by EGBI Tech Team | Mar 23, 2017 | Business Tips
By Al Lopez, EGBI Executive Director
Start-ups and small growing businesses face a common problem: how to manage cash flow so that all the expenses get paid on time. By managing your expenses carefully, you can improve your opportunity to grow slowly and surely. Here are a few tips on how to do that:
Tip #1: Create a realistic budget
It’s not just enough to come up with a budget – you also have to come up with a realistic budget. And in order to do that, you need to have a good understanding of all aspects of your business. Take sales, for example. If you know when you are booking key sales, and when these customers are going to pay, you are going to have much more visibility into the overall profitability and the when that profitability will come. If you know that you can expect an amount in revenue a month, then you can start thinking in terms of affordable dollars in expenses.
At a minimum, you should have visibility into the sales for your upcoming three months. Preferably, you should be able to project out 12 months in advance. This is particularly important because every business naturally has ups and downs in sales over the year – such as during the holiday selling season – and those ups and downs need to be planned for.
Tip #2: Develop a solid business plan
Once you have a budget in place, you need to make sure you have a business that supports it or change the one you have to match your new budget expectations. Start to think about what percentage of your profits you will need to invest back into the business. Maybe you have to buy new inventory or maybe you need a new piece of equipment. Or maybe you are planning a new marketing approach to promote your product or service.
A business plan helps you to understand how these costs fit into the bigger picture and keep you from spending on things that aren’t part of your plan. Too many businesses live week to week, month-to-month, or quarter-to-quarter, and are never able to put together a solid business plan for moving forward. Expenses tend to grow with nothing to show for it. A business plan helps to keep you focused, and helps you manage your expenses more wisely.
Tip #3: Plan for unexpected expenses
The business world is full of uncertainty, and that’s why most small business consultants advise companies to have enough cash on hand to handle any unexpected emergencies. In the same way as you might create a “rainy day fund” for your family budget, you’d also want to make sure that you have enough cash to cover adverse market changes or unexpected events for your business.
There are various ways to protect against risk, of course, without simply having to save a bunch of cash. You don’t want to tie up too much cash, because you’ll need that for working capital. But you should have business insurance to protect your inventory. Or, if you operate a food truck business, you might think about ways to limit your downside if anything happens to these valuable assets.
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At some point, all of the cost savings, bootstrapping and careful financial management will really pay off. You’ll have extra funds to handle unexpected emergencies, and you’ll also have plenty of funds to re-invest in the success of your growing small business.
by EGBI Tech Team | Jan 19, 2017 | Business Tips
By Al Lopez, EGBI Executive Director
For small business owners and entrepreneurs, one of the keys to success is staying focused. That may sound obvious, but too often, small business owners get so many new ideas and opportunities early in the life of their business that they lose their original intent or business plan target. With that in mind, here are three ways to stay super-focused during your first 12 months as a new business owner:
TIP #1: Start small and start slow
Yes, everything’s bigger in Texas, but that doesn’t mean your business is going to become a giant overnight. In fact, there is no such thing as an “overnight success” in business. The path to future success is filled with many mini-steps along the way.
One big reason why you want to start small and start slow is because growth requires capital, and that’s something most new business owners don’t have. That’s why you’ll hear about startups “bootstrapping” their way to success, by being very careful about how much cash they are spending before they make their first sales. When you stay focused, you’ll be able to control how much cash you’re spending.
One way to bootstrap your new venture is to consider a co-working environment. Instead of splurging for an expensive 12-month lease, you can often rent a co-working space on a month-to-month basis. Plus, as an added bonus, you get to network with similar types of entrepreneurs in an incubator-like environment.
TIP #2: Put your business plan in writing
One way to stay focused is by putting down your business plan in writing. Most business plans include discussion of topics like: market opportunity, finance and operations and marketing strategy. By carefully thinking about what market niche you are going after, how you are going to fund your ongoing operations and how you plan to reach your target consumer, you will be in a much better position to evaluate new offers and opportunities as they arise.
For example, say you are a Latina entrepreneur who would like to open a nail salon business in downtown Austin. Your business plan would include details about what part of the nail salon market you are trying to reach, some information about pricing, and some details about how you plan to reach women within certain neighborhoods within Austin (e.g. via social media, print ads, billboards). Then, when someone proposes a new idea to you, you will be able to see how it matches up with your own vision for the business.
TIP #3: Create a mission statement
Too often, small business owners come up with a great business concept but don’t have a way of communicating what makes the business special to other people. One way to do that is by crafting a mission statement that you can share with other stakeholders in your business – employees, partners, vendors and investors. The most effective and exciting mission statements are those that explain how you plan to change the world with your new business.
Maybe you’re thinking of opening a store selling clothes for women. Your mission statement might include a description of some under-served market that you are reaching (e.g. “single moms who want fashionable but low-cost clothing for the workplace”), or some description of what makes your product different from every other product (e.g. “all clothes made from 100 percent locally-sourced, natural materials”). Then, when you get a new offer or opportunity, you’ll be able to see how well that opportunity fits in with your unique vision or goal for your company.
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Being a small business owner is challenging enough without being caught up in lots of new ideas too fast. Start small, map out your business plan, and come up with a mission statement. By doing so, you will prepare your new business for future success.
by EGBI Tech Team | Sep 24, 2015 | Business Tips
by Al Lopez, EGBI Executive Director
For many people, owning their own business is a dream that may never become a reality, simply because the concept of becoming an entrepreneur is foreign. There are a thousand reasons why low-income entrepreneurs never start their business, such as no access to start-up capital, unavailable financing due to poor credit, and limited connections to influential people.
While the challenges may seem insurmountable, there are options for low-income entrepreneurs looking to start a small business. Here are just a few challenges you may face and how EGBI’s resources can help you:
- Challenge 1 – Exposure to role models and mentors – the lack of role models and mentors is one of the main reasons why low-income entrepreneurs have difficulty starting small businesses. Successful entrepreneurs have many role models and at least one mentor available to them at all times. To overcome this challenge, you should reach out to other entrepreneurs, attend functions where you can meet others that have started successful businesses, and take advantage of the network of professionals and resources available at EGBI. We enjoy creating mentor/mentee relationships with our clients, so don’t hesitate reaching out to us to schedule a consultation.
- Challenge 2 – Failure to see Entrepreneurship as a career option – because many low-income people do not have the same exposure to entrepreneurs, they often fail to see the benefit of being an entrepreneur. Individuals who have the desire, need to have encouragement. To overcome this challenge, make an effort to meet others with the same desires. The programs available at EGBI will help provide you the encouragement you need to become a successful small business entrepreneur, and allow you to envision this as your career.
- Challenge 3 – Misunderstanding of basic financial literacy – because low-income people have little money, they often lack the basic knowledge in regards to finances. Understanding basic finances, such as balancing a checkbook, understanding credit, and more, will not only help you pay off debt and improve your credit rating, but will give you the ability to raise capital to fund your new business. Learning financial management is a great resource available to you at EGBI through our entrepreneurial training.
- Challenge 4 – Finding access to capital – no matter what type of business you wish to start, it is beneficial to understand and know how to find access to the necessary capital. Since most low-income entrepreneurs have limited resources, such as family, friends, or their own money, they must rely on finding other avenues to fund their start-ups. There is an abundance of resources available today for new entrepreneurs looking to start a business – you just need to know where to look. A good place to start is the upcoming Central Texas Small Business Forum on Oct. 14th.
Becoming an entrepreneur is a dream that many people have, but seldom is that dream made a reality. For many reasons, people will squash their dream, simply because they lack the knowledge to start. However, there are many programs available to help you become a small business owner and start you on the path to success and financial freedom. You simply need to take the first step – contact EGBI today to see how we can help you make your dream a reality!
