When you’re an entrepreneur, tight budgets can become a common experience. This becomes even more of applicable for startup entrepreneurs who try to monitor both personal and business expenses. Getting more cash is not as simple as it seems, and may not even be the solution to some business problems.
What if you’ll need whatever cash you had now for living expenses? How can you afford to invest?
What if you’ve been budgeting ahead and found that you needed extra money to pay off next month’s rent? Can you afford NOT to invest?
Here, we’ve come up with a list of ways to save money while investing in your internet business at the same time:
Invest in your business
This may seem counter-intuitive, but in order to make sure you have some cash at the end of the day, let’s not talk about investing money.
Instead, you can invest in whatever your product or service is already offering and make sure it gets even better. Nothing boosts your cash flow quite as naturally as sales can in the long run.
If your sales are getting higher, and it’s getting more difficult to fund your inventory, you’re experiencing a good problem. Just be sure to get the orders as soon as they come, and by all means, DO NOT reject a bunch of orders so you can borrow money first to fund inventory people may no longer order.
When you have orders and you need to loan money, this becomes more attractive to banks or entrepreneurs as they know they can easily get their money back.
Treat Your Business As A Separate Entity
Whether a business is big or small, entrepreneurs tend to make the mistake of treating a business as a big, personal wallet as a means to getting what they want.
A good practice that keeps you professional is treating your business as a separate entity. This way, you can invest in it and even build a good working culture that attracts employees as you scale your business.
Acquire Liquid Assets
While it’s an obvious priority to save for rainy days, not everyone can afford the luxury of letting money idle in a bank account while you’re struggling with sustaining a business.
However, an entrepreneur’s main priority should always be building a sustainable business that can support personal needs as well.
This then means more unavoidable spending. To strike the middle ground between investing and saving, go for liquid assets. These can include cash, deposit account funds, stocks, bonds, and mutual funds. With this in mind, save enough for hard times, but not for a retirement fund that may be too far away from where you are now.
Stocks are good, but always weigh this against your options especially when you feel you’ll need your money soon. Although investing in your business may be just as risky as investing in stocks, you’re likely more capable of reducing risks that come in your business rather than in companies you don’t own.
Avoid Going All In With Real Estate
Another potential pitfall is investing in real estate. Although this is a great asset category, it is not always the best one to go into especially if you’re a startup as it is non-liquid.
Buying a piece of land, house or the like can be very tempting especially if you just made a big sum of money over the course of your startup business. Apart from sacrificing liquidity, maintaining assets of this kind can add to your expenses and deprive you of making other investments in the future.
The thought of spending large sums particularly threatens internet businesses that may need additional investments time to time for inventory or other things.
This is not to be confused with tax evasion. Tax avoidance involves handling your finances in order to pay for the least amount of tax and still be bound by accounting laws. When your business is scaling up, managing your taxes by yourself or through an accountant can save you a lot of money.
Be Credit Savvy
If your business will need credit, keep a good credit score with your banks. This easily benefits you in the long term as you can always get the bank’s assistance for funds when expanding your business.
On the other hand, this can go beyond just keeping a good credit score. Having a team expert on the financial world can also help especially if your business is already scaling. Remaining liquid while maximizing money growing opportunities will be great for any entrepreneur.
Fads can be very tempting especially for internet businesses where you can easily spot what seems to be selling well and gaining popularity. However, before jumping into these kinds of products, make sure these aren’t just ‘get rich quick’ schemes. This is a very dangerous pitfall for startups as getting back up will be very costly.
Riding a wave that gets you to earn money easily may end up like the lottery. It’s great to have all that easy money at first, but if you don’t know how to make the money, you may lose it just as easily.
Don’t Put All Your Eggs In One Basket
Investing all of your money in one venture or asset can be very dangerous. First, failure leads to total loss of your money. Second, you may have to wait too long on the returns from that one source – something you cannot afford to do when you are active with your business.
Diversifying your investments and ventures can help scatter your risk and allow for a smoother cash flow that benefits fast paced or startup businesses.
Following these tips can help you save money over the long term even if you’re cashing out to gain some investments. After all, investments whether financial or not, will always be needed when sustaining a business on or off the internet.