Managing your expenses as a new business owner

March 13, 2014 by Ademola Alawiye 

   

 

While starting your own business can provide feelings of anxiety, understanding the characteristics of other accomplished entrepreneurs can help you to follow their footsteps, ADEMOLA ALAWIYE writes

Businesses aren’t easy to run since they take up a lot of time and effort to set up and run. There are many challenges involved in establishing and managing the daily operations of a business. These include fulfilling the unique needs of different customers, competition from rival businesses, dealing with employee issues and providing quality products and services to your clients.

For some individuals, money is the most difficult thing to obtain when starting a business, but it remains the most important asset in any venture, experts say. Unpaid bills, failure in payment of employees’ salaries, unpaid taxes and rents, and other unmet financial obligations can put an entrepreneur out of business.

They note that one biggest challenge confronting most entrepreneurs is the ability to adequately separate their personal and business finances. The Managing Director and Chief Executive Officer, Silex Limited, Mr. Steve Obong, says some young entrepreneurs are not disciplined enough in terms of managing finances. He notes that entrepreneurs need to see the finances of the business as belonging to the company, adding that this will help curtail unnecessary spending.

Experts advise young entrepreneurs to learn money management to in order not to run their businesses aground. According to them, knowledge, patience, and the fear of failing may do it for the entrepreneur. They say proper management of money will encourage saving and this will inevitably lead to business success. By saving, the entrepreneur can invest twice the amount of his capital.

Below are some money management tips for entrepreneurs of growing businesses, according to experts:

Borrow office space if possible

For a young entrepreneur starting up a new business that requires an office space, experts advise that you should not consider buying the office space at first. The entrepreneur should make inquiries for free available space from friends, family, relatives and colleagues. He should continue with this until he is able to make tangible earnings from the business. This, experts say, will not just save the entrepreneur some money; it will also boost his business experience.

For individuals who could not get a free space to run their business, it is advisable to settle for affordable outlets at strategic locations. The entrepreneur should not rush to acquire fancy furniture, but should apply wisdom when making purchases for his office. However, experts say this is an exception. Entrepreneurs whose businesses attract regular visits by clients should try and get a space or should look out for a neighbouring outlet to host their customers.

Trim down lodging/flight cost

When on official assignments, the young entrepreneur should try as much as possible to reduce the cost of lodging in hotels. During such periods, he can put up with a friend or family relative in that area instead of lodging in a luxury hotel. To efficiently manage his resources, he should look for cheap hotels if there is no familiar person who lives around the area. The entrepreneur should book online tickets, as most of them are cheaper than tickets booked on the ticketing and reservation stands of airlines. For distances that can be covered going by road, he must not hesitate to travel by land. All this is to cut cost and manage your capital efficiently, experts say.

Cut down power cost

One good way to reduce cost of power is to ensure that you keep a continuous check on all appliances in your office. Obong says switching off all appliances that are not meeting any desired demand at any particular time will help reduce electrical cost. “Young entrepreneurs must make sure they switch off fans, air conditioners, lights, refrigerators, computers and laptops whenever not in use,” he says.

Experts say entrepreneurs tend not to realise that printers consume more power. They note that having a printer is usually very costly. According to them, the entrepreneur can print on both sides of a paper whenever this is possible and should use affordable and good papers as well as printer cartridges in a bid to cut down printing cost.

Rent out unused items

“For items not in use, do not hesitate to rent them out,” Obong says. They note that items like coffee maker, photocopier, air conditioner, unused refrigerators and computers can be rented out or sold out right. Extra office space can be rented out also to earn more funds for your business, they say.

They advise the entrepreneur to cut down stationary cost. According to experts, young entrepreneurs must not spend on items that can be made available free of cost. Some of such items include stationary articles like pen, paper, notepad, etc. These items, they say, are often given out for free by many hotels and sponsors. By following these tips adequately, the entrepreneur will be able to manage his fund better.

Negotiate thoroughly before payments

Experts advise that the entrepreneur develop his negotiating skills. He should negotiate with every vendor that comes across his business.

Draft and stick to your budget

The entrepreneur must be able to draft a budget. He should also stick to this budget. “This is, of course, another money management measure that is very vital for the success of any business,” Obong adds.