The first rule of entrepreneurship is to never mix business expenditures with personal expenditures. Sometimes entrepreneurs unknowingly or knowingly go too far in the opposite direction. They invest too much time running things in their enterprises, working to improve their businesses, and reallocating profits back into the business. This often makes them forget to pay attention to their personal economic standing.
Some entrepreneurs are very gifted when it comes to innovations in a business. Having the proper knowledge on financial management is always a plus for any entrepreneur. However, when it comes to managing personal expenses, they get sloppy or lazy and end up spending too much and neglect to save enough money for retirement.
Strategic investment decisions include things like pricing models, staffing, capital investments, and other financial decisions.
Strategic Financial Decisions to Help You Make Better Decisions
Intelligent entrepreneurs seek accurate information to be in a better position to make critical decisions. Conducting market research is always an excellent way to move forward with the investment. It’s not advisable to proceed with investing with inaccurate or incomplete financial data.
Create an Emergency Fund
According to financial wizards, you should always have an emergency fund for your living expenses. If you happen to be an entrepreneur, the emergency fund should be even bigger. This will cushion you in case your enterprise goes through a rough patch or takes a downturn. How long would your savings/emergency fund last you if one of your major clients decides to leave? Make a rule to never risk your emergency fund in the stock market, or lock it in long-term accounts. The goal here is to have the cash ready at all times in case of an emergency.
Review Your Strategic Pricing Decisions
Most entrepreneurs set their pricing range at the initial stages of their business venture. Due to the urgency to make a profit while new, they usually set the prices at low levels. As time passes, the business may increase some charges here and there. However, the owner rarely takes a moment to fundamentally analyze his/her pricing model.
What do you consider when coming up with your pricing? Do you price based on competition and production costs? Successful businesses often incorporate both aspects in decision-making.
Manage Your Hiring Intelligently and Identify Optimal Staffing Level
Find and implement a process that enables you to hire additional operational and production staff when the need arises. You need to have indicators that can alert you when your business requires to staff down or staff up.
Reflect on the available investment options in technology, training, and the systems you can adopt to increase production with fewer employees. Most successful business owners produce more than their competitors, with only a fraction more on production cost in comparison. Always research ways to improve or train your team to allow you to achieve more production with less.
Consider Investing in a DST 1031 Property
DST meaning: Delaware Statutory Trust; it’s a body that takes hold of a title deed to real estate investment. Some aspects of it are similar to limited liability companies but vary in very small details.
The minimum investment for A DST 1031 Property is $100,000, which allows an investor to have multiple different proceeds among numerous properties.
If you are already familiar with the real estate market and are looking for a way to up your investments, this could be a great option for you, especially if you already have larger sums of money to spend on investments.
Don’t Try Timing the Market
One mistake that’s often made by rookie investors is trying to time the demand, which is usually followed by catastrophic failure. According to most experts in stock trading, there’s no definite way that you can accurately time the market every time. Additionally, while trying to time the market, people invest and most often end up with no gains and their money gone.
Identify the Difference Between Strategic Expenses and Nonstrategic
Strategic costs are items that have a direct positive effect when it comes to selling or production. These may include things like marketing advertisements that are effective, results-oriented salespeople, technology advancements that enhance operations, and more. Non-strategic investments are essentially the opposite.
Making intelligent and big-picture financial decisions is a very important aspect of managing your cash flow. Sometimes, entrepreneurs get so caught up in the daily operations of their companies that they end up sidelining these crucial decisions. Ironically, they are overwhelmed with $100 or $1,000 complications and decisions, while some decisions like the ones mentioned could potentially have a 6 – 7 figure effect on their enterprise.