Avoid Small Business Money Mistakes

Taken from an article by Cynthia Bunting, Business News Daily Contributor Alex Matjanec's company, My Bank Tracker, helps consumers make good financial decisions by comparing bank interest rates and services. He tells Business New Daily how his experience as an entrepreneur has helped him learn how small businesses can manage their finances better. "As a small business owner, one of the biggest decisions you can make is understanding how you are actually going to make money," Matjanec said. "To ensure you capitalize on your money making product or service, you will need a grasp on things such as pricing, cost control or financial management. Keeping this top of mind will help you create a flourishing company and not one that lives invoice to invoice." Matjanec offers tips on how small businesses can do that. Money vs. mission: While money helps the business grow, it is important to always stay focused on your mission. If you stay focused on what you love (the reason you started the business), you will build a business people love. Have a strong pricing strategy: When the time comes to start charging for your services, having a strong pricing strategy can be the difference between sinking or swimming. Price too high and no one will buy; price too low and you end up losing out on revenue. If you are in a business with comparable competitors, your pricing strategy will be easier to determine. For those in a market that is not as transparent, do what you can to find out what others are charging, but plan to start high with expectations of lowering. By starting high, you can avoid cutting into your profits. If possible, avoid being the lowest price. Don't undersell, this can devalue your product and not only turn consumers off, but also force you to generate so much volume it could put you out of business. Know your real costs: Just because the product or service you are charging costs less than what you charge, does not mean you are making money. It is important to consider every aspect of your business from payroll to the water bill. Knowing what your costs are for every variable in running your business will help you accurately project if you are making money or not. Cash is most important: A common mistake small businesses make is combining cash and profit together. Many companies can be profitable, but if they lack the cash to cover internal costs, they won't be in business for long. During the recession a number of companies had strong profits, but when clients started disappearing they lacked the cash reserves to stay afloat during slow times. Know what your cash flow is, if it is not growing each month you possibly aren't making a sustainable profit.

Enterprise Is Better Than Ease

(Quoted from Jim Rohn's newsletter) If we are involved in a project, how hard should we work at it? How much time should we put in? Our philosophy about activity and our attitude about hard work will affect the quality of our lives. What we decide about the rightful ratio of labor to rest will establish a certain work ethic. That work ethic - our attitude about the amount of labor we are willing to commit to future fortune - will determine how substantial or how meager that fortune turns out to be. Enterprise is always better than ease. Every time we choose to do less than we could, this error in judgment has an effect on our self-confidence. Repeated every day, we soon find ourselves not only doing less than we should, but also being less than we could. The accumulative effect of this error in judgment can be devastating. Fortunately, it is easy to reverse the process. Any day we choose, we can develop a new discipline of doing rather than neglecting. Every time we choose action over ease or labor over rest, we develop an increasing level of self-worth, self-respect and self-confidence. In the final analysis, it is how we feel about ourselves that provides the greatest reward from any activity. It is not what we get that makes us valuable; it is what we become in the process of doing that brings value into our lives. It is activity that converts human dreams into human reality, and that conversion from idea into actuality gives us a personal value that can come from no other source. So feel free to not only engage in enterprise, but also to enjoy it to its fullest along with all the benefits that are soon to come!