New home business owners will often work very hard and not realize that there are problems that need addressing earlier rather than later. The excitement of starting a business can get an owner caught up so much that their good planning is not always followed as stringently as they planned.
A very easy situation that can arise when you are a home business owner is to bury your head and forget about some of the issues that you need to be addressing to keep your business running smoothly and profitably.
When you don’t have to be answerable to anyone else and you can bury yourself in your work, turn the music on or whatever you do, it gives you the opportunity to live in a ‘fools world.’ When the kids or hubby or whoever you live with, comes home you can be all chirpy and act as if nothing is wrong, which is great on the face of it, but the problems do need addressing at some time.
In my experience I find that the sooner you address problems the better you feel and the sooner you can get on with your business in a positive fashion.
Two very important issues that often crop up for home business owners are:
- lack of sales (step out and achieve – an inspirational video to watch)
I have addressed these two issues in a 2 part blog. This blog is about FINANCE, tomorrow I will address ‘lack of sales’.
Home Business Finance Communication
Very few businesses ever run smoothly from a financial point of view, especially at the beginning when you are going through a learning curve, usually in more ways than one. You are learning to run a new business, you may be having to settle a business in at home and you need to find new clients. You might overspend on various items, or suffer from any of a multitude of things that could go wrong or not necessarily wrong, but cost you more than expected.
Let me tell you, and I know from experience, it is not nice if you are having financial problems. It does happen and it is a fact of life for most small business owners at some stage. The very best thing you can do is not hide and hope it will go away on its own, because it won’t.
Face the problem and get in touch with whoever it is that you are behind in payment to. Before you do that however, sit down and work out how you are going to pay off your debt.
Other business owners and banks appreciate that things can get sticky now and then but if they do not hear from you then they assume that you are not going to make any effort to pay them and that is when they will get nasty, and you can’t blame them.
Here is how to handle the debt situation:
- you must keep in touch with your creditor at least once a month if not more
- you must contact them once you are over 30-60 days so they recognize that you are a responsible business owner – if you go out past that they will think you don’t care about running up a debt
- before you ring the first time work out how you will pay them
- very important – don’t over commit your payment amount and starve your business in other areas as you will still need money to operate
- very important – you must pay what you said and when you said (if you can’t pay for any reason, then ring before the due date!)
- get the name of the person you speak to and a reference number if they use that system
Here is how to handle your business situation:
- immediately pull back on your overheads when you see a problem arising
- pull back on stock levels
- if you buy stock, don’t buy any for a month, but if you have to only buy what you can pay cash for
- if you have outstanding orders, cancel them if you cannot pay for them
- drop some of your less profitable lines
- try to borrow a little from family and pay your debtors, then pay your family back
- NOW start selling like crazy to anyone and everyone you can think of (I cover this in part 2)
The thing is, if you burn off your supplier then you are risking your business but if you keep in touch you can often keep buying the necessities for cash and pay back the debt. If you don’t keep a good relationship going you are risking your business as a whole.
From the outset I would not suggest you use a credit card for any business purchases until your business has a history of regular profitable income and YOU KNOW you are going to be able to meet any purchases you make.
You can see from the above information why I have written before just how important it is to have a start up budget and a budget for operating the business. These budgets help you be realistic about what you can spend and how to keep your payments being made each month.
Kaye Dennan is an experienced home business owner/online marketer of 7 years with a further 25 years as a small business owner. A recent Kindle ebook is A BOOK FULL OF HOME BUSINESS SUCCESS TIPS. Kaye has started a Home Business ebook series to help home based business owners.
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