Author: Lazz Laszlo

The excitement of starting a new business can really get your adrenaline pumping. You have trouble sleeping, but it’s a good trouble. Your eagerness to get started can be overwhelming at times.

You lie in bed at night imagining the bigger house, the luxury automobile in the garage, and the yacht. No need to be embarrassed, we all have done it. We all imagine so much that we’ve spent a million or two dollars before we’ve brought in a nickel with our new business or idea.

It’s common for new businesses to spend on the look of a business rather than the infrastructure. Important is the computing power at your command, what isn’t important is the desk that the computer rests on.

I know people who have come up with an idea that they think is the greatest money-maker of the century, only to be stuck with a garage full of widgets that couldn’t be dumped on a salvage buyer for a few cents on the dollar.

Make sure you have a market for your products or services before you spend your business capital on luxury offices and furniture. The pay-off is that if it’s a really good product or service, you’ll get the income to handle the frills.

Don’t order 5 thousand custom business cards for you and every employee. A couple hundred generic cards without names printed on them are great for the employees and a couple hundred with your name printed on them should do nicely. By the way, you don’t need the seven color embossed, foil-stamped, laminated cards to begin with; wait until you get the yacht.

What may seem like just a few thousand dollars, or a few hundred dollars, could be the money to keep the business going an extra few days, month, or quarter. It could be that time frame that brings in the really big client that you’ve been pitching for months.

It’s easy to get fast and loose with the company funds, because in many cases; the money is borrowed from a bank, loaned by a friend, or supplied by a silent or active partner.

You have to treat every dollar as if it’s your last. Treat each dollar the same way you treated money, before you had any in an account at a bank.

Your cash flow, which is essentially negative in a start-up, has to be controlled and here’s some tips on how to maximize your cash in the beginning of a venture;

1) Think need rather than want and what I mean by that is only spend money on the absolute essentials. The big desk and the thousand dollar cell phone can wait. Besides, by the time you can afford them, your taste may have changed or the technology that you just had to have has been replaced with even better technology at a better price.

I’m not asking you to not get what you need to run your business, but I am advising that you examine your expenditures before, rather than after they’re made.

2) One of my favorite sayings growing up and to this day is; why buy new when used will do. The great thing about buying used or refurbished supplies is that you can save a lot of money. Maybe instead of saying that you can save money, I should say you’ll spend less of your precious cash.

Buying recycled paper, using both sides of the paper before discarding, and only printing what you really need, can save in the office. You may pay a little more for cellophane tape by the individual roll, but do you really need to buy a pack of thirty-six rolls when you first start out.

I could talk a lot about office supplies, but I think you get the message and the message is; don’t load up on office supplies. Buy office supplies as you need them.

3) In the beginning, you pay the bills. Do not turn your bill paying over to someone else until you are firmly established and know within a hundred or so dollars a week, what your business income is going to be.

In the first couple of years, your cash-flow is so crucial to your survival that it’s probably a strong reason why so many companies don’t make it. You should manage the money in the beginning or as many of my business colleagues say, “Don’t ever give up control of the cash.”

4) Be quick to invoice and slow to pay. In the beginning, you want to get your billing out quickly. Keep in mind that there are a lot of slow pays and you will probably not be a priority, but get your invoice in the mail.

Once you get terms on what you need, don’t be in a hurry to send the check out. You have to put your suppliers on a program. What I mean by that is; you pay them, but not the minute the invoice hits your desk. Pay the most important vendors the fastest and let the others wait 30 days or so for their money.

I’m not telling you to be mean; I’m just telling you the other side. No one is really going to be in a hurry to pay you and the sad truth is; some people will never pay you.

Every business has write-offs or charge-offs and that’s part of business. There’s a good chance that you will be billed for something that you will either not pay, or refuse to pay, because of dissatisfaction with the item or service. Again, it’s all part of being in business.

5) A good plan to follow is; lean and nice. Only spend on the things that you really need and be nice to the people who supply you. Being nice can come in handy in the event that you come up a little short at the end of the month.

Being a good guy, paying your invoices in a timely manner can buy you time when your cash flow gets tight; and it will if you are in business for any length of time.

If you’re lucky enough to stay in business for any length of time, you’ll experience the other type of not being able to sleep.

Topics: Nicholas Yates on Business, Nick Yates on Travel |

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