Talk to today’s entrepreneurs, and there is a good chance that you’ll hear more than a few harrowing tales of stress and near-total financial ruin. The first couple of years of a startup’s lifecycle are the most tumultuous, and it’s common for a new entrepreneur to end up going through their entire life savings. In fact, five out of ten new businesses fail within the first five years, according to statistics, and it’s often more common for businesses to fail within the first year.
The fact is that the first few years of being an entrepreneur will be incredibly stressful. However, there are a few things that can help you reduce the overall level of financial stress that you experience. Here are some things to remember.
- Be Realistic – Set up a real-life budget including personal living expenses and your business expenses. Then, try to save more money that that – at least 15%, but more if possible. Giving yourself breathing room is important, and that starts by being very realistic about your expenses.
- Evaluate – Always take the time to evaluate what is working and what isn’t. See where money is being spent that isn’t netting a return, and listen to the marketplace to adjust your strategies. Be ready to change plans when you see issues.
- Set Priorities – Knowing where your cash flow’s priorities are will help you make sure that you get the most value. Spending too much time, energy, and money on minor things can drain a bank account. Instead, focus on things that bring in big revenue and increase cash flow instead of on things like trying to choose just the right color for the font on your website. You can change the little things later, but for now your priorities should be elsewhere.
- Know Your Exit Plan – Simply put, you should always have a way out. Knowing your exit strategy, how to exit if it’s required, and understanding how to go about recouping losses when possible will help give you a bit of a parachute that can reduce stress.