Discovering the best ways to handle finances is an ongoing process for any business owner. Even if you’ve been a lifelong entrepreneur, you can still end up struggling with corporate money management. In fact, figuring out the fiscal end of owning a company can be one of the biggest challenges you’ll face.
Fortunately, you don’t have to reinvent the wheel. After all, “learning as you go” can be notoriously arduous, time-consuming, inefficient, and even a bit risky. A better method of mastering the financial aspects of your organization is to learn lessons from others. By avoiding their mistakes, you’ll get ahead faster and with fewer friction points.
Yet, you don’t have to look just within your field to get great money advice. Quite honestly, smart founders often reach outside their industries for counsel and ideas. Here are six wonderful fiscal lessons that come from a variety of verticals. You’re sure to find at least a few of them useful, even if they don’t come from your “world.”
1. Realize how to use debt wisely.
You may have heard from the time you were little that debt is bad. Hopefully, by now, you’ve realized that healthy debt can help you advance. By leveraging debt that you know you can pay back, you can hold on to your cash reserves. In addition, you may be able to use your debt to create new cash flow faucets.
Professionals in the wholesale real estate investing industry frequently leverage the power of good debt. They’ll take out mortgages in the short term, knowing that they will get a return on their investment later. Within a few months, they expect to turn the debt into profits. Many wholesalers cycle through the debt-profit rollercoaster routinely. When handled correctly, they always end up avoiding the red … and seeing green.
2. Resist the temptation to go overboard with spending.
This financial tip comes straight from Hollywood, which might be a bit of a shocker. After all, celebrities aren’t always known for keeping their dollars and cents in order. Plenty of them have gone deep into debt, or gotten in trouble with the tax man, while others are good stewards of their wealth, including successful actor Will Smith, who said, “We spend money that we do not have, on things we do not need, to impress people who do not care.”
His reminder is a solid one, especially if you’re trying to build your brand. Nothing’s wrong with having a budget and sticking to it like glue. You’ll be happier—and so will your accountant. If you think you need lots of fashion-forward furnishings or trappings to impress clients, you’re mistaken. Before any big buy, assess your reason behind making the purchase.
3. Find (or create) opportunities to earn passive income.
Audio streaming sites, including Spotify and Pandora, have tapped into something important: Subscriptions are beneficial. While they are hardly the only providers offering subscription services, they are a prime example of why and how subscriptions can be highly helpful to your bottom line.
When you encourage customers to become subscription members to your business, you can expect a certain baseline revenue stream. This allows you to enjoy what’s known as passive income. Most people forget to turn off their subscriptions, so they keep paying month after month. Once you know how much money to expect from subscriptions, you can put some of the money into advertising. The more paying subscribers you have, the better your profit margins.
4. Expand your services or products to grow.
Feel like you’ve hit a plateau? Just can’t seem to bump up your profits, no matter how many times you tweak your sales pitches or content? Your problem might be a saturated market. At that point, you have a few choices to open your sales funnel. One of them is to diversify.
Gig economy workers know this all too well. It’s why they get into gig working in the first place. Having a side hustle enables someone with a steady paycheck to boost income. Using that model as inspiration, why not figure out how your business can “gig,” too? Perhaps you could add a new service to your lineup. Maybe your products could undergo a feature refresh to drive traffic from different sources? Get creative and get into a gig mode.
5. Create new point of sale opportunities.
When COVID-19 in 2020, restaurateurs experienced some of the toughest moments in their business lives. However, the clever ones figured out ways to keep their finances moving along. In addition to taking advantage of government programs such as Paycheck Protection Program loans, they offered consumers multiple ways to buy.
You can do likewise, especially if you only give clients one or two methods to pay you. For instance, would it be worth offering PayPal or perhaps making it possible for people to give you their checking account routing numbers? The easier it is for shoppers to give you their money, the higher the chance they’ll patronize your company. Just make sure that you implement tracking methods so you can keep an eye on financials.
6. Get money up front for your services.
Waiting to get paid can be tough. To keep money coming into your accounts, consider asking for all or some money in advance. Private schools and higher education facilities do this in order to front load their finances. That way, they know what they have and can proceed accordingly.
You may have to slowly wean current customers onto this type of pay-ahead financial model. Give them plenty of advance notice so they’re not surprised by any billing changes. Over time, moving to this structure can be highly advantageous.
Learn best practices
As a business owner, you can never have too many financial hints. Routinely seek out money-related ideas and lessons from other companies and entrepreneurs. You’ll become more confident in how you handle your corporate wealth. Plus, you won’t feel as concerned at the end of the month because you know you’ll have enough to cover your expenses.