According to numerous surveys, about 90 percent of all businesses don’t make it through their first five years. Needless to say, most of these doomed small businesses don’t even make it through their first year and while the reasons for this vary, most of them are of financial nature. Therefore, in order to get your small business through its first year, you need to learn a couple of tricks that will help keep it financially afloat. Here are five ideas that just might work.
1.Revise your budget soon after the launch
When you initially plan your budget, you will be able to take all major expenses into consideration, but that’s about where your prediction abilities end. The price of the office lease, utilities, supplies and employee wages are fairly easy to predict, however, once your business hits off, you will be faced with a series of new, unexpected expenses you failed to take into the equation. Taught by this experience, it might be a good idea to revise your budget soon after the launch and ensure that every single dollar you invest in your business is going to the right place.
2.Consolidate your debt
In a situation where you had to get a loan to get the business off the ground and then soon had to get another one to secure a steady cash flow, you might be in a bit of a rough spot. Not only will a lot of your profit go to the interest alone, but you will also have a huge problem dealing with several deadlines and several different interest rates. Therefore, it might be a good idea to consolidate your debt and, thus, gain the option of focusing on a single adversary at a time.
3.Additional stream of income
One survey claims that it takes between 6 months and 2 years for a business to become profitable enough to sustain itself. In the meantime, you have to find a way to keep it all afloat. This is why it is probably for the best if you created an additional stream of income while you’re at it. For instance, you could take another roommate, sell some of your old stuff on eBay or even think about online trading. The perk of these ideas lies in the fact that they can be done part-time. Some people decide not to leave their day-job until their business becomes profitable enough.
4.Learn a bit more about deductibles
Another thing that could make or break your business is the way in which you are counting your deductibles. You see, people who run their operation from home have no idea that they could even deduct a part of their utility bill as the cost of running a business. For instance, if you use 10 percent of your home as a home office, you can deduct about 10 percent of your utility bill. Apart from this, even things such as dry cleaning while you are on a business trip fall under this category. Therefore, learning a bit more about deductibles might save you quite a bit of money in the long run.
5.Sell your invoices (when you have to)
Finally, while waiting for your account receivables to arrive might be a more profitable idea on paper, selling your invoices might sometimes be the best solution to your temporary financial issues. First of all, most factoring companies charge between 1 and 5 percent, while interest rates seldom go this low. In fact, for a quick cash boost, you might even be forced to agree to an 8 or 9 percent interest, which would make selling your invoices a clearly better solution.
At the end of the day, budgeting properly and frequently enough, learning a bit about the expenses you can list as tax deductibles and finding a way to produce more cash flow are all life-saving skills in the world of small businesses. Sure, mastering these skills may be hard, but even in a scenario where your first attempt at business fails, these skills will be essential in your future endeavors. Either way, no amount of theoretical knowledge will prepare you for what is to come, but with the right idea on your side, you can overcome these obstacles a lot sooner.