This post kicks off a multi-part series in which I will provide you with tips to avoid and overcome common challenges for start ups and small businesses.
The full list can be found here: https://www.teamwork.com/blog/11-challenges-startups-face/
Today, we'll examine the first two items on our list: Managing Your Money & Cash Flow, and Neglecting Marketing & Sales.
Managing Your Money & Cash Flow
As a startup or an early-stage business, your cash is your most valuable asset. To track it in detail, you'll need to create a reasonable budget and spending forecast so you’re on top of your business's cash and spending needs.
One area to be very careful: Avoid overconfidence bias and errors in your forecasting.
First, as every business owner will tell you, growth is not linear. Your plan should have some “market dips” or "sales dips" in your forecast. You can build these into each line item, or create an overall "buffer" to the budget that will account for possible overruns.
When you build a buffer into your a line item or the overall budget you're less likely to have unpleasant surprises in your business. With those savings, you can retain earnings or reinvest in the business. But in short, you must be diligent when overseeing your budget and spending needs and policies.
Another way to avoid cash issues is to evaluate purchases based on the "Total Cost of Ownership". How much does it cost to acquire, retain, and maintain this asset? Take a car for example. You have not just the price of the car, but gasoline, insurance, maintenance and upkeep. If you fail to account for those additional costs, your budget will not be an accurate reflection of your cash needs or your spending.
Finally, fight the temptation to spend everything you earn. Reinvest in yourself, your team, and your business versus before upgrading your office space, cars, and salaries.
Neglecting Marketing and Sales
This one is fairly simple. You can’t ignore your marketing and sales plans. At the outset, you have to answer two questions. First, "who is my customer?" and second, "what needs does my company fulfill for that customer?".
The answers to these questions will help you create your customer demographics and psychographics. In very simple terms, "who is my customer, where can they be found, and what will convince them to work with our company?"
Sales and marketing are two critical pieces of your business. Every business needs not just customers, but good customers. And successful business owners know how and where to find those good customers. Your customers provide you the cash flow you need to operate your business and turn a profit.
If, at the outset, you are having trouble answering those preliminary questions or other operational needs are taking up your time, then hire a marketing and sales consultant or begin to fill out your organizational chart with new staff that can address marketing and sales needs. But as the heading suggests, do NOT neglect marketing and sales.
About the Author:
Matt Beckmann is the Founder & Managing Director of Ascent Consultants. In addition to experience as a former Chief of Staff to the Missouri Auditor and as a Corporate Vice President and General Counsel, he has advanced training and certifications in law, business, coaching, athletics, and leadership. His blog content, inspired by his deep passion for unlocking his reader's best potential, consistently equips business owners and individuals with the knowledge and resources to overcome obstacles that may be hindering growth.
Ascent Consultants provides business and strategy consulting, executive and leadership coaching, and leadership assessments. By converting client growth goals into an actionable "game plan," we help companies and individuals unlock their full potential.