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Every entrepreneur confronts the same challenge. It takes cash to start a company. Starting up, the big question is how to fund your company. Friends and family? Loans? VCs?
And it continues throughout your journey as cash flow ebbs and flows. What I didn’t know when we started is that cash challenges would haunt us continuously. Cash is king… and queen!
You won’t always be able to plan for everything, but here are a few things I wish someone had told me when we started:
1. Become a scientist.
Running a business is both an art and a science. The art is your passion.. The science is the numbers. As a business owner, you simply cannot let either one go. Both are critical to your success.
When we started NutraBella, I was afraid of the numbers. My business partner was an ex-investment banker and brilliant at everything financial. Sweet! No finance for me, but several years into the business, I realized that abdicating the numbers was hurting my ability to make decisions in tougher times.
It’s simply not enough to have passion. If you only want to focus on the art, go work for someone else! Then, they will take care of the science.
If you want to grow a successful business, you will have to embrace the numbers. Reframe them if that’s helpful. For example, I used to think about our finances in terms of pregnancies eased, retailers delighted or suppliers rewarded. The science doesn’t have to be scary. In fact, the finances can be fun if you frame them in a way that makes sense to you.
2. Put your oxygen mask before you help others.
As the business owner, you set the tone, the culture and the vision for your business. You also teach people how to treat you. If you don’t take care of yourself, no one else will either and your business will suffer.
One of the biggest mistakes we made was to not pay ourselves for two years. It was draining for everyone involved and it was not sustainable. I meet a lot of small business owners who put everything back into the business. I get it. But at what price? Make sure you pay yourself to keep you (and your business) healthy.
Another way to ensure you put your oxygen mask on first is to start every day off on the offensive. Start your day with five revenue-generating tasks to ensure you get paid in the future. I used to write a to-do list first thing in the morning and by the end the day, nothing was checked off! I spent too much time reacting – don’t let that happen to you. Kick things off your way first.
3. Know the ins and outs of your business.
Money-in, money-out. It’s sometimes that basic. Right now, do you know what came in this week and what is going out?There were so many days that I just didn’t know what was coming in or going out. Ignorance is bliss, right? Well, not when it comes to your business. Knowledge is power. If you know exactly where you stand, you can act on it. If your cash flow is solid, you can celebrate! If it isn’t, you can come up with a plan to get more cash in. Don’t turn a blind eye. It’s not monkey see, monkey do — it’s money see, money due!
Some of the most successful businesses crash and burn because of cash flow challenges. Apple almost went bankrupt in the late 90s – hard to imagine today. Cash flow challenges can be temporary and solvable. But you need to know where you stand to make a difference. Team members and accounting tools can certainly help, but only if you take the time to embrace the numbers. I know you can do it. I’m cheering for you!
Related: Five Ways to Keep Cash Flow Pumping