Worrying about money will stop you from moving forward.
These past five days my company took in a revenue of $12,000. Mind it, this is revenue, not profit, but it is still a good amount of money considering my overhead and expenses are low. However, despite this, I have big cash flow problems right now. Although I have taken orders for 12k of product this week, it is not paid for until it is delivered in April and May. Therefore, I have to manufacture the products I take orders for and not get paid for them until I deliver. I hate CASH FLOW!
Ok, so that was just to illustrate the money problems that every young company has. However, although I worry about it, I am finding ways to make it alright. Furthermore, this illustration leads to my main point of this post, and that is that worrying about money stifles ideas.
The number one reason that an idea never becomes a business is the worry that you don’t have enough, nor will be able to get enough, money to launch a business.
Therefore, most people have an idea and that’s all they will ever have. For the most part an idea is not enough to secure funding for a venture, however, once you develop your idea and support it with market research and a business plan the money will most likely follow.
So, never worry about how to get things done when you are first developing your idea. Money and resources will come together once you have set your goals and begun to work at them. Worrying about not having money before you even develop your idea will only keep you from moving forward.
How have you gotten over the worry of money? OR are you at a stage in your idea development that money is your number one worry? Let’s talk about it in the comment section, shall we?
{ 10 comments… read them below or add one }
Hey Brian,
Is that the way it typically works? You don’t get paid anything until the order is delivered? And what about with the supplier/manufacturer? Do you pay them everything up front or do you pay something like half up front and then the remaining half once you receive the product? Thanks a lot.
-Adam
Adam,
Yep, that is pretty standard practice — that I don’t get anything until either right before or right after the order is delivered. It varies by customer, and you always want to try to get the money as early as possible, but you usually won’t get it too long before delivery, and in many cases larger companies will not pay you until 30 days after delivery (net30). I pay manufacturers about 30% up front and then the balance right before it is shipped. I have been trying to get better terms with my manufacturers, but it is quite difficult to get net30 or net60 from them. Let me know if you have any other questions.
Cheers,
Brian
I’m right now in the starting process of my company. I know pretty much all the cost for tools, fees, material that I will need for product development and the first few products(My customes will pay cash, I don’t have any cashflow delays). I don’t know what it will cost me to promote my product, I don’t know how set up an emergency fund for any unexpected interruptions (do you have one brian?). But what I know is that, if I can proof some taction, my parents will support me a little bit. Anyway I don’t worry about money, I only worry about not making progress or taking too much time to reach my “milestones”. What I learned just a few days ago: Once you are in the entrepreneur-mindset nothing can stop you. Since that shift of mind ideas are flowing into my mind constantly. I can’t help it. And based on that, I believe that when I encounter a lack of financial backup I will find a way. I also think that if you need the 500 bucks for an ad-campaign or product pictures for your onlineshop you will do anything (even cleaning toilets) for the money to get it done. Once you love your product and company you would die for it. And that “love” will push you.
Right on Jens. I know it is corny, but I too am a firm believer that if you have the love and passion for your product and company you can always find a way. I’m happy to hear you don’t worry about money and that your main concern is not making progress. To answer your question, I don’t have an emergency fund, I reinvest most of the money I make back into the company to help it grow…growth is more important to me than an emergency fund.
Thanks for the comment!!
-Brian
Hey Brian!
In Babson, people say that entrepreneurship is based in 3 main areas. Opportunity, team and resources and I agree with them. You have to know how to control your resources for the best results. But more than that, it’s a consensus that you have to have the passion for what you do, than the money will follow.
Guy Kawasaki also says that. He says that the most important thing you have to keep in mind is how to make meaning, not money. By making meaning you will make your costumers happy then money is a consequence.
Well, from my experience I can’t say much, I’m just starting. But these mind-set really seems correct to me, I totally agree with you that thinking about money all the time will keep you from moving foward.
Congratulations for the post.
Cheers from Brazil!
Millor
Thanks for your responses Brian, you’ve been really helpful and have given me some good insight. I have another question for you…do you have UPC’s/barcodes for all your products? And if so could you explain a little about how that process works and when it’s necessary to get them? Thanks again!!!
-Adam
This is an interesting subject. It’s the number one thing that is stopping me now. I am trying to save money as I go along each month for utilities like web for my site launch but I am finding it difficult. But again, you always find a way when you want it to work.
@adam – No, thank you for asking questions. Your questions not only are good for this website and add value to the content, but also get me thinking and keep me sharp as I move forward with my businesses. To answer your question: No, I don’t use barcodes for my products. Yes, I should be, but I just haven’t done it yet. Most of the stores I sell to put their own UPC codes on… I do know that you can purchase a machine that generates and prints unique codes for each product and the UPC system keeps record of everything that is sold…so yes, I should be using UPC codes as I would be able to better track the sale of my products, the inventory, and other important stats….I’m thinking this will come into effect sometime this year.
@aulelia — thanks for the comment. You can do it..you’ll find a way. I just checked out all your blogs and you seem like you have the wheels rolling already on those projects anyways. Let me know how things go!
@Millor – Thanks for your insights!
Hey Brian,
Thanks for the response on the YE forum. You have written some great stuff over here.
The problem of cashflows is one that I have dealt with many times. Mismanagement of funds is one of the leading causes as to why many startups have to fold. I wrote an entry some time back on some of the tips I use to manage cash flow, maybe it would be of interest to you and your readers. http://www.usmansheikh.com/strategy/5-tips-for-better-cash-flows
Best of luck with you ventures. Please feel free to get in touch with me. I enjoy talking strategy and bouncing ideas of other entrepreneurs.
Regards
Usman Sheikh
http://www.usmansheikh.com
http://www.twitter.com/usmansheikh
Usman,
Glad to see you found your way here! Thanks for the article. Hope to see you around and back here!
Cheers,
Brian