Although everybody seems to have a good business idea, only a small percentage of those ideas are ever implemented successfully.
One of the most important goals of starting a company is to generate wealth for the environment, community, and business owner.
Money and its proper management are linked to the generation of capital. Many business owners begin as operators or technicians and never venture into financial management. As a result, their companies remain small or fail to thrive over time.
That is why I decided to write this article titled “7 Money Keys to Good Undertaking”:
A mindset of an entrepreneur
Many people believe that all they need is a good idea to get started. Unfortunately, this is not the case; good ideas abound everywhere and are doomed to fail if you do not approach them with an entrepreneurial mindset.
Creating a new company necessitates a lot of hard work, a high tolerance for dissatisfaction, the willingness to keep going even though something seems to be going wrong, and implementation, implementation, and more implementation. Above all, it takes a passion for achieving your goals rather than a desire to make money. If you are looking for capital, your chances of success will be reduced (because you will not have it at first). Money would follow if you want to change people’s lives and make a difference on the world.
So, do you have an entrepreneurial mentality or not?
A Business Model That Works
One of the most common errors I see in entrepreneurs is that they become obsessed with their brand and product. Your brand and product are worthless unless they can demonstrate that they can generate revenue.
To begin, you must ensure that someone is willing to purchase your product or service. Describe your ideal consumer, then approach people who fit the profile to see if they’re interested in purchasing.
Second, you must build your business model, which entails understanding how to connect all aspects of your company. You must know how you can draw buyers, turn them into customers, manufacture and distribute your product or service, charge, and pay for your product or service. When you’ve finished putting it together, you’ll notice that your model needs money to run. What are the expenditures and costs?
Finally, you must prepare financial statements or numbers to ensure that your company is sustainable and scalable. When you deduct your revenue from your costs and expenditures, you get profitability. When you confirm that there are many people who meet the characteristics of your valued customer, that your business model will satisfy them, and that you have enough resources to start and sustain it, you have scalability.
We may assume that your company is viable if you follow these three criteria. If you discover it isn’t, you can change your business plan as long as you can prove that someone is willing to pay for what you have to give.
Austerity to the extreme
One of the most common mistakes people make when starting a company is overspending on purchases. They look for the best machine, offices, or vehicles, or they spend their money on items that aren’t directly related to producing sales.
Absolute austerity is a philosophy that Carlos Slim employs and that I strongly recommend. Make sure that everything you purchase is specifically linked to the generation of revenue.
If you need a computer, consider which computer better fits your specific requirements (not which one meets the needs of your ego). And consider this: Would buying a more costly machine boost my sales?
Flow of Cash
Cash flow is the engine that propels companies forward. Many highly successful (profit-generating) companies fail because the founder or company owner does not understand how to handle cash flow.
I suggest using three levers to effectively control your cash flow:
The first is to charge ahead of time and pay later. Instead of being their bank, you can fund your company with money from your customers.
The second step is to deal with low inventories. If you have too much money, one of the places where it gets trapped is in inventories. Try not to succumb to the lure of buying a large quantity in exchange for a discount.
The third is a defense reserve. Make sure you have enough cash on hand to cover one to two months of service. There are both fat and lean cows to be found. A successful business would go out of business if it does not have the funds to pay for the lean process.
Profits should be reinvested.
One of the entrepreneur’s temptations is to invest his profits as soon as they come. My recommendation is to put them back into the same market. You may use them to increase sales and marketing leads or to streamline the operations and reduce costs and expenses.
When do you spend your profits and how long do you do so? When you’ve hit a critical mass where the company will function without you.
Make a Transition Plan
One of the most common questions I get is, “When is the right time to leave my job and focus solely on my business?”
The response is when your company is able to produce enough revenue (consistently and continuously) to replace your salary.
It’s important to schedule the transition with specific goals and priorities in mind. In such a way that you can suggest, “The company must leave me this sum of money in six months.” I’m going to quit my job when I hit this sum of money. This way, you’ll know where to concentrate your efforts and when the transition will take place.
And I know a lot of entrepreneurs who are ready to leave right now because they are kamikazes.
Is it possible for you to do it and succeed? Yes, of course. I suggest preparing the change if you want to prevent or mitigate the effects of entrepreneurial trauma and emotional crises.
Continual Knowledge
This is a must-have for any business owner. If you want to be competitive, you must be able to learn new things on a regular basis. If you dislike studying, entrepreneurship may not be for you because you will become redundant in a short period of time and the company will fail.
There is now a form of education for every need.
Academic preparation should be considered if you want to learn how to be a successful company partner (such as masters, diplomas, specialties).
If you want to learn how to improve your business performance, you’ll need concentrated education (such as conferences, seminars, workshops).
The difference between the two is that the first teaches you a lot of theory (and takes a long time) and teaches you how to run someone else’s company, while the second teaches you practical concepts (in a short time) and teaches you how to run your own.
What is the first thing I would advise you to learn? To keep track of your finances. to keep track of your personal finances
Money in business is a representation of how you manage your personal finances. If you understand how to do it, you will be able to ensure that your company produces long-term results.
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