You’ve finally made the decision & you’re excited to get your new business off the ground…and now reality is setting in about how much startup costs can run.
Whether you are bootstrapping your business or have ample funding, now is the time to build the habit of keeping a close eye on your overhead.
Entrepreneurs are required to make many immediate decisions about what to spend money on:
- Location of the business – home based, leased or purchased space?
- Basic equipment needs – computers, laptops, printers, phones, furniture, etc.
- Website design
- Accounting & Legal
- Branding & marketing materials
- Advertising & marketing
- Employee recruitment
- Employee benefits packages
- Software needs
- Website design
That’s just a starter list & it will vary by type of business, but cash flow is often tight initially so careful monitoring is important to a successful start, as well as long term profitability.
Don’t just look at the numbers, ask yourself how the expense will benefit your business with questions like these:
- Do I really need it now? Or can I postpone it for a while?
- Will it help to generate revenue? When? How?
- Will it help to build employee productivity & capacity?
- Can I get out of the contract or adjust it later if my needs change?
- If I had to pay cash for it, rather than put it on credit or lease it, would I still do it?
- Will it help me to manage my business better?
- Will it help me recruit & retain great employees?
The difference between being an entrepreneur & being an employee is that money spent on overhead or other expenses comes directly out of your bottom line profits at the end of the year – not your employer’s.
Breaking the employee mindset of “the business will pay for it” is a big first step on the road to successful entrepreneurship. Good expense management relies on understanding what the financial return is to the business before spending the money.
You are now “The Business” & it pays off in profits to remember that.