Managing money is an integral part of running a business. It\u2019s something that every entrepreneur or small businessman needs to be great at.<\/p>\n
Knowing where you stand financially gives you the ability<\/strong> <\/em>to forecast, plan and preempt crises.\u00a0And having a buffer to fall back upon, gives you the freedom<\/strong><\/em> to do so.<\/p>\n It is tough to admit this, but someday you will…<\/p>\n Learning No: 9 Learn to save money. Compromise (a little, if not a lot) on your lifestyle. Live within your means.<\/p>\n Once the revenues start flowing in, make sure to put away something for a rainy day.<\/p>\n With the way the global economy is shaping up, no one can predict tomorrow. No one can predict revenue flows. You cannot take business relationships for granted. What\u2019s good today, may be bad tomorrow.<\/p>\n Over the last few years, given the volatility in the market, it is becoming more and more difficult for a small to medium sized business to work on revenue projections. There are too many factors that are variable in today\u2019s scenario.<\/p>\n Very often, work that is assumed to be confirmed, gets canned or shelved, even after receiving job orders.<\/p>\n The options you have are either to accept the revised terms of the contract or to pursue legal action.<\/p>\n In India, taking legal action is usually the very last option for a smaller business. Firstly it shuts all doors with the client (which means no more business from them\u2026 ever) and secondly, it is a long drawn, time consuming and expensive affair.<\/p>\n So, more often than not, you accept the compromise and live to fight another day.<\/p>\n In such situations, your revenue projections and business flow take a serious hit.<\/p>\n If and when you do face a crunch, you should have reserves to fall back upon. It will help you tide over emergency shortfalls in your revenue.<\/p>\n It also has the added benefit of adding to the valuation of your organization, in case you don’t need to use it.<\/p>\n Once your business is up and running, it is easy to fall into the trap of looking at the big picture\u2026 \u201cI have ‘x’ business in the funnel, I should end up making ‘y’ money, let\u2019s spend on upgrading the computer systems, or change the interiors of the office\u201d<\/i><\/p>\n The question you need to ask then is: \u2018If my revenue flow completely<\/em> stopped today, how long will I survive, running this organization, paying salaries of employees, covering the overhead and having something left over for myself?\u2019<\/p>\n The answer to this usually scares the living daylights out of any entrepreneur\u2026 because you realize that there is a huge gap, between perception and reality.<\/p>\n TO BE CONTINUED\u2026<\/p>\n (This is part 7 of a series of blogs on my learnings as an entrepreneur )<\/p>\n photo credit: tokyoform<\/a> via photopin<\/a> cc<\/a><\/p>\n <\/p>\n
\n<\/b>Our parents were right!<\/i><\/b><\/p>\nRead\u00a0Part 8 here<\/a><\/h5>\n
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