When companies are in growth mode, finding the money to fuel that next stage is a top priority—whether through traditional business loans, the right credit options and beyond.
Problem is, once you've got it, it's tempting to spend it. And if you've made it this far in business, you know that everything inevitably costs more than you think, and that precious cash can fly out the door a lot more quickly than it came in. Entrepreneurs are often so busy trying to raise capital, they devote far less time thinking about how to actually spend it when they get it.
So what are some of the best ways to keep spending under control? We asked our expert panel—who have raised their own share of money along the way—to reveal their top money management tips.
Founder and CEO, TerraCycle
“Don't spend it before you have it. It seems simple, but as an entrepreneur, especially in the early stages of a growing business, you want to spend money on resources in order to jump-start the business. Using restraint might be challenging for your staff, but you are forced to be creative and find solutions beyond just spending money. While we can be a little more relaxed now, that mentality has served us well as we've grown."
Co-Founder, Hella Cocktail Co.
“Retain a scrappy, every-penny-counts mentality no matter how big you get. There's unavoidable spending and there's reckless spending. Being on the manufacturing and operational side of our business, I must have an acute knowledge of our accounts payable and I must be ever-cognizant of keeping our costs down. Whether it's working with multiple vendors, constantly looking for better pricing and re-negotiating or avoiding excessive inventory and raw-materials stock, there's a constant push and pull that requires constant management.
“At the end of the day, you want cash on hand to spend on the parts of your business that will help it grow—marketing initiatives, product development and personnel, to name a few. Great companies never lose grasp of what gave them a competitive edge in the beginning, and one of those things, no doubt, was knowing fundamentally how and where to spend money."
Founder and CEO, The Inside and Lemieux et Cie
“I relentlessly watch burn. Also, everything—and I mean everything—is a bit negotiable, especially professional fees. Negotiate and question every line item and charge. It's amazing how much you can save if you have your eye on everything. I imagine my expenses like a large colander. I attempt to block every hole."
Great companies never lose grasp of what gave them a competitive edge in the beginning, and one of those things, no doubt, was knowing fundamentally how and where to spend money.
—Tobin Ludwig, co-founder, Hella Cocktail Co.
Founder and CEO, Shoptiques
“My money-management tips come down to communication and planning. Professionally, make sure you communicate with your team about what you want to accomplish and plan ahead with detailed budget and analysis. Ensure everyone's buy-in before finalizing the plan. With your investors, keep them updated if business changes occur and numbers shift up or down. When fundraising back in the day, I was given a fantastic piece of advice: Always raise more than you think you will need, since things change and there is lots of uncertainty with startups. Personally, communicate with your partner, be honest with yourself and plan ahead."
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