It took you years to gather courage, kick your job and convert that dream of having your own business into reality. Finally, the time has come. The very next month you would be launching your startup and the world will know about your entrepreneurship spirit. But there’s a bad news. Setting up a business isn’t easy as dreaming about it. In fact, many startups don’t even survive through the first year of their launch.
The point here isn’t to discourage you or make you feel scared towards the idea of launching your startup. The idea is to just to make you aware of certain careful steps which need to be taken to ensure your startup doesn’t fail before it begins. The following points are about financial tips which will help you to make a smooth business start and fight against all the odds.
1. Establish Measurable Financial Goals
Everybody has that big financial goal, “I want to build a million dollar company”. But as the saying goes, “Rome wasn’t built in a day”. You cannot achieve your financial goals in just one go.
A good idea is to break down financial goals into achievable and measurable ones. You can set targets for a week, month and eventually on yearly basis, which will help you make necessary efforts for consistent growth. Setting smaller and reachable milestones gives you a quick sense of achievement and also keeps you at peace.
2. Manage the Cash Flow Wisely
The most common reason due to which most of the startups fail is poor management of cash flow. It is important to keep track of every single dollar being spent and received from.
Many people think that a good idea is enough to make a business survive and other things such as money, people, resources etc., aren’t that important. It is true that a business idea is important. But remember that money is the most important medium to make sure you are able to invest in a good team, resources, infrastructure etc. Ignoring the cash flow management of your business means directly putting it into danger.
3. Invest in Technology
So, now you know that tracking every single penny involved in your startup is business. But question is how to do that? A startup business firm cannot afford to hire full-time professionals who can take care of your money, you will be running short on cash during the initial days.
You can invest in a budget-friendly accounting software like Xero which can help you manage the cash flow along with the taxes as well. Invest in the right technology, be it an accounting software or a project management software like ProofHub to manage your work and teams.
4. Have that Canny Eye
It is always good to make a lean start by keeping unnecessary expenses low and focusing on generating revenue. But in reality, the situation is entirely different. Many startups spend a lot in building a fancy office, providing meals to the employees, business trips or meetings. And that’s why most of them fail to take their flight off.
In the beginning, focus on allocating majority of the capital to growth and spend every little penny carefully. Before every purchase you make, foresee the potential return and spend only if there is considerable profit else look out for other affordable options.
5. Save that Equity
In the beginning, you or your co-partner have full right over the company and its equity. But if your capital goes low then you will have to take financial support from angel investors by giving a part of your equity. This seems an appealing option because you don’t have to give that money back, but it takes away a part of your control over your company.
Thus, it is advisable to save your company’s equity and keep it in your hand. This will save you a lot of money. Also, once your company is established, getting a loan would become quite easy. But don’t forget the ultimate aim-to save your business from failing. Even if that means finding an angel investor as well. Make sure you negotiate wisely to ensure you can have the maximum possible control.
6. No Customers, No Business
There is no doubt in this - without buyers there is no role of seller. The quicker you grab this phenomenon, brighter are your chances of success. Identify customer acquisition channels and begin working on optimization to lower your costs.
Since it can be difficult to test every possible acquisition channel at first, so choosing the most lucrative opportunity can be a wise choice. Once you are able to scale those successfully, you become financially capable to explore other channels.
7. Pay Yourself
Yes, you read it right. Paying yourself with a decent compensation is good to pamper yourself for the hard work you had put in over the last month. Although this doesn’t mean a big fat salary but something that is enough to fulfill your needs.
This is also a great way to eliminate financial stress at the personal level and to encourage yourself to focus on business building.
In all, it is important to maintain positivity while you are in the process of building up your business. Your next step may or may not yield you positive results but you need to maintain that enthusiasm and spirit always. Another important thing you should remember is, “ time is money” and nothing is more valuable than your time. Before taking any decision, make sure it is profitable for your business else it’s just a waste of time.
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