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What Financial Lesson Has Shaped Your Fiscal Strategy?

What Financial Lesson Has Shaped Your Fiscal Strategy?

Financial wisdom often comes from experience, including the missteps along the way. We've gathered the hard-earned lessons from CEOs and Founders, distilling their insights into fifteen key financial strategies. From the importance of proactive comparison shopping to the necessity of preparing for economic downturns, these leaders share pivotal advice that has shaped their fiscal approaches.

  • Embrace Proactive Comparison Shopping
  • Negotiate Marketing Expenses
  • Preserve Financial Flexibility
  • Minimize Personal Compensation
  • Conduct Thorough ROI Analysis
  • Diversify Revenue Sources
  • Prioritize Business Insurance
  • Avoid Overexpansion
  • Establish an Emergency Fund
  • Diversify Seasonal Revenue Streams
  • Balance Inventory with Liquidity
  • Focus on Cash Flow Management
  • Utilize Green Bonds for Financing
  • Align Marketing with Operational Capacity
  • Diversify and Prepare for Economic Downturns

Embrace Proactive Comparison Shopping

A financial lesson I learned the hard way was not realizing how easy it is to be proactive about my finances. While many people have an innate talent for comparison shopping and frequently switch companies to get the best deal, I've tended to stay in the cozy rut of sticking with the same companies for years, thinking that switching would be time-consuming and complicated.

How did I break free? Necessity. The onset of the pandemic reduced both my and my husband's incomes, and luckily I started working for a digital media company in the insurance industry that promotes the benefits of comparison shopping for insurance.

So, in looking for ways to trim the family budget, I took the advice of my new employer and comparison-shopped our car and home insurance. I wish I had done it years ago! By switching from our longtime, and frankly lackadaisical, provider to a new one, we saved over $700 a year, and the process was quick and virtually effortless! Emboldened by that success, I then contacted SiriusXM when our annual contract came up for renewal and ended up cutting our bill by 66%!

So I'm now a full-time comparison shopper. I want to kick myself for the thousands of dollars I could've saved and added to our savings or paid directly for big-ticket items instead of relying on credit cards, but better late than never!

Michelle Robbins
Michelle RobbinsLicensed Insurance Agent, USInsuranceAgents.com

Negotiate Marketing Expenses

So I know the hard way that not negotiating on marketing expenses, like paid tools and subscriptions, can cost more than expected. I used to accept the prices as they were, without asking for bulk discounts. That mistake added up quickly. Now, I always make sure to ask for discounts, especially for long-term deals or bulk purchases. This has saved me around 20-30%, which I can use in other parts of the business. It's a small step, but it makes a big difference in managing costs better.

Bhavik Sarkhedi
Bhavik SarkhediFounder & Creative Director, Ohh My Brand

Preserve Financial Flexibility

One of the lessons we learned early in our growth efforts was that preserving financial flexibility is incredibly valuable. The single biggest expense in expanding to new markets is acquiring moving trucks, and our initial strategy was to focus on purchasing them on relatively short-term loans that we could pay off quickly. This was seen as a way to get more cash flow in the medium term and to keep our overall borrowing costs low. After we had to sell off some of our truck fleet to keep the lights on, we learned that longer-term financing and renting are also valuable strategies, even if they cost more in the long run.

Nick Valentino
Nick ValentinoVP of Market Operations, Bellhop

Minimize Personal Compensation

One financial lesson I learned the hard way is this: Pay yourself as little as possible for as long as possible. Early on, I made the mistake of taking more money out of my business than I should have, which left me short on resources when I needed to invest in growth. As a result, the business struggled, and I realized that every dollar taken out was a missed opportunity for reinvestment.

Now, I reinvest almost all of the profits back into the company, and this shift has led to substantial growth. By keeping my personal compensation low, I've been able to fund better marketing, hire key talent, and improve infrastructure—all of which have contributed to long-term success.

Alexander Weber
Alexander WeberFounder, Axlek

Conduct Thorough ROI Analysis

A tough lesson was learning that not all investments yield quick returns, particularly in technology and marketing. We invested heavily in an advanced marketing campaign expecting immediate increases in customer acquisition, only to find that the returns were slower to materialize and less impactful than we anticipated.

This led to a more analytical approach to investment, where every major expenditure now undergoes a thorough ROI analysis and a phased rollout. We've become more patient and strategic, allowing for longer timelines for returns on investment, which has improved our planning and reduced financial stress.

Alari Aho
Alari AhoCEO and Founder, Toggl Inc

Diversify Revenue Sources

The single most important financial lesson I learned the hard way is not putting too many eggs in one basket, which means that one should not be too dependent on one source of revenue. Early in my career, I got overconfident by trusting one big client. When they experienced financial difficulties, it seriously affected my global workforce management business.

That experience taught me the importance of diversification both in the services and client base.

Now, I implement this lesson in my current financial planning by making sure that my company serves diverse clients across various industries and geographies. Such diversification strengthens not only our resilience but also assists in mitigating risks emanating from market volatility. Diversification is more than just a financially enabling strategy; it is a guiding principle for me in helping my clients expand their business futures by building wider markets and sources of income.

Lucas Botzen
Lucas BotzenFounder, Rivermate

Prioritize Business Insurance

Early on, I learned the hard way that business insurance is critical. As a young financial advisor, I made the mistake of skipping business insurance to save costs. When a client dispute arose, the legal fees threatened to bankrupt me. Fortunately, my mentor stepped in and covered the fees, but it was a sobering lesson.

Now, I advise all clients to make business insurance a top priority. At my current companies, we invest in comprehensive coverage including professional liability, cyber security, and business continuity insurance. Though pricey, this protects our team and clients should anything go awry.

For example, a data breach at one of our partner companies exposed some client information. Our cyber liability policy allowed us to provide monitoring and identity theft protection for those affected at no cost. Though an expensive claim, it upheld our commitment to security and client service. Our team could also continue operations without interruption.

Business insurance is unglamorous but essential. No company is immune to risks, so plan ahead and avoid learning lessons the hard way. Build coverage into your costs and view insurance as an investment in stability. Your team and clients will thank you if the worst occurs.

Ben Klesinger
Ben KlesingerCo-Founder & CEO, Reliant Insurance Group

Avoid Overexpansion

Expanding too quickly during busy times is a mistake a lot of entrepreneurs make, myself included. It's easy to take the results of a single quarter and extrapolate them to an entire year or more. And you certainly don't want to be turning down work, so you bring on more people and invest in more space than you really need. It's a delicate balance, but one lesson I learned from those days is that roles are more flexible than you might think.

Sure, having a dedicated social media manager, for example, sounds great, until you realize they're only working one to two hours each day. That's often a responsibility you can hand over to the office manager or an intern. For small and mid-sized businesses, titles like this can and should have dual responsibilities and a workload that varies from day to day.

Linn Atiyeh
Linn AtiyehCEO, Bemana

Establish an Emergency Fund

One financial lesson I learned the hard way was not having an emergency fund in place. A few years ago, an unexpected medical expense hit me hard, and I did not have the resources to meet it. I had to borrow money, which left me in a financial bind for months. Since then, I've made it a top priority to accumulate an emergency fund that can cover at least three to six months of expenses. I contribute to it on a regular basis, understanding that having this cushion provides peace of mind. This lesson transformed my financial strategy, making savings a non-negotiable component of my monthly budget.

Timothy Allen
Timothy AllenDirector, Oberheiden P.C.

Diversify Seasonal Revenue Streams

Among the various financial insights that I learned through the course of running a gift recommendations website was the danger of relying on seasonal peak sales. During the early days of the business, holiday sales were such a reliable source of transaction revenue that we looked on them as a conduit to the rest of the year. Consequently, when one particularly slow holiday season, as a result of changing consumer spending patterns, exposed us to a cash flow crunch, we grappled with the danger of seasonal dependence.

That tough lesson led me to rethink and diversify our finances in a big way. I developed a year-round engagement plan, including non-seasonal gift guides for anniversaries, graduations, and 'just because' gifts that evened out income over time. In addition, I developed a series of interactive, user-generated content competitions that brought in reader activity and opportunities for advertising and sponsorships. Those finessing strategies took the money 'seasoning' out of the business and brought in a better revenue year-round, keeping the business robust no matter the season.

Danilo Miranda
Danilo MirandaManaging Director, Presenteverso

Balance Inventory with Liquidity

One financial lesson I learned the hard way as the owner of TN Nursery is the importance of maintaining a strong cash flow. Early on, I focused too much on expanding inventory and neglected to prioritize liquidity. When unexpected expenses arose, like equipment repairs or sudden shifts in demand, I found myself scrambling to cover costs. That experience taught me the value of balancing growth with financial flexibility. Now, I'm more diligent about budgeting and keeping reserves for emergencies, which allows me to adapt to market changes without disrupting operations. I also ensure that any investments, whether in new stock or technology, align with my long-term financial health. This lesson has shaped my approach to fiscal responsibility and sustainable growth for my business.

Tammy Sons
Tammy SonsFounder/CEO, TN Nursery

Focus on Cash Flow Management

From my experience, one financial lesson I learned the hard way was underestimating the importance of cash flow management. Early on, I focused too much on revenue growth without paying enough attention to the timing of cash inflows and outflows. This led to periods where, despite having strong sales, I struggled to cover expenses.

This experience taught me to prioritize cash flow forecasting and maintain a buffer for unexpected costs. Now, I regularly review cash flow statements and ensure there's always a healthy reserve. This approach has made my business more resilient and better prepared for financial fluctuations.

Ramon Khan
Ramon KhanCMO & Cofounder at Alloy, The Alloy Market

Utilize Green Bonds for Financing

One lesson I learned from the financial experience of running my eco-friendly HVAC business was the inadequacy of traditional financing for supporting the innovation of green technology. At first, we tried to fund new technology investments through traditional loans, but this system quickly proved unsustainable. The interest rates were high, and the repayment schedule was too contiguous to match the cash flows of our projects.

In response, I followed a novel practice in our sector: we started using green bonds to finance our projects. Green bonds are bond issues that are geared towards investments with environmental benefits. The idea was to reinforce our financing strategy with our business ethos and to attract the attention of only those investors who are concerned with sustainability. This solution not only offered better terms but also an additional channel of green investors. This strategic move not only relieved our financial burden but it also reinforced our ethos towards environmental sustainability, strengthening our brand's reputation and appeal in the green technology sector.

Kyle Kozlowski
Kyle KozlowskiCo-Founder, Eco Temp HVAC

Align Marketing with Operational Capacity

One financial lesson I learned the hard way was overspending on marketing without having proven systems in place to handle the influx of leads. Early on, I invested heavily in marketing, which brought in more leads than we could manage effectively. Without the right processes, it led to a significant loss due to the non-conversion of leads to contracts. That experience taught me the importance of pacing investments and establishing key performance indicators (KPIs) to track where funds should be allocated for both operations and growth. Now, we closely monitor these KPIs to ensure that our marketing spend aligns with our capacity and goals, allowing us to be more strategic in where we place our funds and leading to better efficiency and profitability.

Yancy Forsythe
Yancy ForsytheOwner, Missouri Valley Homes

Diversify and Prepare for Economic Downturns

One financial lesson I learned the hard way was during the 2008 financial crisis. As an insurance broker, our revenue took a major hit as clients struggled and premiums declined. We had to make some tough choices to cut costs, restructure, and pivot to new products to survive.

This experience taught me the importance of diversification and building a rainy-day fund. Now, we keep a healthy cash reserve, offer a range of products beyond just marine insurance, and are ready to weather future economic storms.

When the Sharing Economy emerged, I saw an opportunity. We created custom policies for those renting their homes, vehicles, and boats to others. This new line of business helped make up for lost revenue streams. The key was moving quickly to take advantage before competitors, using my knowledge of insurance gaps to create valued products.

You never know when the next crisis will hit, so fiscal discipline and foresight are key. Build in financial cushions, look for new opportunities proactively, and don't put all your eggs in one basket. Adaptability and nimbleness will serve you well. When times are good, prepare for when they're not.

Casey Heer
Casey HeerPresident, Casey Insurance Group

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