The entrepreneurial spirit can be a hard thing to rein in. If you’re full of zeal and a new zest for life after deciding to own your own business and be your own boss, that is completely understandable and a very admirable approach to your new business.
However, being a frugal entrepreneur does not come without risks. The last thing you want as a new entrepreneur is to dive into the job without giving proper and careful thought to things like your finances. This is the most critical element of any business.
If you’re new to the entrepreneurship game and you have just raised funding from an angel investor or VC, then the goal should be to make that capital stretch as far as possible. Here are some strategies you can use to be a frugal entrepreneur.
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Avoid making large purchases
While it can be tempting, one of the worst things you can do with your new money is to go out and blow it all on every large purchase that you “might” need for your new venture, including things like expensive office furniture.
Instead, you should sit down at your table with your business plan and map out how you can go about making necessary purchases in a timely and financially-sound fashion. This will stop you from impulse buying and give you more time to source the right tools for your business at the right price point.
No large personal expenditures
Again, while it can be tempting to take your money and blow it all on hats, it’s not smart. You should also take steps to avoid personal indulgences with your loan from the bank. That’s not what the money was intended for and it’s not what it should be used for. If it is discovered you made any large-dollar purchases with a bank loan intended for business use, you might not qualify for that loan ever again, and legal action may even be taken.
Secure your assets
One of the most important things to do with any newfound income is to make sure it’s secure and can’t be touched by anyone but you. It might be worth ensuring that there’s a prenuptial agreement in place between you and a significant other that clearly lays out who gets what of what financial assets in the event of a separation or divorce. You should clearly discuss this with your significant other, make sure they understand that it isn’t a personal grievance, simply a financial necessity for any business owner.
Hire some help
It can definitely be tempting as a small business to do everything yourself. There’s so much to do for any business, it can be exhausting and awfully time-consuming to have to do everything yourself.
Between running your website and social media and trying to make sales and trying to keep your books in order, it’s no wonder people make money doing all of those things for others, so that they don’t have to. You can and should capitalize on the services offered by other people. This will help take the load off yourself and make sure you can focus on running your new business.
Make sure to pay yourself
One of the biggest mistakes new entrepreneurs make is not paying themselves. It should go without saying, but so many entrepreneurs pour their heart, soul, and money into their new venture and forget about themselves entirely. Make sure you pay yourself for your hard work. You work hard for your business, it should definitely be paying you back something.
Automation can be your friend
Remember how we talked about taking some of the stress off yourself by outsourcing some work to professionals? The same can be true of software like Quickbooks or Xero. If you still fancy doing some of the work yourself, then inputting values into accounting software isn’t too strenuous a task and is certainly cheaper than hiring an accountant. This is why you should always embrace automation — it will save your business time, money and allow you to focus more on your business.