Eight Key Money Tips For First-Time Entrepreneurs

From Forbes.com

However, following a few key steps and having a basic plan can go a long way to simplifying the entire financial process. Below, eight members of Young Entrepreneur Council discuss a few pertinent tips that may help first-time entrepreneurs get a little more comfortable with business finances and set themselves up for a successful financial future.

1. Organize Your Records

When you're new to running a business, you might find it difficult to organize your records and other information, but it's crucial to keep everything organized so it doesn't become a problem or hassle in the future. Without properly tracking your finances, you could end up in trouble with the law and face fines or penalties. You can separate your data and finances into categories so your information is easily accessible and doesn't cause confusion or frustration. - Jared Atchison, WPForms

2. Save And Spend Wisely

Most new business owners want to jump into their business and spend money on a fancy office and furniture. You don't need all of that, especially in the beginning. Start small and build from there. If you are selling a product, don't worry about having hundreds available in stock right away. Create the product on demand as customers are buying. In the beginning, you are figuring out what your customers need and want, so you want to be able to adjust as needed. Just remember that building your business, your team and your product or service takes time. Start slow and adjust along the way. Eventually you will figure out a budget and what works best for your business. - Lisa Collum, Top Score Writing

3. Be Frugal, But Value Your Time

Being frugal means thinking about ROI. Say someone wants to sell you some marketing services for $1,000. Ask yourself, is it going to bring $1,000 in revenue? People try to sell you stuff that doesn't provide value, so always ask, does this provide value to the customer? The other side to that is to value your time. It’s easy to think, “I can save $50 by doing this myself.” But if it takes three hours and you can pay an accountant to do it instead, you’ll save a lot of time—time you can spend adding value for customers and making money for your business. Give yourself an hourly rate. A high one, like $500. If something takes away an hour of time that you could spend on customers, and someone else can do it for $200, that can be a really good trade-off. - Cody Candee, Bounce

4. Keep Things Simple

Keep it simple and remember that profit equals revenue minus expenses. Too many people will try to give you advice about gross margin analysis, profit per input, profit per hour and a variety of other things. These are all really, really important, but start simple and work your way up to it. Also, pay yourself first. Too many entrepreneurs think their company is incredibly profitable, but they don't pay themselves. Without a steady paycheck, you're robbing yourself of the reward of your effort and robbing your business of accurate financial reporting. Get yourself on a regular pay schedule from day one. - Steven Knight, Mosaic Home Services Ltd.

5. Don’t Scale Too Fast

You always have to start lean. Have a small team and don't get too excited and scale the size of your team too fast. It's going to be tempting to hire more people when the going gets tough, but that's exactly when the tough get going. Focus your finances on process improvement and the quality of your output. - Solomon Thimothy,OneIMS

6. Plan For Taxes

First-time entrepreneurs who have never been self-employed before typically overlook their tax obligations throughout the year, leaving them with an unwanted surprise come March and April. Small businesses need to plan for taxes both in financial preparation and in budgeting. Throughout the year you should plan your business affairs to take advantage of the tax code. Everything from choosing between an LLC and an S-corporation to the timing of hiring employees and purchasing equipment will impact your taxes. You should also plan to save money each month to pay your taxes. The best way to plan for taxes is to hire a CPA. A good CPA is worth the investment. They will educate you on the different types of taxes and make sure you don’t have any devastating surprises come tax time. - Shaun Conrad, Guitar Repair Bench

7. Maintain Cash Flow

Cash flow is king. A smart person once told me, "It's the CEO's job to keep cash in the bank and set strategy." The pandemic was a wake-up call for many owners. Those who had focused on having cash in the bank had the flexibility to borrow more and make strategic investments and pivot in the middle of a crisis. We had a really great borrowing base going into 2020 for our size of business, and it allowed us to start a whole new business in 2020. - Kara Brown, LeadCoverage

8. Work With A Professional

Hire a bookkeeper. Hiring someone who knows more than you in this area and who can set you up for tax season, paying your team and giving you support when making financial decisions is priceless. Bookkeepers can be extremely affordable and are well worth the investment. You need to be hanging out in your sweet spot and not worrying about this side of the business other than making sure you are aware of your P&Ls. - Diego Orjuela, Cables & Sensors