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Entrepreneurs: Building a Business After Financial Setbacks
Financial setbacks happen to every entrepreneur. Whether you’re dealing with cash-flow issues or total insolvency, these struggles can affect your resolve and resilience. As you start again with a new business, it’s important to learn from past mistakes and set yourself up for success. Today, Ceelso outlines some steps you can take to prepare your business for the next round.
Identify What Went Wrong
If you’ve suffered a major financial setback, you probably know exactly what went wrong. Now, it’s time to dig deeper, find the root causes, and implement solutions to avoid these problems in the future. Some common stumbling blocks for entrepreneurs are:
- Failing to hire an accountant. Financial professionals can help you maximize tax advantages, improve cash flow, and create a financial plan.
- Not separating business and personal finances. Separate business accounts streamline taxes, accounting, and financial projections.
- Mismanaging cash flow. Make sure you have enough money to pay salaries and bills by controlling expenses, invoicing promptly, and forecasting your cash flow regularly. Also, make sure there aren’t any surprises in your credit report!
Plan, Plan, Plan
Planning is essential to business success because it gives you guidelines to keep you on track and helps prevent impulsive decisions. Some essential plans include:
- Business plan. A business plan outlines your company’s goals and how you intend to achieve them. It informs major decisions.
- Marketing plan. Define your target audiences, and identify the channels and strategies you plan to use to reach them.
- Financial plan. This big-picture document establishes how and where you plan to spend your capital to get the highest ROI.
- A budget accounts for expenses on a daily, weekly, and monthly basis.
Establish a Solid Infrastructure
Protect yourself and your business by setting up a formal legal structure. An LLC is an easy way to limit your personal liability and enjoy flexible tax filing. Read up on your state’s LLC rules before you file; every state has its own laws. Are you looking to conserve capital? Don’t pay an attorney to handle the process — a formation service is an affordable alternative.
When you’re excited about a company, it’s easy to prioritize growth at all costs. While expanding your business comes with added revenue, it also increases your expenses. Keep growth in check by:
- Outsourcing tasks outside your core competencies. Outsourcing can increase capabilities as needed without the need to invest in salary, benefits, and office space.
- Renting equipment. This is an easy way to save money, test different models and brands, and maintain agility. The hands-on experience helps you make better purchasing decisions in the future.
- Training lower-level employees. Top talent is expensive. When possible, hire and train more affordable employees. This helps you build loyalty and get the precise skill set you need.
Build Customer and Vendor Loyalty
If your past financial failures are public knowledge, it may take work to convince customers and vendors to work with your new business. Rebuild your reputation — and safeguard your company against future struggles — by going out of your way to inspire loyalty.
- Pay bills on time and in full
- Provide top-notch customer service
- Exceed delivery expectations
- Request and integrate feedback
- Communicate transparently
Create a Successful Entrepreneurial Career
For business owners, things don’t always go the way you like. However, when you learn from your past financial failures and take steps to avoid repeating the same mistakes, it’s possible to build a successful business and recover from virtually any mistake or bad turn of fortune.
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The above is a guest post from Katie Conroy of Advice Mine. Katie Conroy is the founder of AdviceMine.com. Her blog has useful insights & practical advice about lifestyle topics (e.g. health, career, relationships and personal finance).