Be frugal when starting a business
Conserving cash is one of the most beneficial business acumen skills.
“You must spend money to make money.” “Cash is king.” “Money is power because money talks.” We have heard these phrases hundreds of times in various situations. You have probably said something like one of them yourself. When starting a business, however, eliminate all the proverbs and traditional sayings because in the end, preserving cash is what is important.
Surviving in business is a difficult undertaking. All it really comes down to is having more cash at the end of the day than you had at the beginning. However, in the start-up phase of any new business, you will have more cash leaving each day than coming back in. You have to produce prototypes, redesign workflows, obtain licenses, purchase marketing materials and hire lawyers. Starting a business is expensive.
Another common saying is “You have more time than money.” Remember this axiom because in a start-up phase, your cash goal should be to preserve your cash. Michigan State University Extension educators share this belief. The following is an example to explain why this tactic is so important. A business owner is ready to open their single-product ingredient company. After speaking with a lawyer, they spent $200 to register their business with an assumed name. The big mistake here is that if the business owner would have done their research, they would have known that they could have saved money by purchasing a single-page form and registering their own business. They could have completed the form in a few minutes for only $25.
Then the business owner decided to hire a graphic designer to create their business card. The expenditure ended up costing them over $500. The business owner could have printed 500 beautifully designed 4-color business cards by purchasing through an online printer for only $10 plus shipping.
It is your duty as an entrepreneur to create sales. Your focus should not be how to spend, but how to generate revenue. Revenue is should be paramount—not capital, not investments, not loans but actual revenue from the sale of your products.
When it comes to business start-ups, it is best to be frugal and do tasks that you can do without having to pay. Remember that you “have more time than money,” and that “a fool and his money are soon parted.”