7 Smart Suggestions To Maximize Your Money
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Business can be brutal and a mass of money is the lifeblood of your company. Starting your own company or running a startup on a tight budget can be one of the most challenging things you'll ever do in your life. Staying in the black and setting yourself up for long term success requires sound strategy and die-hard dedication. Here are seven smart suggestions to help maximize your money.
1) Opportunity Cost & Profitability Timetable
Some business plans or models might be successful, but are they worth the struggle. Entrepreneurs can work 80 hours a week for decades and still only enjoy moderate success. Or you could lose everything, including your personal assets and credit if you don't set up your company correctly. Think hard about what your other options are and what you're missing out on by engaging in your new business endeavor. Are there other alternatives? Licensing, if possible, can be the smartest solution. Or have a reasonable exit strategy. Work smarter, not harder. Fail quickly and cheaply if you must, and move on to the next project.
Here's an example of what I mean by picking the right opportunity. There was a local pet food and supplies company that started up a few years ago. That time of business is relatively expensive when it comes to buying inventory, storing it, shipping, customer service, and e-commerce platform costs. It's also incredibly competitive with online behemoths like Petco, Chewy.com, Amazon, and brick and mortar options like Wal-Mart, grocery stores, and veterinarian offices. The company ended up failing, declaring bankruptcy, and losing hundreds of thousands of dollars. They could have instead started an Amazon (or other online retailer) affiliate marketing business model for the cost of a $10 domain name and just produced online videos, blogs, and podcasts to drive affiliate sales. That would have been at no financial risk as well!
2) Take Money Seriously
You can't be ridiculous when it comes to company valuation, and sometimes it's best to compromise and take a reasonable investment offer from a VC instead of asking too much and losing everything. Money is hard to come by, so take it seriously and don't scoff at what could be your lifeline. Also remember it's better to have 10% of a profitable company than 100% of a worthless company.
3) Are You An Entrepreneur Or An Employee?
This takes some real self-awareness, soul searching, skill evaluation, and pattern analysis. While employees usually gets a guaranteed check and less headaches, the entrepreneur in charge can enjoy the real upside. There are people that need direction with a rigid system, and then there are leaders that need to create the rules around themselves. Determine which one you are to avoid frustration and failure. Be honest with yourself!
4) Numbers Don't Lie
When it comes to investing in a business, it's a numbers game. What are your sales? How much debt do you have? What was your initial investment? What are your production costs and how much do you sell it for? While businesses can always be on the rise or decline, the current numbers of an operation are critical in determining valuation and the chances of success. Ignoring the numbers or misinterpreting them are top culprits when it comes to reasons why businesses fail.
5) Most People, Products, Services, & Businesses Are Replaceable Or Easily Replicated
This is a painful principle but every entrepreneur needs to take a good look in the mirror and ask themselves exactly what makes them special and irreplaceable. Can your work be replicated and at what cost? Is your business or product proprietary with intellectual property such as registered trademarks or patents? Could you even enforce those trademarks or patents if it came down to it against a multi-billion dollar corporation?
Most entrepreneurs believe nobody else can do but think hard for a minute. Could someone else with hundreds of thousand dollars come in to replicate your product or service and put you out of business? If you don't want to be replaceable, you have to have extraordinary knowledge of your business and passion to help you rise above enormous competition. Don't devalue yourself but also don't underestimate the competition.
6) Business Is War
This is something he likes to remind hopeful or struggling entrepreneurs that are whining. All of us that have started their own businesses, or managed critical departments of a business, can completely understand where I'm coming from on this one. Entrepreneurship and business ownership can in fact be a battlefield where one can become wounded or destroyed financially or emotionally. Business ownership has severely damaged many lives, sometimes leading to divorce, bankruptcy, or worse. You have to prepare to fight for every sale and every dollar while understanding that business success can require sacrifices. Sometimes it isn't pretty but you have to do what it takes to win the war and survive the market.
7) Sometimes It's Not All About The Money
It's not always about dollars and cents every second of every day. Not everything is about ROI as Gary Vaynerchuk has said on many occasions. Some businesses do have the passion and innovation that can't always be quantified or put into a spreadsheet. Some people love their work and are OK with working hard and achieving their own version of success. Not all businesses are going to look incredible on paper but that doesn't mean they aren't viable. Think of companies that started modestly or poorly like Apple, Google, Amazon, Facebook, Twitter, and thousands of other underdogs. A stingy and conservative investor would have passed on most of these companies and lose out on millions of dollars. Also, if you treat everyone like a number or a statistic, a lot of people are probably going to hate you and that does not usually bode well in the business world. An entrepreneur or business plan that isn't a "sure thing" might end up surprising you and being the best investment you ever made.
Keep these smart suggestions in mind and your money will multiply magnificently!
I hope you enjoyed this article about smart suggestions to maximize your money in business.
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