach to keep track of your costs.
To calculate my average monthly costs, I went through every subscription-related email I’ve received in the last year and tallied all of my regular expenses (including meals).
This provides you a measurable target to shoot at – or should I say, exceed.
FAILURE TO DEVELOP A CLEAR MARKETING STRATEGY
When it comes to generating a healthy cash flow, cutting costs is only one side of the equation.
Bringing in new, repeat customers is just as vital (if not more) than developing your business. Your business will be doomed if you don’t have a steady stream of clients and revenue.
That’s why it’s critical to have a clear and straightforward strategy in place for generating new leads and converting them into paying customers.
If you’ve ever played poker (at a reasonable level), you’ll know that the key is to not play every hand you’re dealt, but to make the most of the ones you do.
Business is no exception.
It’s strongly suggested that you actively work toward making more money – for less [time spent] unless you’re selling a product on a large scale.
This entails charging higher rates per hour, project, and client. It isn’t as simple as simply raising your prices.
You must demonstrate to your prospective clients that working with you is the best and most efficient way to solve their problem(s) – and achieve their goals – in order to successfully charge more for your products and/or services.
NOT HAVING AN EMERGENCY SAVINGS ACCOUNT
You should be saving money for a day when a meteoric s***storm blows in unannounced, just like you would for a rainy day.
In business, you never know when an unexpected bill will arise, so be prepared.
That day arrived for me when my computer abruptly shut down – shortly before a critical customer deadline!
I had to Usain Bolt it to the nearest computer shop at 4 p.m. on a Saturday to get a replacement.
I wouldn’t have been able to buy a second PC without those emergency finances, and I would have missed that crucial deadline.
To summarise, make sure you have some emergency money on hand; you never know when it will come in helpful!