As small businesses get their footing, the decisions they make upfront may have lasting effects down the line. Some of the most important ones are based around getting funding, creating a sustainable business plan, and ensuring that cash flow remains positive.
If you’re not making smart and sustainable decisions up front, it could spell trouble for your new enterprise. As you focus on your plans, be sure to keep these three issues in consideration.
Financing and Startup Costs
When your small business is just getting off the ground, managing money may be one of your first challenges. Where is your startup funding coming from? Are you combining your personal finances with your business finances? Are you appropriately charging enough for your services to cover costs?
The first step is always to separate business and personal finances. Opening a business checking and business savings account will create a clear delineation between your assets and those of your business, helping you get a better understanding of your overall financial health.
Once your money is separated, you can start exploring additional funding options. Small business loans and business grants, among other options, can give you the capital you need to maintain your operations. To ensure good continuity, it’s important to continually manage and track your finances as you grow.
Demand for Your Product or Service
Unfortunately, having a great idea for a product or service may not be enough to keep your business afloat. Without a business plan or proper research on the need for your business, you could face struggles before you ever hang up an “Open” sign.
Before you start investing in your business, it’s important to do your research. Creating a business plan is a great first step to addressing your target audience’s needs, as well as outlining how your company plans to increase demand over time.
In addition, many lenders will want to review your business plan and strategy before discussing any sort of financing – especially during the early stages. Creating and adjusting your business plan early and as your company develops can help you stay ahead of the demand and ensure you can build a healthy enterprise that will stand the test of time.
Cash Flow Management
By itself, cash flow measures how much money is coming into and being spent from your business. For new business owners, it can be a very big term that encompasses many different aspects of your spending.
If your business suffers from negative cash flow, it could be the result of several unhealthy practices. This may include a lack of adequate funding, poor budgeting habits, or even inventory management issues. Issues with one or more of these can create major problems for your burgeoning business.
The good news is there are ways to take control of your cash flow to ensure your business remains afloat. Spending time tracking your inventory, building cash reserves, and closely tracking your accounting can make sure you stay in control of cash flow. You can also use our Cash Flow Calculator to help visualize your situation and see where you need to make adjustments.
Although starting a business can be stressful, it can also be incredibly rewarding when you do it right. Taking charge of these three common concerns early may give you the advantage in building a valuable enterprise for years to come.
If you need a hand getting started, the business team at SESLOC Credit Union offers everything you need, from deposit solutions to financing to get off the ground. Contact our business team today to learn more about how SESLOC can help bring your dreams to life.