Startups are as diverse and complex as the entrepreneurs that create them and the customers they cater to. However, there’s one thing that’s the same for any company, regardless of its industry and size. All businesses need to take care of their finances and manage their resources with care.
The most important part of managing your finances is thinking ahead and planning in advance. In order to accomplish this, you need to keep track of your spending, as well as the expenses, and make all the necessary adjustments when and if needed.
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Set Realistic Goals
Everyone who starts a business does so with big plans and hopes of a major success. That’s the only way to do it and it’s perfectly fine to dream big. However, in order to keep track of your finances and overall progress, you need to set short-term goals that are much more manageable and more realistic.
A well-selected goal should be achievable in a matter of months and it should be something that you should measure and actually see the progress. Have in mind that it doesn’t have to be about the profit you’ve made during the set timeframe. Sometimes having stable cash flow can be a more valuable goal.
Cut Down the Expenses
A business can always cut down on their expenses if they really put their mind to it. This is true for businesses of all sizes and it’s just a matter of keeping track of where your money is going and what you can do without.
Create a list of everything that’s not essential to your production and advertising and try to cut back on it until you meet the savings goal you’ve set for yourself. It’s important to note that even when you’re cutting back, employees shouldn’t be the ones to take this burden.
Startup owners learn about the importance of accounting right away. Taxes are the most complex and most important part of managing business finances, and a good accountant can be a very lucrative investment for a small business.
If you don’t have the resources to pay a professional for these services, there are alternative ways you can use for a far lower price. Accounting tools are available online and they are pretty intuitive so that even beginners can get a handle on them quickly.
Investment and Growth
A startup needs to have a plan for growth from day one. There are a lot of competitors in every industry and even if you have a niche market that you control entirely, your business needs to expand and branch out as soon as you find the resources to do so.
There are professionals in this area that can help you get through the complicated process of growing your company. Organizations that understand the details of effective equity funding can find the growth opportunities that will help your business get to the next level.
Taxes and Bills
There’s one simple rule for dealing with taxes and bills. It’s rather easy but somehow a lot of businesses find it difficult to stick to it no matter how hard they try. Namely, the rule is: pay your bills on time. That’s all there is to it, so, if you manage to do this, your business will definitely thrive.
Banks will look into your credit rating and it depends mostly on how organized you are with your bills. It’s also important how much you borrow, but even if you have only a few small bills every month, your credit score will go up just by being on time.
For a new startup having a steady cash flow is much more important than having a lot of money on your savings account or a large investment fund. Money in such funds usually gets spent relatively quickly and creates a false sense of comfort. A steady cash flow means that your business is actually operational and you have clients that work with you on regular bases.
If you’re just getting started and you’re struggling with cash flow, a good option would be to create a partnership with one of your clients or customers. That way, you’ll know that you’ll always have some profit to rely on.
Regardless of how much you plan and how hard you work, things sometimes don’t work out in business and you might find yourself in a financial trouble. This can be stressful, but it isn’t something to be desperate about. It’s important to have a plan B in place before things start to go sour.
Having a plan B doesn’t mean that you should start a new business from scratch. Most of the time, it’s about taking your goals down a notch and adapting to your new reality.
Managing finances is the most important task of any business. It needs to be done with clear goals in mind and you should always strive to expand and grow your company.