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Tuesday, December 1, 2020

Building Finances: Things to Consider When Starting a New Business

For many, this period of time is one full of financial hardships. Many have lost jobs, many have lost clients. Some people, because of this, have decided to open a new business that can better serve people during these times, with the hopes that this can be a good source of income for them and their family. If you are starting a new business, here's some things from a reader that you should definitely consider.


There are two distinctly opposite approaches taken when starting something – anything – new. One is that someone will just begin, get straight to it. They will do the new thing and accept the mistakes, fumbling around, until it begins to make sense and a clearer solution and process is discovered or presents itself. The other is to commit to mastering the activity before it’s even begun. It’s achieved via reading books and articles of other people’s experiences and technical knowledge. The middle ground between the two is the ideal. This article cannot start the business for you. What it can do is provide knowledge about the things to consider about the financial-side of starting a new business. So, it’ll meet you halfway.

Invest

Let’s start with spending money. A funny place to begin but a necessary one. Investing money in new technology or training can save you money or even make you money. You shouldn’t be scared to do it.

The most obvious and easy thing to commit money to would be high-quality equipment which helps fulfil jobs. Be it construction, beauty, or IT, each industry has specialist tools which can set competitors apart. In some cases, it’s not about being superior to other businesses, but about working at the same level. For example, those in the mobile manufacturing industry utilising Android software opt to use Qualcomm’s Snapdragon 865 processor. It is an industry leading piece of hardware. If manufacturers didn’t use it, they would be working with a disadvantage unless they had an alternative which stands up well, which in the current market is very hard to find or develop.

This isn’t just about technology which enables you achieve higher work standards, though. There are massive administrative benefits. For instance, having online software to manage and track billing is so much easier than paper or Excel. It can be accessed from different devices and by different people, and, also, with these two benefits and only one central copy, the data can be kept up-to-date much more efficiently.

Insurance

Insurance is usually begrudgingly approached. It shouldn’t be. It’s a life saver and an easy means of future-proofing your business. At the top of the list of priorities should be to shop for commercial liability insurance, also known as general liability insurance. It covers injury compensation, legal fees, and property damage. You’ll feel a lot more secure knowing that new tech you’ve invested in is covered.

Billing Strategies

A business will not exist without income. This is the most obvious fundamental, but one which is sometimes taken for granted. Customers love the product or service, but are they good at paying for it?

There are little tricks which you can do to increase the chances of getting paid on time. Start with adding the business’s logo to your invoice; agreed terms of payment should go on there too, which include details of how to pay, how much, and penalties if it isn’t paid by the due date (which should also be clearly displayed); and send the invoice to a single person (if it’s a company you’re billing this is particularly applicable) as it puts responsibility on them, rather than three people receiving it which potentially results in each one thinking the other is sorting it out. In the current times, it’s especially important to ensure you do everything you can to get paid on time and ensure healthy cash flow.

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