Entrepreneurs are a rare breed.
They are the ones who question the status quo and offer solutions to problems that are troubling the world as a whole. Problems sometimes that we do not even realize to be a problem.
But not everyone is built to be an entrepreneur. Although education to entrepreneurship does exist at the university level, some still question its effectiveness. It is something that develops from a feeling of the intestines and also through passion.
For first-generation or first-generation entrepreneurs, as they are often called, this translates into a period of difficulty. Everything they watch seems to be written in a language that they can not understand. Even with basic knowledge of business administration and financial management, entrepreneurs often struggle to keep things under control when they run their own businesses.
Money being something that can easily be lost with bad decisions can cause disaster for a first-generation entrepreneur.
Tips for First Generation Entrepreneurs
This post discusses some financial advice to help first-generation entrepreneurs make the right decisions to save them from long-term business disasters.
Do not worry. You will not need your accountant by your side to understand what I've compiled. You will be totally in touch with what I have to offer.
1. Invest in hiring since people are your biggest assets
"If you run a business, put your employees, consumers and then your shareholders at the top." ~ Richard Branson, founder, Virgin Group.
People are forming a business. People turn names into brands. These are the people who turn your ideas into products. Investing in them is perhaps the best financial decision you can ever make.
How can it be a financial decision? Investing in attractive benefits and hiring the cream of your candidates who can get things done and exceed expectations with results, are the most important decisions needed in the early stages of your startup.
As Steve Jobs, former CEO of Apple, said: "It does not make sense to hire smart people and tell them what to do; We are hiring smart people to tell us what to do. You need smart people who can tell you what can be done to make your startup a success. Not employees who say "Yes sir" all the time or those who just work for instructions.
2. Investing in customer loyalty as well as new acquisitions
It takes 10 times more to acquire a new customer than to retain a former customer. We are in 2017 and customer loyalty is the biggest strategic advantage. Look at Apple, Amazon, Starbucks, Nike and other favorite brands. They depend on the strength of the loyalty of their customers.
Many first-generation entrepreneurs make the fatal mistake of believing that they can expand their customer base even if they lose their first customers. Remember, your first client is like your first love. That's who he or she paid for your product while the world did not even know your brand. So it pays to keep this customer happy and come back for more.
With investments to increase your acquisitions of new clients, plan customer loyalty programs, reward points and other tactics to satisfy your first customers. Their word-of-mouth advertising can do a lot to attract more customers. BrightLocal's survey results affirm the power of personal recommendations and word-of-mouth advertising.
3. When it comes to fixed expenses, keep them as low as possible
Costs such as rent, wages, interest on debt, etc. are fixed. You will incur them and must pay them without fail in a timely manner. Now you can not run a business without fixed costs. And taking and maintaining working capital loans will also be difficult since your business is just starting.
The best thing to do is keep fixed expenses and loans to a minimum. Also, try to increase and maintain the debtors turnover ratio at the highest possible level. This will give you enough working capital to meet your daily expenses. Low fixed expenses combined with a high debt turnover ratio will ensure a healthy operating cash flow.
4. Marketing should be based on campaign performance
Marketing is essential to building your brand. You need as much advertising as possible in the first days of your launch. But, should that force you to burn money by doing marketing blindly?
Most first – generation entrepreneurs make the mistake of investing in premium paid advertisements on online and offline channels in order to get a first impetus. In addition, 50% of businesses use digital marketing, but they do not have a plan. What they do not understand is that marketing must always be planned proactively and further modified according to the performance of the campaign.
Measure the answer and the main flow of all your campaigns. Keep track of those who fail to achieve the average ROI mark. Check them and focus on the campaigns that generate results. Paying for a marketing that does not keep the promise of producing results now or in the near future makes no sense.
5. Establish Clear Milestones for Investors and Lenders
Your investors and lenders will have very high expectations. It is mandatory to write down and come to a consensus as to what they expect from your company for the next quarter, semester, or financial year.
Set clear milestones in terms of sales volumes, business acquisitions and profits will steer your business. It will allow your finance team to set the right direction for planning and spending financial resources in accordance with regular budgets. If they do not, they may be tempted to sign contracts with suppliers that can either be postponed to a later stage or simply postponed.
This brings us to the conclusion of five major financial decisions that you can take to steer your business in the right direction. As a first-generation entrepreneur, you have to make mistakes in these areas. Financial management books follow the knowledge of the manuals and may not be useful for conveying practical practical knowledge.
That's what motivated me to find these five pearls of financial wisdom for first-generation entrepreneurs. I hope this helps you. Do not hesitate to share your questions.
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