5 Financial Habits of Successful Entrepreneurs
Entrepreneurs come in all shapes and sizes, but the most successful entrepreneurs have a few key things in common. Not only do they have a passion for serving their loyal customers but they have a fundamental understanding of the finance side of their business. Here are the top 5 financial habits we’ve seen in our most successful entrepreneurial partners.
Begin with the End in Mind
Successful entrepreneurs have an ultimate goal, whether it’s to grow their business to a certain revenue objective, or bring their idea to market and eventually sell the company to the highest bidder. Either way, these successful entrepreneurs know the value of beginning with the end in mind. They make sure their finances are in order from the start and everything they invest their time and energy in has that end goal in frame. Keeping your books clean and transparent from the beginning can save a lot of headache in the future.
Surround Themselves with Experts
Michael Dell once said, “Try never to be the smartest person in the room. And if you are, I suggest you invite smarter people… or find a different room.” Successful entrepreneurs can admit they may not know all the answers, but they choose to surround themselves with experts that do have answers. Whether it’s a trusted legal advisor, a tax guru, or even us at CFO Alliance, entrepreneurs know when to ask for help and they take the advice to heart. As the old saying goes, “It takes a village.” Entrepreneurs need an extensive network of experts and advisors to help them be successful. Don’t be afraid to seek the advice of a professional.
Schedule Money Dates with Themselves
What’s a money date, you ask? It’s a set allotment of time that you devote each week or month to strictly look through finances. It’s a time to review where your funds are being allocated and where that’s creating value for your company. We know entrepreneurs are busy people, often dealing with one thing after another, after another. All too often, the accounting and finance pieces can get lost in the shuffle with everything else on their plates. But, successful entrepreneurs know how vital it is to be on top of their finances. With so much cash coming in and going out the door, it’s imperative to have an intimate understanding of your business’s financial situation.
Focus on Cash Flow as Much (or More) than Profit
Most entrepreneurs think that cash is what’s in the bank. Smart entrepreneurs realize, there’s more to it than just a balance of funds. There’s no doubt that revenue and profit are important to small businesses, but no matter how much revenue is coming in the door, entrepreneurs need to focus on their cash flows. Knowing when to expect cash in the door and when to plan for it to go out the door is important to the health of the business. Even if your business has a line of credit, it will cost you more in the long run (in interest) to borrow than to manage your cash flow appropriately. Managing cash flow can also be an asset to your business when things go awry. Making sure you have enough cash to handle unexpected situations can allow you to still be able to focus on the overall goals of the business even in the midst of less than perfect situations.
Think in Terms of Value Creation
Smart entrepreneurs understand that sometimes it’s okay to spend on something that will help create value for the business. Whether this means outsourcing your day-to-day accounting tasks with CFO Alliance to be sure that your books are compliant for your incoming investors or putting higher quality materials into your finished product to enhance the experience for your customers – most successful entrepreneurs agree, value creation is significant. Choosing to advance your company through value creation can be the differentiating factor when investors are looking to put funding behind your ideas!