If you’ve already started an online business, you’ll know that there’s more to entrepreneurship than just sipping cocktails on the beaches of Anguilla.
There’s a lot to learn about successfully running a business, which in turn will include making a lot of mistakes. Today though I will be teaching you the most valuable business lesson of all.
“You must learn from the mistakes of others. You can’t possibly live long enough to make them all yourself.”Sam Levenson
The biggest mistake that business owners can make is in having a lack of cash flow at any point in time. This is often a result of not having a clear marketing strategy, poor financial planning and taking on unnecessary costs.
Without capital to spend, you are effectively trading your time for money in order to bring in new clients and keep your business alive. A healthy cash flow gives you the freedom you need to invest in long-term solutions for your business, helping you to scale – without the stress!
Common Cash Flow Mistakes
Although it’s simple, knowing that you need to earn more than you spend, it’s worth knowing that there’s plenty of ways that business owners can start racking up recurring expenses that they can no longer handle, and that these are several costs that you can avoid or prepare for in advance. With that in mind, let’s get started…
Starting your business with Debt
This one hits home for me.
I had a previous business venture that I was super excited about launching before I suddenly became really ill and had to quit my full-time job.
Problem is, I’d taken out a couple of big business loans in order to fund my “side hustle” idea.
Loans that I’m still paying off to this day!
“If you start a business by taking out a small business loan, you are a moron”Mark Cuban, Billionaire Entrepreneur
Needless to say, I regret ever taking out those loans and despite still believing that my idea could come to fruition in the future, I would advise anyone to avoid starting a business with debt.
Especially if you have no prior experience in running a successful business!
There is no certainty that you will find new clients and become a success, but there is the certainty of having to pay back the loan.
Not Keeping track Of costs
Whether it be a fancy office, branded stationery or a $20,000+ university degree in gender studies; business owners can rack up quite a bill (and debt) on things that do nothing to further their business.
Sure, that large vanilla latte might seem like an immaterial expense but you grab one of those every day; don’t be surprised when your bank account gives you a big “@#&! you” at the end of the month.
The best way to track your costs is to keep a spreadsheet that tracks your business’ income and expenditure over the course of the week, month, quarter or year.
I personally went through every subscription-related email I’ve received over the past year and added all of my recurring expenses (including food) to figure out my average monthly costs.
This gives you a tangible goal to aim for – or should I say; surpass.
Not Having a Clear Marketing Strategy
Reducing your costs only makes up one side of the coin when it comes to generating a healthy cash flow.
Bringing in new, recurring clients is just as (if not more) important to growing your business. Without that regular inflow of clients and income, your business is on a one-way ticket to disaster.
That’s why it’s important to have a clear and simple strategy for generating new leads and converting those leads into paying clients.
If you need help with putting together an efficient marketing strategy and finding new clients, you are welcome to book a free 30-minute consultation with me.
Not charging enough
If you’ve ever played poker (at a decent level) you’ll know that the secret is not to play every hand you get dealt, but instead to make the most of the ones that you do play.
Business is no different.
Unless you’re selling a product on a mass scale, it’s highly recommended that you actively work towards making more money – for less [time spent].
This means charging more per hour, per project and per client. Although, it’s not as simple as just upping your prices.
In order to successfully charge more for your products and/or services, you need to demonstrate to your prospective clients that working with you is the best and most efficient way to solve their problem(s) – and achieve their goals.
Not having emergency funds
Much like saving money for a rainy day, you should also be saving some spare cash for a day when a meteoric s***storm rolls in unannounced.
You never know in business when a random expense will crop up, so you best be prepared.
For me, that day came when my PC just completely died up on me – right before a pressing client deadline!
4pm on a Saturday, I had to Usain Bolt it to the nearest computer shop to buy a replacement.
Without those emergency funds, I wouldn’t have been able to buy a second PC and I would have missed that important deadline.
So to reiterate, make sure you have some savings ready for an emergency, you never know when it’ll come in handy!
The biggest mistake any entrepreneur can make is not having a steady cash flow available to deal with the ongoing costs of running a business.
A healthy cash flow is the result of cost management and a good marketing strategy to bring in regular clients and income. Without both of those things, your business is on a slippery slope.
Have any questions or feedback on this past? Let me know in the comment section below!