How to Financially manage startup company:
Many startup companies fail because of financial reasons, managing this is tricky as you have a lot to lose if something goes wrong, so the pressure is always on.
Finance can be stressful to manage as a business owner because you have to also oversee every other process that is going on in the business such as marketing, sales, customer service, etc. It may even be harder depending if you have investors or initial funding, these are hard enough to come by. On top of managing the finance, a continuous goal is to try and start generating money at a consistent flow so you do not run out of money. In this article I will go over some tips on how to stay on top of everything financially related.
Staying within your means
Always play within your means, spending too much or borrowing too much money can quickly backfire. All entrepreneurs like to think big, however, if you are new to startups with no previous elite track record, then funding and investments may be hard to come by, so there is no point in spending loads of money in an attempt to turn big profits overnight, it is best to always plan for the near future to ensure you always have a future.
Being real in your business means always having a backup plan incase things do not go as well as planned, or take longer than usual. For example, a new product you have created is selling 50% slower than what what is expected and you are not making enough money from your only source of revenue? A simple way this could’ve been prevented is to have a more realistic estimate and also a back up plan.
Hire financial assistants
Being the manager of your start up company could mean you are short on staff and you have a million different tasks to manage. If you are not trained in accountancy, perhaps looking into financial accounting and reporting training courses would be beneficial. If you wish to delegate the job to a professional, then hiring an accountant will save you a lot of time, stress and money when it comes to managing the numbers. It will give you a peace of mind knowing that you don’t have to spend ages number-crunching and it is also one less task you have to complete by yourself.
Log all financial costs & profit
Although this is primarily a job for the accountant, this point is quite important when it comes to start up companies, there will be phases where there are lot of transactions going within and out of the business with new investors, customers and other stakeholders taking interest in the business. Maintaining organised records can help you a lot as it will show you exactly what is being spent or earned.
This type of data can be used in the future incase you suspect anything goes missing and so you can see how much profit is actually being made on a month to month basis so that you are able to make projections for the future. One last point is to stay away from verbal agreements, in this day and age, every transaction or deal must be traceable or else it could lead to problems in the future.
Ensuring there is a money flow – and be tight with your money
Any business owner will tell you how important it is to actually have money in the bank. Whether you have investors that are demanding money, need money to pay yourself and your staff, enough leftover to put into the business, ensuring that you have cash in the bank is very important. Here are some quick tips to help with the cash flow:
Invoicing customers quickly means you will get the money quicker
Make payments quick and easy for customers
Make all payment terms clear and tracked
Use up to date technology to manage cash flow.