Launching a new startup always comes with a variety of challenges and obstacles. This is what makes being an entrepreneur interesting and engaging. However, regardless of your skills and talents, if you don’t handle the financial side of your new company right away – it might fail even if the product you’re selling is truly amazing.
Every business and industry is unique and comes with its own set of rules and problems. There are still some financial tips that will help you out in every situation and that can be applied to every company.
Keep track of your finances
In order to make any long-term plans and adapt your business when necessary, you need to keep close track of your finances. These reports will provide you with enough information to truly understand your own company and the way it works.
Don’t be afraid to go into details with this. Small expenses often pile on and can affect the bottom line, especially for small startups that need to watch every penny until they find their customer base and the marketing strategy that works for it. The same should be applied to revenue – keep track of it and don’t leave out small payments.
Dealing with financial aspects of a business could be overwhelming even for the professionals; business owners and investors are usually out of their depth when it comes to accounting or even management. However, getting into the specifics could be quite useful and allow you to expand your business.
It’s sometimes useful to enroll in courses that would help you understand the process and the rules behind tax codes and management practices. This will cost both time and money, but try to think about it as any other investment because that’s what it is. The skills you obtain in these fields could translate into actual savings and revenue.
A lot of small businesses discover that having a steady cash flow could mean more to them than having a lot of money to invest or save. Most of the money problems concern late payments or having a bad month in terms of sales. Focusing on the cash flow instead of investing could help you prepare for such problems.
One of the ways to accomplish this is to use invoice services. That would allow you to get the payment right away and let the invoicing company wait for the payment instead of you. This means that a percentage of the money you’re owed will be paid to the invoicing provider, but that’s a better option than waiting for the entire sum indefinitely.
Small business investing
Even in countries with a great startup culture such as Australia, small businesses find themselves in money troubles pretty soon after opening their doors. As much as 50 percent of Australian startups have financial problems within their first year since they’ve miscalculated the expenses of day to day business operations.
More often than not, these problems could be dealt with, by a small grant or a loan. There are options for small business lending in Sydney that could cover these smaller costs. Startups shouldn’t hesitate to apply for such loans since these financial injections could help the company a lot in the initial stages.
Focus on the customers
One of the hardest questions to answer is what should the focus of your financial plan be. Some startups are creating their plan around a big investor. Their goal is to grow the business as much as they can and wait for someone to pick it up. Others are all about improving their products and services.
If there’s one advice that can’t fail, it’s to think about your finances as they relate to the customers. By improving your customer experience or enlarging the customer base, you’re doing more for the business than with any other investment.
If your finances allow it, you should start thinking about saving some of the revenue. It’s important to make a difference between investment funds and savings. This isn’t the money you plan to use for a particular investment or improvement, but the money you’re keeping in your savings account without a particular use for it, at least for a while.
There are no rules as to how much you need to save and this depends on your business success overall, but it’s customary to put aside roughly ten percent of your earnings whenever you can.
These financial tips will help you find the funding for new ideas and help the company grow. It’s important to keep the big picture in mind when doing so because the hardest thing in business is to stay innovative and to last.