-Kamilah Campbell
The saying, “Experience is the best teacher,” is true, but doesn’t always have to be, especially when you decide to take the chance on being an entrepreneur. There are many things I wish I did when I started my metalsmith handmade jewelry business, but by far these five are the most crucial ones:
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Separate business expenses from personal expenses.
This tip is one I did from day one, but over the years I’ve found this is something that a lot of entrepreneurs, when they’re starting out in their early stages, do not do.
Commingling of expenses is very much frowned upon by the IRS. Most importantly, you want to make sure you are separating personal and business expenses to truly know how much you are spending in the business. If you are commingling your expenses, it’s very time-consuming to separate at the end of the month, much less the end of the year. If you are just starting out and can’t afford the minimum balance for a business checking account, open a separate personal checking account, but only use it for business transactions. As your business grows and your sales increase, you can switch to a business account with a required minimum to sustain the account.
Tracking expenses is very crucial in any stage of business, because you need to know how much you’re spending and how much income the business is generating.
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Price for profit.
Make sure that your prices reflect more than just what it costs to produce your items.
Proper pricing is crucial to the growth of any business. The ability to grow your business depends heavily on profit margins. Underpricing is common in the beginning stages, because most businesses are eager for sales, so low pricing is an attractive and easy way to accomplish that. However, in the long run, underpricing harms you more than it helps.
Your pricing model should reflect the cost of goods, marketing, labor, overhead, and packaging, just to name a few. You want to make sure that you’re actually making a profit, so that you can reinvest back into the business, because ultimately, that’s what’s going to help you grow.
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Have a plan for your profit.
Many times whenever we make a sale or have great sales months, we’re not directing our profits where they should go. There needs to be a plan of how this income will be distributed by month. Some of the things you may want to consider are business savings, working capital and paying yourself. Ultimately, it’s about creating healthy financial habits that will pay off in the future.
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Don’t become too intrigued with “Quit Your Day Job” stories.
I still have a full-time job, even though my business is successful. We all love a good story of inspiration from time to time, but be careful not to compare yourselves to others, because everyone’s on a different timetable. Our personal finances are all very different, and so are our family dynamics. Use those “Quit Your Day Job” stories as a form of inspiration, and that’s it.
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Have a vision or idea of your ultimate goal.
When most entrepreneurs first start a business, they start it with intentions of growing. If you’re starting it as a hobby and want it to continue as such, there’s nothing wrong with that.
However, if you have a bigger intention, then having a vision for your business, whether it’s a 5-year vision or a 10-year vision, is important. That vision is what will keep you going throughout the times when it’s not going so well in your business, because you’re clear about what you are actually looking to attain. That vision will be your motivation to continue.
Starting a business can be a daunting task, but with the right mindset and tools, it can also be incredibly rewarding. By following these five tips, you’ll be setting yourself up for success and avoiding some of the most common pitfalls that new entrepreneurs face. Good luck on your journey!
Kamilah Campbell is the founder of The Pink Locket, a successful modern minimalist line of handmade jewelry. The Pink Locket’s jewelry has been featured in Essence, BuzzFeed, Huffington Post,The Grio, Hallmark Channel, Lifetime TV, Netflix and many other outlets.
