Money: 10 things entrepreneurs need to know

For many people, money is the biggest obstacle when they start a business. It’s not something we talk much about and unless you were lucky, most schools don’t educate us on it. With Priya Malani, co-founder of Stash Wealth, we compiled a list of tips and resources that can help entrepreneurs be smart about their finances.

Know your business model

You have an idea for a business? Great! But before you take the leap to full-time entrepreneurism, you need to develop a business model. What are you selling? Who is going to buy it? How much will they buy it for? Take your time to create a financial plan that explores all potential revenue streams, taking into account expenses and startup costs. Set short and long-term goals and make your projections as conservative as possible.

Suggested resource: Strategyzer

Be realistic

As you create a budget, make a list of all the things you can cut down or remove completely. Like going on a diet, be wary of going cold turkey since it’ll be too much of a shock. Ease into the transition of financial sacrifice so you don’t feel overwhelmed by all the things you may need to give up.

Suggested resource: Mint

Manage your money

If you aren’t checking your bank statement every day, start now. Make things easier on yourself by signing up for a service that can manage your money, pay bills, and track your credit score.

Suggested resource: Quickbooks

Ask for help

Think about the strengths of the people in your network. Who can you reach out to for support? Be careful about asking for free labor since you get what you pay for…or don’t. See what kind of trade you can make or agree on a payment plan. Trust us, it’ll make your working relationship so much better. We also recommend automating your payroll.

Suggested resource: Wave

Be smart about your credit cards

1. Pick your card wisely

Familiarize with the perks of various credit cards and pick one that will give you the most for your needs. For example, every quarter Chase Freedom chooses a category that gives you 5x points instead of the usual 1x. There is no annual fee and a one time $150 cash bonus after you spend $500 on purchases within 3 months from account opening.

2. Stop using your debit card

Instead, pay for everything with your credit card which will rack up points.

3. Automate payments

Sign up for a service like Debitize that will automatically repay your card so you never have to think about. (But make sure you have enough in your account to cover it!)

Suggested resource: NerdWallet

Prepare for tax season

The first step is to track your expenses and mark your calendar for any filing deadlines. Then find an accountant who works with small businesses; they’ll let you know what you can deduct. Make sure you’re saving each month so that when you have to pay taxes, you can. Speaking of saving, we recommend that you set aside 20-25% of your income.

Suggested resource: Bench

Leverage your money

Before you start putting things on your credit card, research small business loans and grants. You may be eligible and the interest will be much lower or non-existent.

Suggested resource: United Capital Source

Diversify your income

Don’t put all your eggs in the business basket. What can you do on the side as you build your company? What skills do you have that you can offer as a freelancer or a consultant? For example, if you’re good at using Squarespace, maybe you can create websites for friends.

Suggested resource: Cushion

Use your time wisely

Since time is money, be aware of how you’re spending it. If you’re freelancing on the side, this will also help you determine your rates.

Suggested resource: Harvest

Related project

We eradicate and replace backyard shacks with formal structures to create sustainable income for low income households