This post is sponsored by QuickBooks. All opinions are my own.
Growing a successful company is all about mindset, and the difference between successful and failed business owners is often their mindset about money.
Money isn’t a dirty word. It’s the lifeblood of any business.
Any business not focused on actually making money is destined to fail. Even in creative fields, people need to make enough money to give themselves the time to create without having to work a second job to keep themselves afloat.
Focusing on making money isn’t enough though. You have to manage that money, put it in the right places to grow, hold enough back to weather unexpected turns, and track that you’re collecting the money from every sale.
Keep More Money in the Business
When you’re getting a company up and running, it’s very important to keep spending to a minimum. That goes for the business but even more for the owner. As much as you may try, you never know what the future holds.
Unexpected events can sink any company. A new competitor could steal some of your market, a change in the economy could cause an unexpected dip in sales, or worst of all, the business you’re in could fundamentally change similar to how Blockbuster got wiped out by Netflix and Redbox.
Every business has unexpected challenges along the way, so you’re job is to build your business to weather them.
On a personal level this means not taking too much money out of the business too early. Keep your expenses low, so if revenues dip, you’re able to take less income from the business.
When my wife and I were starting our most recent business we shared a single car to keep our expenses low. It wasn’t anything fancy. We didn’t love it.
We had the money to buy a second car but didn’t. Instead we used that extra money as a cushion that allowed my wife to quit her job to work full time on the business instead.
The benefits of owning our own company and working for ourselves FAR outweighed the perk of having a second car.
On the business side, it’s easy to believe you can spend your way to success. If you’re highly experienced in the field that may be true but most people starting a company are not. Even if you’re experienced in the field, you may not be experienced as an owner of a company in that same field, so the challenges can be quite different.
To watch you’re spending, it’s a good idea to invest in some accounting software.
As the saying goes “what gets measured gets managed,” and your financials are something you can’t afford to slip.
Cash is King
The only way for a company to fail is to run out of cash. That’s it!
Any other problem can be fixed.
The more surprising part is that many companies fail not because they don’t have a great product, or don’t have significant sales, it’s because they either take on too much debt by buying too many assets, have too much overhead, or it simply takes to long for their invoices to get paid.
It’s easy to get so caught up in booking new business that you let other tasks fall to the wayside.
As an example my wife and I got so busy working on one of our companies that at one point we forgot to check that we were actually being paid! Once we finally got around to checking we found that we had unpaid receivables. Some over a year old! We finally collected all of the money, but it could have turned our very differently.
Since then we’ve made sure to use proper invoicing software that gives us reminders when one isn’t paid, something that Quickbooks Online does really well.
Trends Come and Go
Smart owners know that no matter the business, there will be highs and lows. The only difference is how often they come.
Use a good accounting software like Quickbooks Online to track your cash. It’s the lifeblood of your business and deserves more attention that many small business owners give it.
They key to long sustained success is not just the ability ride the wave, but to have a life raft to keep you afloat until the next one.