Don’t go broke building your business

Sep 15, 2016 | Innovation Resources

For any new entrepreneur money is often perceived as the biggest hurdle to getting their venture started. The reality is

that money is always going to be an issue in your business. You have to learn how to strategize and manage it from the

very beginning. Whether you are going to bootstrap it yourself, take out a loan, look for angel investment or venture

capital, it is always about how you manage your dollars not just how much you have.

The key to success for a new entrepreneur (and even those who are trying to grow their business) is strategy. It pays to

spend time planning so you can avoid the most common mistakes, learn and understand how cash flows through your

business, and find good mentors who can offer advice. I sat down with Stephanie Artino, of the Artino Advisory Group

here in Bellingham to find out what money management advice she has for entrepreneurs looking to start or grow their

business.

 

Common mistakes should not be costly

I started by asking her about the biggest mistakes entrepreneurs make when getting started. “They fail to adequately

estimate the total funds needed for startup (plus the first year of business) and making sure those funds are readily

available/accessible when needed.” She says. “Most entrepreneurs make a good effort to be prudent with their

budgets, but often forget to build in a cushion for unexpected expenses. This cushion should also take into account

potential delays in collecting cash from customers or lower sales.” Often times entrepreneurs underestimate what the

actual costs may be by half and should consider a cushion to double or even triple expenses.

Entrepreneurs who use money that is not their own, like loans, investors, friends/family, or crowdfunding may be

especially at risk for these mistakes. Stephanie explains, “This can be dangerous to cash flow when it comes time for

repayment. There is also a definite correlation between mental buy-in by entrepreneurs when more of their own money

is at stake. “

 

 Manage that cash flow

In addition to building a strategy around the budget, it is important for entrepreneurs to strategize how money will flow

through their business. Cash flow is all about knowing when cash comes in, when you will need it and where it goes

back out. “A little planning up front can help set you up for success much faster” Stephanie suggests. “Failing to do so

can put you in a cash crunch that can delay your ability to start on time, create additional expenses or other problems,

sometimes big ones.”

 

 Do what works for you

New entrepreneurs and even some seasoned business owners are often hesitant, confused, or even frustrated by the

financial forecasting they need to do for their business. So I asked Stephanie what advice she has to help ease those

issues. “Make it easy for yourself.” She says, “Planning doesn’t have to be complex or in a certain type of format. What

works for one person might not work for you.” She continues on by suggesting that guidelines and templates can be

good references, but that ultimately it has to make sense to the entrepreneur. “Most importantly, don’t get caught up

in doing it right that you don’t plan at all. As long as you are spending the time planning and doing what works for you,

it will help you in the long run.”

 

*This piece originally appeared in the Bellingham Herald.

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