Welcome to entrepreneurship!
You have this great idea to start a business. Maybe you’ve built this dream over several years, decades even. Maybe you decided to start a business yesterday. Maybe you approached investors. Maybe you used crowd-sourcing, fund-raising, asked for money from friends and family that believe in you. Maybe you created a business plan and pitched your idea to venture capitalists and secured a loan or found a partner to buy into the business. Regardless, most people take a look at their personal assets, figure out what else they have to invest, and decide, “I’m going to use X number of dollars to start my business.”
No matter how you slice it, you need money to make money. That’s the long and short of it.
Most business owners see this clearly in the beginning but forget this is still true when growing your business. You still need money to make money. In the first three years in business, over 75% of business owners aren’t actively preparing for expenses that come with growth. You need money to hire new employees, expand to a second location, advertise, purchase new equipment, fulfill a large purchase order, etc. And the money isn’t there. Many businesses don’t qualify for funding, can’t raise any more funds, and aren’t earning fast enough to support this sudden increase in expenses. Simply put, you aren’t making money fast enough to take your business to the next level.
At this point, you have two choices: (1) Continue to make money the slow way. Pay for things in cash. Make your money back one sale, one contract, one client at a time. Operating invoice to invoice, year after year. We see businesses doing this for years, decades even. (2) OR you must choose to take deliberate steps to preserve your cash flow and increase your revenues to support sustainable long-term growth.
But how do you do that? How do you get to that next level where you’re ready to expand and have the working capital to do so?
Just like you need money to make money, you need to work smarter, not harder.
Learn More!
Here in the United States, there are two systems in place to help small businesses get ahead. And you should be utilizing them, not ignoring them!
We have the business tax code and the corporate credit system.
First of all, if you’re operating as a sole proprietor and netting anywhere over $40k a year, you’re throwing away money. The IRS taxes sole proprietors at the highest tax rate. Once you incorporate your business, you can put the tax code to work for you and use the business to offset your personal tax liability. Most business owners can reduce their self-employment tax by 50% just by making this one change!
Secondly, the corporate credit system is specifically designed to help take business to the next level. Did you you know that 80% of everything you can touch in Walmart inventory is purchased on credit? Walmart hasn’t paid for the products you’re buying. You purchase a product, and Walmart makes it’s money first, THEN pays that invoice for the product. The point is Walmart makes its money first. Do you make your money first? If you aren’t, you should be.
It’s time for you to make that switch from operating like a rookie to running a smooth, well-oiled machine.
Put the corporate credit system to work to preserve your cash flow and access the resources you need to grow your business and ultimately make more money. Work smarter not harder.
