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Boom in number of older entrepreneurs

Older man on laptopIn the last 10 years there has been a huge 140% increase in the number of entrepreneurs aged 65 and older, according to Barclays Business in the UK. In the same period, there was an increase of 63% in the number of businesses owned by those over 55.  Surprisingly younger entrepreneurs lagged significantly behind with only an increase of 23% for the 25 – 34 years population.

Barclays has appointed the founder of a skincare company, Liz Earle, to advise on the ways that banks can better support older entrepreneurs.  In an interview with YourMoney.com she commented

The older generation adds so much value to the workplace in any context – bringing a wealth of experience and industry contacts to the table. I’m not surprised to see so many budding entrepreneurs of my generation, but it’s great to see them taking the plunge in later life, rather than feeling it’s too late.”

She offered ten tips for people starting a business later in life which I have adapted and shared with you here.

  1. Believe in your abilities, skills and experience.  You have a lifetime of experience, skills and knowledge. Understand that you have much to offer and be confident in what you can achieve.
  2. Stay up to date and keep learning.  You must have deep contemporary understanding about the area in which you are working.
  3. Have a clear business strategy. You need to be able to articulate your big idea and how it relates to your business.
  4. Embrace technology.  Without a good understanding of what technology can do for your business and some technology skills you really can’t be in business in the 21st Century.
  5. Make your decisions slowly.  Their impact will be felt for a long time.
  6. Prioritise your health.  There is no point in being unable to enjoy the rewards of your work or being the richest person in the cemetery.
  7. Listen to your instincts.  You are probably right and even if you aren’t you will not be able to proceed smoothly if your instincts tell you something isn’t right for you.
  8. Do something that matters to you.  It may not be that you absolutely love the work you are doing.  It may be that the outcome really matters to you, or that the reason you are doing something is enough to motivate you.  Some lucky people can create a business based on something that they are passionate about. Most others get their motivation through the purpose or the outcome of their business activities and that is enough.
  9. Family comes first.  The people you love, the people who care about you, should always be a top priority. Don’t let your goals drive a wedge between you and your family.
  10. Don’t be too proud to seek help.  Look to trusted business mentors, people in your network and family members to give you some support when you need it.  Get assistance to do the jobs that you don’t enjoy doing or find difficult.

(Adapted from ‘Huge growth in older entrepreneurs: how you can join them’ by John Fitzsimons published in  Yourmoney.com 21/08/2017)

Baby Boomers and Seniors in the Digital Era

Baby Boomers and Seniors in the Digital Era

Explore more infographics like this one on the web’s largest information design community – Visually.

When is a good time to start a new business for baby boomers

If you are thinking about starting a new business, it is best that you do it before you officially retire. There is a couple of benefits of doing so which I shall cover below.

Easier to get sources of funding

When you hold down a job, it is easier to secure financing for your new business. Whether is it a business loan or going to direct lenders for payday loans, you will get approval if you supply the documentations needed when you have a job. When you are retired, it is much tougher to secure any kind of financing, especially from banks.

Easier to get business contacts for your new business

When you are still active in the job market, you will meet more people relative to when you are officially retired. You can take this chance to do some networking for your new business. Talk to people and see who are potential sales leads or business partners. It is difficult to get a meeting when you are not on a official business so take the opportunity when you still have a job to secure as many meetings as you can.

Maintains cash flow

A new business carries a lot of uncertainties. Certain assumption you hold might not be true, which can derail your business. As a result, if you new business doesn't generate cash straight away, and you are burning away your hard earned savings, it can pretty stressful if you don't have your job as another income source. Doing a new business is already a stressful event and you want to avoid adding to it by having cash flow issues as well.

The downside of holding down a job when starting a new business is the additional hours you need to put it. However, I think the benefits outweighs the cost of doing so.

 

5 ways to promote your startup

It’s never easy to start a small business, but now may just be the perfect time. The economy is still in recession and hiring has slowed to a crawl. So if you are underemployed or willing to take a leap with a bit of an emergency fund behind you, you’ve got nothing to lose. After all, those pension plans we all thought were guaranteed after decades of working for the same company clearly aren’t worth what they once were. There’s no true reward for longevity in the corporate world. Better to go out and realize your dream! So you’ve got the idea, and the willingness to cultivate it. How do you start to develop a base of customers? The best, most inexpensive options for a small business are all through the internet. Here are five great ways you can promote your startup online right now.

If your startup is a commercial or retail business with a storefront, you’ve got to get up on the business listing sites. It takes quite a bit of effort and no small amount of money to show up at the top of those search engines when people type in keywords. But it is easy to get yourself up on all of the local and regional listing sites. That way if someone searches for a product or service by location, your startup will pop up as an option. Check out Yahoo Local, Windows Live Local, Yellow Pages and Google Local for a start.

Another great inexpensive option is the well-worded and timed press release. You don’t have to be a PR professional to get this right, but it is a good idea to have one review your work if you can. Basically, you want to announce your new venture in an exciting way that clearly shows your target audience and reveals a purpose that will be meaningful to people. It should be a page or less, and include a compelling quote by the senior members. Make sure all of your website and contact information are there as well. Then blast it out to all of the business owners you know, the bloggers and news sites within your niche and even the PR wires if you have access. As long as you catch people on the right day they will repost it, and you’ll receive the promotional visibility completely for free.

Next, get yourself up and running on the social media sites. Today’s internet is all about personal interaction. People get their news from each other these days, not from television networks or newspapers, and recommendations from tastemakers, friends and associates will go much further than any paid advertising. Upon the launch of your business you should have a website in place, but all should also be connected to Facebook, Twitter, LinkedIn and any of the other networks that make sense. You can promote everything you are up to through these various sites, and begin locating and contacting an expanding core audience.

Now that the network is set up, you’ve got to fill it with interesting content. That means developing a ‘news’ page on your website, or a fully functioning blog. Consider what it is that made you want to start your own business in the first place. What do you do better than anyone else? Or how does the knowledge you’ve accumulated over the years give value to people? If you can establish yourself as an expert and deliver that expertise in a blog on a daily basis you will gain a following. And that will translate into business for your new company.

Finally, consider network marketing opportunities. This doesn’t mean you have to set up an affiliate program or anything, and you’re probably not ready for that step. But it never hurts to connect with other small businesses for cross-promotion. Perhaps you can praise the company that made your store signs, and in return they give your business a shout out. Maybe you can provide a service to another company in return for inclusion in a newsletter or an advertisement. Keep your eyes open for opportunities, and you’ll find small business owners more than willing to work for the common good.

 

Start a new business or buy an existing one

It has always been clear that entrepreneurism is the surest path towards financial freedom. But in 2012 it may also be the only sure bet on the table. The costs of living continue to rise, while employees’ paychecks stagnate or even shrink. If you are lucky enough to have a significant amount of capital on hand, because you already run a successful business, you’ve invested wisely, you’ve come into an inheritance or because you’ve worked long and hard for several decades, you’d be wise to get into the business world. But should you start your own business or purchase an existing one? There are pros and cons to each, so consider the question from all angles before making your choice.

First of all, there is the issue of risk. The majority of small businesses won’t last through their first five years, regardless of how strong the initial idea. Venture capital companies spend months researching businesses to invest in, and they still choose companies that fail around 20% of the time. When you start a business you have no idea if your great idea will translate into consistent customer interaction, or if a bigger competitor will simply blow you out of the water. When you buy a company that is already established, you know they have customers, a strong reputation and a workable bottom line. Instead of starting from scratch you only have to improve what is already in place. At first glance, that seems much preferable.

The way value is created or dispersed is also very different in each case. When you start your own business, you are responsible for creating all the value. Where nothing existed now there is something, and every good choice you make along the way increases the financial value of the company. You get out of it what you put in, in a fairly organic development. When you buy out an existing company you are paying for value that has already been created. That means you end up having to pony up financially for all of the sweat equity that went into making the company what it is. You may end up having to pay more for the company than it is worth in reality, just to placate the previous owners. And then you won’t have the money on hand to improve upon the company.

When you buy an existing company, you could also face taking on preexisting problems you weren’t prepared for. Your lawyer and accountant will of course look over everything top to bottom, but issues can still slip through the cracks that limit your ability to make money off of the purchase in the future. When you start the business yourself there are no such surprises. Of course, you may be limited by problems you created yourself, and will suffer the consequences if you can’t turn things around. But you’ll have the benefit of knowing the business inside and out, and less surprises means less headaches.

Finally, you’ll have to think about the rewards of a purchase versus the rewards of starting from scratch. Financially you’ll begin to make money right away if you buy out a company, as it is already well established and probably turning a profit. Startups could take years to become profitable, and in fact could lose money at first. Starting from scratch requires vision and patience, while buying a company requires nothing but a savvy Tampa business broker and a large chunk of liquid capital. One choice isn’t necessarily better than the other, but your temperament could be the deciding factor between the two.

 

Financing options for boomers who want to start a business after 40

Starting a business after 40 can be a good way to generate after retirement income. All businesses however require financing some form of financing. Depending on what kind of businesses you want to start, there are a number of options that one can consider.

Self financing

This is the option chosen by me. I decided to start this blog as way to generate income. My yearly expense was USD10 for a domain and USD50-70 for hosting. I also paid USD129 for a professional theme and less than USD50 for a customised logo. Total cost came up to less than USD500 for starting a blog business which is why I can go for the self financing route. Currently this site generates around USD500 per month and can be considered a good return on my investment.

However not all online businesses are as capital efficient as a blog. ECommerce stores for example require you to stock up inventory. That will cost extra and that is when you might want to consider other financing options.

Raising money from friends and family

If the business financing goes beyond what you can self finance, you can considering raising money from your close family or friends. Collectively, they can typically offer a loan of up to USD50,000. However, asking money from family and friends is never easy.  If there is something you feel uneasy about, then the next financing option might be suitable for you.

Getting a personal loan

The next option is to get a personal loan. This is for businesses that require capital of less than USD100,000. This financing option is good for physical stores or online businesses that are more capital intensive than a blog. Usually, banks will require the lender to be evidence of a regular salary or an asset pledge or both in some cases.  Currently, there are even small business loans for folks who are entrepreneurial in spirit. This is an alternative to a personal loan that you can consider.

Raising money from investors

If you are have a bigger ambition, then it is possible to raise money from venture capitalists or angel investors. This investment group is looking to finance business ideas that are scalable and is able to address a big market. If you business idea requires that kind of investment then this is the group you should be talking to. However, getting equity investments is never easy. You might need to delicate at least 6 months to prepare for the kind of due diligence work that these investors require.

Getting money from customers

This is a more radical idea but one that is becoming more common. If you have a business that addresses a pain in the market, there will be customers who might want to pay you upfront so that they get priority in terms of enjoying your solution. This requires you to get out there and talk to potential customers as much as you can. Find out what is really their pain points and create a mock up of your solution. Then present the mock up to your customers again and see if this is something they are looking out. If you get this right, there will be people dying to give you their money first so that they can get their hands on the solution as fast as possible.

Using crowd funding

A more recent financing option is crowd funding. On websites such as Kickstarter, you can list your project or business ideas and explain why the crowd should fund you. These type of funding is more suited for technology or innovative projects that carry a lot of risk.

 Hope this is useful for you to start a business and generate some after retirement income.

5 things to know before starting your own business

Finally making the decision to start your very own business is exciting, intimidating, and invigorating, all at once. It can be one of the most daring things we choose to do in our lives, and this is because of the considerable amount of risk that can be involved in something like getting ready to start your own company and start being responsible for making your own living. As such, there are plenty of things you should make sure you spend some a good amount of time considering before you really get to throwing your money and free time into starting up your own business.

1. Consider Your Expertise. This one seems pretty obvious, but you might be surprised how many overly-ambitious would-be entrepreneurs toss themselves headlong into a venture that they’re not even in the least bit prepared for. Perhaps the restaurant industry is a good candidate for the place where this happens the most.

2. Consider Your Budget. It costs a lot of money to operate a business, and for a lot of reasons. You’ll need a huge amount of capital just to get things started, and then you’ve got purchasing to think about, you’ve got supplies and employees, and you’ve got all sorts of other overhead like building rent and utilities. You should prepare a very thorough budget so you can know what to expect of your new business and can anticipate what it’ll take to handle it.

3. Consider the Market. It’s great that you’ve got a passion into which you’re about to invest yourself, and having a budget is just the icing on that cake of opportunity — but there’s still a very important piece that needs to come into play before you’re ready to even think about starting a business, and that’s the market. Is anybody going to be wanting to buy what you’re selling? Some of the best things to consider are whether or not there’s an established demand or use for whatever it is you’re going to trade in, and whether or not a good amount of competition seem to have noticed this, as well. If your area doesn’t seem like it’d be hospitable to your idea, maybe think about trying something else.

4. Consider Your Savings. Remember that capital we talked about a couple of points ago? That’s an incredibly important part of getting a business started. Whether you’re insanely cash-rich or take out a business loan (it’s more than likely you’ll be doing the latter), your savings are still important. They’re important if you’re cash-rich because you’ve got to make sure you don’t waste your savings on an idea that won’t pan out, and they’re important if you’re taking out a loan because banks think highly of how much money you’re keeping in them when they’re deciding whether or not to lend you more of that money.

5. Consider Your Customer. Think about the people to whom you’ll be selling. Think about those to whom you’ll most likely sell — and think about those to whom you would ideally sell. When your business starts up, nobody’s going to care about it unless you’re some prominent member of your community, or are fresh on the heels of some type of very popular success. In most cases, half the work of starting a business is actually getting people to realize it’s there. The best thing is that this can now be done for free. You can reach everyone from professional employer organizations to the average consumer on a very limited budget these days — all you really need is a laptop and some creativity. Building a successful new business has literally never been easier!

 

Tough times for mining companies ahead

As Dickens may have said, “It was the best of times, it was the worst of times,” and the current economic climate provides nothing short of a thrill a minute. Many businesses are trying to adapt their strategy to the current times, and new solutions like serviced office locations, available via http://www.regus.com.au/products/offices/serviced-offices.aspx/, are emerging throughout the country. Aside from location, the expenses/venue balance is coming to the forefront increasingly of late. At the same time one of the world’s biggest mining corporations announced the need to cut back and reduce its expenditure, other companies have been able to ride the wave of uncertainty and flourish under, what are largely considered to be, very trying financial circumstances. The business two cities we’re going to be looking at here are Sydney and Brisbane.

Anglo-Australian mining kingpin Rio Tinto PLC has announced its plans to close the Sydney office, in order to cut operational costs as the price of iron ore, a key commodity, plummets. The Sydney office employs 30 people and Rio Tinto has announced that it will continue its operations from serviced offices whenever business brings it back to Sydney.

The news was announced just two weeks after the company communicated that jobs would be lost in Queensland, at its Clermont coal mine. The cut backs were motivated by a decrease in demand for thermal coal which dropped to its lowest rate in two years. Thermal coal is used predominantly to fuel power stations.

Shares in the mining giant are currently trading dangerously close to their lowest in the last three years, as an increase in mining costs and a drop in commodity prices take over. This activity stands in stark contrast to the profits that were generated last year, as the demand from China and Asia as a whole boosted business and productivity. No announcements have made pertaining to the company’s administrative center in Melbourne or any of the regional centres that operate the logistics of the company’s mines that produce diamonds, iron ore, uranium and coal.

While the door shuts for one company, it opens for another and, while some companies are more concerned with cutting back and economising, others are still doing business in premier environments. The Executive Center has opened a new, fully serviced business center in Brisbane, offering only the most exclusive and upmarket services to a discerning clientele.

The Executive Centre operates 47 business centres in 18 cities and is well known for its cutting edge infrastructure and high quality fit outs. The company has entrenched itself firmly in the Australian market over the last decade, and operate four centres in Sydney alone, which cater to the likes of Morgan Stanley, Microsoft, AIG and Cisco.

The new business centre is expected to cater to the whims of multinational and local companies and has identified Brisbane as a mature city with a rapidly growing business scene. Brisbane is the headquarters for a number of multinational enterprises and expanding businesses with an acquired business taste and The Executive Centre has the services and facilities to boot.

The expansion of the company into Brisbane is an integral part of its US$18-million expansion project planned for the Asia-Pacific region. The Executive Centre has enjoyed a 261 per cent growth over the course of the last seven years and its opening of premier business facilities have taken place in cities like Chengdu, Mumbai, Singapore and Shenzhen.

The new centre is located in Brisbane’s Golden Triangle district at One One One Eagle Street, a prime location that is close to leisure activities, lifestyle essentials and an impressive transportation network. It will take pride of place among a number of prestigious businesses occupying the high rise building. The facilities include state of the art technology, Herman Miller modular furniture and a full communications system, complete with video conferencing facilities with a sharp focus on quality and attention to discerning detail. The company has also announced further plans to expand in Sydney and Perth.

Work From Home Ideas

Virtual Assistant 

You could start a virtual assistant service using the camera on your computer to be a business professional’s personal planner and set appointments. Be someone’s personal secretary. If you have any particular skills or expertise in a certain area such as Human Recourses you could offer services on that level also. Begin by contacting previous employers, and past coworkers and tell them about your service. Post your ad in papers, Craigslist or job boards.

At Home Call Center

Many companies these days have all of their customer service and support calls routed overseas. A growing number of these companies are now hiring people to work from their homes responding to those calls. A lot of companies require you to have a college education, good problem solving skills and a quiet workspace. Usually you would take care of some sales, taking orders, and solving minor problems for people. This is a great work from home idea for the right person.

Online Auctions

Begin your own online store or personal auction using eBay tutorials to help you get up and running. You need an inexpensive digital camera to take photos of the items you want to sell and a clean, professional looking staging area with a backdrop that will enhance your product and make it easy to distinguish. There are many wholesale companies that you can purchase the latest trending merchandise from to sell on your auction. With a little experience many people enjoy a lucrative income from these types of work from home ideas.

Flea Markets

If you are one of those fortunate people who is artistically inclined and enjoy making craft items, pastry, candy or even cosmetic products you may want to get a table or booth at a craft fair or flea market. Try not to crowd your merchandise together. Merchandise your items by category and separation. It is easier for people to make a simple choice between two or three items than be overwhelmed by too many choices and not be able to decide at all.

Online Affiliate Programs

Out of the majority of work from home ideas, affiliate marketing should be at the top of the list. There are some decent companies out there offering a wide range of different programs, products and methods. Try to avoid the hype by researching the reviews of a specific company before you sign up or give them any money. Internet affiliate marketing can be very personally and financially rewarding. I recommend companies that have a proven track record, a turnkey operation that provides you with your own website with products or income streams ready to go. These kinds of programs do not require you to do any selling but only that you bring traffic to the site. They also should provide concise educational tutorials and mentorship to guide you step by step along the way.

Note: If you are looking for an honest, ethical, and legitimate opportunity to generate a full time income from home, click here.

For free training, free education, and a free income generating website, visit http://www.YourLifeOnCruiseControl.com today.

How to Be Successful As a Freelancer

Freelancing is the best job for many people who want to stay at home, out of the traffic and avoid the strict and stringent rules of the office. Instead of doing what others tell them, they can do their job according to their own rules and regulations. It is also the perfect job for moms who want to earn some extra cash without leaving their little ones.

There are many benefits of going freelance and working from home, which is the reason why there are so many freelancers around which makes it difficult to fight the competition. Many people start off their freelancing career but they find themselves in the middle of nowhere as they can’t make a place for themselves on a platform where there are many other freelancers around.

To get a freelancing job, you usually have to sign up on freelancing websites like Freelancer.com or oDesk.com. These websites are secure and most of the employers there are genuine who really pay you for your work. Also, these websites run on a system of reviews in which both the employer and the freelancer leaves feedback for each other, which is publicly visible. To know if an employer is genuine, you just have to look at his reviews. The same is for freelancers.

If you are a newbie, you will have no reviews for the employers to see whether you are reliable and provide good service or not. This is where you have to do some extra effort to make you stand differently from all the other freelancers out there.

Use the theory of cost leadership: to beat the competition and make the employers notice you, you should offer low rates for your work. Offer a bit lower than the usual standard rate, so the employer notices you.

Show your work and your credentials: send a sample of your work to the employer to show him your skills and your talent. Only your good work can help you make a place for yourself in the industry.

Accept any kind of work you get in the beginning: in the beginning, do any kind of work you get even if it is for very low rates. Consider it an investment of time for your freelancing business and do it to secure some good reviews from the employers. When you secure a place for yourself and people recognize you for your good work, then you can always select the work you want to do.

Be good and work well and hard: all the above tips are only useful when you are good and hardworking yourself, when you are ready to accept the work employers give you, make any amendments to your work if required, be communicative and always there to answer employer’s queries and update them on the status of work and deliver high quality work on time.

This will make you renowned for your good work and in a few months, you will not have to apply for jobs but employers will approach you yourself and will invite you to work on their projects.

Maria Ilyas is a freelance writer and writes high quality of articles. Writing is her career as well as passion.

Baby Boomers: Are You Prepared to Restructure Your Life?

Are you a baby boomer who’s ready to retire, and if so, are you ready for retirement? That’s the big question. If you are like me, a baby boomer in the latter stages getting near retirement age, do you have enough money or investments set aside to carry you through your retirement? Will you be able to continue your current standard of living (or better) based on the money you have saved?

Let’s take a minute to analyze this thinking. For example, let’s say you’re a 50 year old baby boomer earning $50K a year. For whatever reason, our culture has arbitrarily chosen the age of 65 as the ideal age to retire. Based on this, you have fifteen more years before the so called “golden handshake.”

Let’s also assume that you want to live at the same comfort level that you’re currently accustomed to, and you don’t have plans to switch to ramen noodles and prunes as your staple diet.

How long will you live? In today’s age of modern medicine, a healthy adult could definitely make it to ninety or even a hundred years old.

In terms of your retirement and savings, let’s also assume that your company executives pulled an Enron scam, and stole your entire pension fund. You can also assume (rightly so) that social security will be a thing of the past. That leaves 25 years of retirement supported solely by your savings and investments.

CNN has this nifty little retirement calculator that predicts that you will need $850,019 in the bank in order to just maintain your current standard of living. The question is, do you have that much?

Times are a ‘changing as the saying goes, and baby boomers, unfortunately, are bearing the worst of those changes as they approach retirement age. Many of us have worked our whole lives to scrimp and save thinking that there would pensions and social security to supplement our income during retirement. If you face the scary truth, and realize that these additions for retirees may soon be a thing of the past, where does that leave you? The reality is that it leaves us with a potential mess. However, it also leaves us with an opportunity.

No matter what, life is going to continue on no matter what you do. You will not be able to impact the inevitable demise of social security or the loss of your pensions and retirements. You can however, make a difference in your own life. It will all depend on how you respond to these changes, and the possibly tumultuous future.

Instead of sitting back and letting the world steam roll over you, you need to be willing to get up and do something about your future. Quit worrying about things you cannot change. Instead, start doing something about the things that you can control.

Retirement is a dirty word in my book. Old books, old cars and things that no longer work are retired. Are you so old that you can no longer work or be useful? I’m not! I’m still very active and useful.

So, what should you do? Where should you turn? You should start by reinventing yourself. Find something that you are passionate about, good at and that brings you joy and start doing it. The one requirement – make sure you get paid for it. Home-base business opportunities abound. They give you the freedom to do what you want, when you want. And, more importantly, they allow you to write your own paycheck. You just need to find one that is the right fit for you.

As you reach that certain age where others think you are no longer useful, don’t retire (at least don’t call it that). Instead, rejuvenate, reinvent, revitalize, and restructure your life. Take control of your life and do something that keeps you alive and earning. Remember, life goes on (sometimes like a freight train) but know and be secure in the thinking that you will be fine no matter what comes your way.

Don’t wait another minute, get started now!

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2 Tips for Finally Starting that Business

Tip #1: Avoid The Bank and Take Care of the Customer

We see it time and time again. A talented entrepreneur gets a fantastic idea that will change the world – one that is so revolutionary that, given a little funding, will alter human existence as we know it. These are the kind of entrepreneurs that we love. They have passion, intelligence, and drive that push them far beyond most people’s wildest dreams. Because we love these kinds of people so much, we hate to see them fail. When they do, it’s because they let the bank pay for their growth instead of the customer.

If you truly want more profit and cash flow in the bank, the first and dare we say golden rule, is to stop asking for money from banks, family, and the dentist next door. Instead, ask for money from your current or potential customers by providing more and better services or products. Ah ha! This is where you say, “Yeah but how can I sell anything if I don’t have enough money to start or to carry on?” That’s a very good question and the answer is that you have to become creative – you have to “create” your cash flow instead of ask for it.

For example, if you want to start a clothing store for women that will cost $500,000 – the bank probably won’t give you the money. Instead, you should open an Ebay store to sell your clothes, create a strong following in the social media circles, and use the money from those sales to increase your inventory, marketing, and operations as a whole.

This works if you’re an existing business as well. Instead of asking the bank for more money, thereby getting deeper and deeper into debt, ask your customers for more money, but give them something valuable in return. Your customers will fund the growth of your business. If you’re lazy and take the easy way out by asking for another loan, you’ll be a lazy entrepreneur down the road and when disaster strikes (which it will), you will not have a strong customer base helping to fund you through it. You’ll just have to ask for another loan which means more debt and despair.

Tip #2: Know Your Burn Rate and Runway

Imagine sitting by a barrel that has a fire burning inside of it. Next to you, you’ve brought a large wheelbarrow full of cash. In fact, that cash represents everything you’ve accumulated up to this point in your life. It may be $10,000 or it may by a million dollars. However much is in your wheelbarrow, image taking huge handfuls and duping it into the fire. That doesn’t sound like much fun to us, but it happens every day in almost every business and here’s why. Many business owners don’t know what their “burn rate” is.

Definition: Your burn rate is a measure of how much money you toss into the fire (your business) before your business starts generating a positive cash flow. Essentially, we’re measuring your negative cash flow. We know, it sounds morbid. An investor, lender, and you yourself should all ask your accountant what the burn rate for the business is if more money is to be put in. Your accountant may say $50,000. In essence, that means that you burn $50,000 a month trying to get to profitability.

Another term to understand is “runway”. It is a measure of how long you can burn money for before you go broke. Once the runway ends, you better have your plane in the air or else we’re going to need to call the paramedics. If you have $200,000 to start your business and your burn rate is $50,000, then it stands to reason that your “runway” is four months ($200,000 / $50,000 = 4 months). As a business owner, if you’re going to generate more cash and increase profits in your company, you’ll want to extend your runway as long as possible.

Small businesses need to understand the difference between profitability and cash flow. The problem here is that most accountants make it so darn hard to figure out for the entrepreneur. If you have a good accountant, sit down with him or her and have them walk your through it.

As an outsourced accounting service, we see so many people searching for more debt instead of applying the principles above. If you start your business, make sure to apply the above principles to come out on the right foot.