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02.08.2007: Cashflow Tips

#2 Engaging in impulse spending during the start-up phase

"It takes money to make money": We hear this saying so often in business, and in many ways it is true. But, unfortunately, this common belief can make many a rookie entrepreneur fall prey to gross overspending — especially in the first few months of business.

The reality is that while, yes, it does take money to make money, not all start-up expenses are created equal. Starting a business involves plenty of clearly beneficial expenses — costs that will benefit your company's profitability in measurable ways. But there are also plenty of consultants, advisors and B2B service providers who would be happy to take your start-up's capital for things you don't actually need.

If you want your business to make money, then, keep your eye on the bottom line, considering the cost-benefit of every single expense. After all, every pound you spend on your business is a pound that is ultimately taken away from your profit margin.


Along with your revenue forecast, create a realistic budget, and stick to it. Calculate when you plan for your business to break even — and as unexpected expenses or opportunities for impulse spending come up, go back to your projections and calculate how those purchases will delay your break-even point. You may decide that your employees don't need that ping-pong table after all.

No matter which method you select, make sure to base your future sales expectations on objective facts and sound judgment. This will save you from overspending based on pipe dreams that may never come true.

08.06.2007: Business Finance Tips

#5 Make a budget

Part of staying organised and planning ahead should include creating a budget. Many business owners view this step as dull and unnecessary, but the importance of a budget could be equated with the value of a well-formed business plan.

A budget is not a tool for planning out how every penny should be spent. Rather, it's a framework that you can use to help you make clear-headed decisions, whether it's increasing your marketing spend, or cutting expansion costs to keep your profits on track.


Make a budget and use it as your guide. Don't allow it to force you into decisions you don't want to make, but use it to make adjustments when and where necessary.

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