Grow your business in its first year and beyond: Your questions answered

You know him as Mr. Worldwide, Mr. 305, and the singer of your favorite pop song. You might not know singer and rapper, Pitbull, as a brand ambassador, an activist, and a philanthropist—but you should.

For the last decade, Pitbull has been focused on closing the poverty gap of the Latinx community in Miami. In 2017, in response to Hurricane Maria, Pitbull announced that he would use his private plane to bring cancer patients from Puerto Rico to the mainland for treatment. And in 2020 he released his single, “I Believe That We Will Win (World Anthem),” donating all proceeds to Feeding America and the Anthony Robbins Foundation.

Today, Pitbull is an entrepreneurial advocate for Hispanic small business owners. In honor of National Hispanic Heritage Month, Pitbull joins other entrepreneurial experts in a discussion moderated by award-winning journalist Soledad O’Brien to share advice on how to grow and manage your small business in its first year and beyond. Watch it here and read on for answers to some of the most common questions from registrants.

Q: “What do I do when cash flow is low?”

— Javier B., Puerto Rico

A: Cash flow shortages can arise from low-profit margins, problems with invoicing and collecting payments, or over-investing in inventory. Understanding how and why cash flow issues occur can help you address them before they affect your business. However, there are a few tactics you can use to tackle common cash flow problems.

Start by reducing expenses. Discontinue non-essential services temporarily, cancel or reduce premium services, move to a lower-cost supplier, or look for ways to reduce operating expenses.

If late payments or unpaid invoices are the root of your problem, there are a few things you can do to get paid faster. Send invoices earlier, build payment terms, request payments from past-due accounts, and incentivize early payments.

Finally, if you’re really strapped for cash, consider your borrowing options. Short-term loans can act as a lifeline for your business. But be warned: If there’s an internal flaw causing cash flow problems, a loan won’t fix it.

Q: “When you’re stuck between ‘I don’t have time for any more clients’ and ‘but I’m not making any money,’ what do you do?”

— Katie S., Florida

A: If you find yourself at such an impasse, it’s time to re-evaluate your pricing, your clients, and your services.

Start with a profit margin analysis. A low profit margin may indicate that it’s time to raise your prices. From there, calculate your break-even point. This is the point at which expenses and revenue are the same—you’re not losing money, but you’re not making money either. If you’re hitting your break-even point, it’s time to make a change.

Your clients are important, but not all clients are created equal. Some clients simply aren’t good for your business. Perhaps they require more time and effort than your other customers, and you’re losing money working with them. If that’s the case, it’s okay to “fire” the customers who are no longer a good fit for your business. Or, at the very least, re-imagine the way you work together.

Finally, breaking even may indicate that it’s time to re-evaluate your services. If you offer a range of services, you might find that some bring in more money and more customers than others. Some services might just be taking up precious time. If that’s the case, it might be time to focus on the services that bring in the most money (and bring you the most joy).

Q: “How do you finance your new business when your personal credit score isn’t ideal for loans?”

— Paige D., North Carolina

A: Securing funding is one of the biggest challenges small business owners face. Fortunately, there are a few ways to secure funding without applying for a traditional loan.

Small business grants can help you get the funding you need without having to worry about interest rates or monthly payments. Many grants are offered by the federal government, but you can find grants through educational institutions, nonprofits, corporations, and other organizations.

Angel investors are high net worth individuals who provide money to early-stage startups and small businesses. They’re called “angels” because they’re willing to take a risk on your business with no guarantee that they’ll get a return on their investment.

Asking for money can be awkward, but at least 10% of entrepreneurs rely on friends and family to finance their new business. When your business needs capital, turning to the people who believe in you the most is an obvious choice.

Finally, thousands of entrepreneurs turn to crowdfunding sites to finance their small businesses each year. The US saw $17.2 billion in crowdfunding revenue in 2020 alone. Crowdfunding allows you to gather donations from a large group of people who are eager to see your business succeed. A successful crowdfunding campaign can help you secure the capital you need while fostering a connection with a group of supporters.

Q: “How do I know how much to pay myself?”

— Roderick H., Georgia

A: Figuring out how to pay yourself as a business owner can be complicated. Typically, it’s done one of two ways: a salary or an owner’s draw.

An owner’s draw refers to an owner taking funds out of the business for personal use. This allows for greater flexibility but reduces a business’s equity. If a business owner decides to pay themselves using a salary, they determine a set wage for themselves and cut themselves a paycheck every pay period. This makes for less administrative work on the backend, but can negatively impact cash flow.

In either case, understanding how much to pay yourself as a business owner can be tricky. Many business owners don’t take a salary for the first few years of business. And Payscale data shows that the average business owner makes about $70,000 per year after that.

There are a few things you should consider when determining how much to pay yourself. Your business structure may dictate how you get paid—some entities don’t allow you to take a salary. You should only pay yourself from profits, not overall revenue. So business performance will determine your compensation. Paying yourself too little could raise some red flags with the IRS. It’s a good idea to familiarize yourself with IRS guidelines and research what a reasonable salary for your type of work is. And remember, you have personal expenses that you need to fund, make sure you’re taking home enough to cover them.

Q: “Our company has been growing, and we do many activities. We currently brand all these activities under one company name, ‘The Landscaping People.’ Would it be better for us to create separate brands for each activity so we can have a niche market for every activity we do?”

— Daniel V., Florida

A: If you offer distinctly different products or services that serve distinctively different audiences, it might be time to create individual brands. Doing so will allow each brand to cater to an individual audience—personalizing the experience and, hopefully, generating more leads.

But there is a downside. In this scenario, each individual brand needs its own marketing budget, market position, and customer segment. With each brand you create, your marketing efforts double. You have to consider the capacity of your marketing team when you make this decision.

Additionally, creating individual brands can cause confusion in the marketplace and for your customers. Individual brands often don’t get to benefit from the parent brand’s success or awareness. If your customers have come to know and love The Landscaping People, that love and awareness might not transfer to a new brand.

So, before you decide to create additional brands, ask yourself if these activities truly target vastly different audiences, or if there’s an underlying vision or purpose echoed throughout (in your case, fulfilling landscaping needs). If your target audience for each activity isn’t distinctly different, or if the underlying purpose of each activity aligns with the purpose of your company, keeping these activities under one brand might be your best bet.

You can always consider “sub-branding” to differentiate your services. Think “Uber,” “Uber Eats,” and “Uber Freight.” Each sub-brand offers a different service and caters to a different clientele, but all are recognizable under the parent name, Uber.

Q: “I am a one-person business. I struggle with ‘doing it all.’ How do I manage everything as one person?”

— Janet A., New York

A: As a “solo-preneur,” you wear all the hats. And that many hats can get pretty heavy. At the end of the day, the only way to alleviate the load is to get some help. Maybe you’re not ready to hire an employee, but that doesn’t mean you have to do it all alone.

Make a list of the things you’d like to get off your plate. Things like “bookkeeping” or “marketing” might land on that list—and that’s okay! After all, you started your business to follow your dreams, not to spend all your time in the books. You can outsource these tasks out to a bookkeeper, a freelancer or contractor, or an agency. Sure, it’ll cost you, but you’ll gain more time to do what you do best: grow your business.

In the meantime, automate. If you’re still manually entering transactions, using spreadsheets, paying bills, emailing customers, or fulfilling orders, it’s time to automate. Use accounting software to automate your bookkeeping, invoicing, and bill payments. Use email software to streamline your marketing and communications. Use forms and templates to collect information from customers. Modern technology eliminates the need for business owners to spend time on menial tasks.

Q: “How do I become a better closer?”

— Rocío F., Nevada

A: No matter what type of business you’re in, you have to make sales if you want to make a profit. Of course, closing the deal is easier said than done. Customers can be demanding or hesitant, and negative negotiations can have lasting effects on your business.

The best thing you can do is provide outstanding customer service from the get-go. Treat your buyers with courtesy and respect—even if you’re frustrated or in a hurry. Radiate professionalism. And be willing to go the extra mile.

Beyond that, there are a few things you can do to make your “deal” a little more enticing. Offer special discounts to first-time customers and referrals. Advertise a free gift with every purchase. Make the closing process as easy and seamless as possible to avoid common pain points. And, finally, don’t take it personally if you don’t close the deal. If the interaction was positive, they’ll be back.

Q: “At what stage in your business should you hire an accountant to assist with bookkeeping?” 

— Regina W., Virginia 

A: Most small business owners start their journey handling accounting tasks on their own. As your business grows, you might decide to hand off the day-to-day transaction input to a bookkeeper. Eventually, your business will require the expertise of an accountant. At the end of the day, business owners want to build their businesses, not manage their books.

That being said, every journey is different. Only you will know when it’s time to bring in extra help. There are a few signs that may indicate the time has come. If preparing and paying taxes is causing you stress, an accountant can help. If you’re losing control of your finances or spending more time in the books than on your business, it might be time to bring in a bookkeeper. As a rule of thumb, if you’re feeling in over your head when it comes to the financial side of running your business, it’s a good idea to get some help.

When looking for an accountant or bookkeeper , it’s important to know the difference between the two. Bookkeepers benefit your business by freeing up time in your schedule, minimizing financial errors, and generating accurate financial statements. An accountant might oversee a bookkeeper’s work, or they might offer their own bookkeeping services. Accountants act as valued financial advisors who can help you with financial planning, business decisions, taxes, and more.

Q: “How important would you say it is to incorporate a podcast into a business?”

— Chrissy P., Arizona

A: It seems like everyone and their uncle has a podcast these days. And, yes, podcasts can be a really powerful way to share your story and market your business. After all, 57% of US consumers say they listened to a podcast in 2021. It’s a real advantage when you walk into a meeting and the client already feels like they know you because they’ve been hearing your voice in their earphones every week.

But before you run out and buy a microphone, it’s important to understand WHY you should produce a podcast and WHAT you want to share with your audience. There are already a lot of podcasts about succeeding in business (we’re talking thousands)—so how does your podcast stand apart?

Due to their audio-only style, podcasts are a cost-effective and simple marketing tool compared to videos and graphic design. But there are a few caveats. You need to make sure you have the bandwidth to not only launch your podcast but produce multiple episodes on a scheduled basis. As with any marketing material that has your company’s name on it, you want to make sure the podcast represents your brand both in production and editorial quality. As you build your listenership, you might need to spend some marketing money to promote your podcast, which can conflict with marketing your actual business. You’ll want to make sure your podcast is strong enough to support those marketing dollars.

Finally, keep in mind that most podcasts don’t actually make any money. And it can be difficult and time-intensive to build a following. Your time might be better spent advertising your business as a guest on an established podcast.

Q: “How should bookkeepers encourage small businesses to adopt environmental, social, and governance (ESG) methodologies while growing their businesses?”

— Yosniel R., Florida

A: Building a sustainable brand isn’t just good for the environment, it’s good for business. Today’s consumers care about the planet—and they want the businesses they support to care too.

The majority (81%) of consumers say that trusting brands to “do what is right” is a top buying criteria. Another 73% of consumers say they’re willing to change their consumption habits to lessen their negative impact on the environment. And sales of sustainably marketed products grew 5.6x faster than conventionally-marketed products from 2013-2018.

Plus, businesses that seek to improve themselves, their community, and the planet gain a competitive advantage by improving efficiency, reducing operating costs, and building a strong brand reputation.

Q: “How can I become better at pricing our services?”

— Gilbert B., Colorado

A: Choosing the right pricing strategy is make or break for your business. Price your products and services too low and you’ll feel it in your profit margins. Set your prices too high and potential buyers will flock to your competition instead. Then again, if you don’t price your services high enough people will question the quality of your work. It’s a complicated web—to get it right, it’s critical to use your financial reporting and insights to guide your decision.

Beyond that, choosing the right pricing strategy depends on a number of things including marketing conditions, competitor pricing, your customers’ ability to pay, and production and distribution costs. At the end of the day, you need to know what it costs to produce your products and provide your services. And you need to continuously monitor these costs so you can react quickly to changes and maintain long-term profitability. If you’re feeling overwhelmed with these decisions, an accountant can help.

Q: “What is the best piece of advice you can give a small business owner who is trying to create a healthy work-life balance?”

— Sara M., Wyoming

A: As Intuit EVP, Alex Chriss, would say, “the most important resource for any business is YOU.” You have to protect your time. After all, you only get 24 hours a day—at least six of those hours should be reserved for you to live your life (and, no, you can’t use those hours to sleep).

It’s easy to talk the talk, but how can a busy new business owner actually walk the walk? Unfortunately, there is no magic spell to create more time or less work. It’s up to you to draw the line between work and life.

Start by practicing the word “no.” Cut or delegate the tasks that aren’t essential to your to-do list. Set manageable goals for yourself each day and be efficient with your time. Take breaks while you’re on the job and listen to your favorite music or podcast while you work—these things actually foster productivity.

When you get home, unplug. Just because you can work from everywhere doesn’t mean you should. Focus on the activities that bring you joy. Spend time with friends and family. And treat your body with kindness.

Finally, don’t be afraid to seek help when you need it. If you’re consistently overwhelmed by work or life, talk to a mental health professional or trusted advisor to help carry the load. Above all, remember: When you take care of yourself, you take care of your business.

Q: “I just want Pitbull to sing to me!”

— Lynda A., Florida

A: Us too!

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