Introduction
Starting a new entrepreneurial venture is
no mean feat. It is a tough, yet exhilarating experience. It can prove to be
highly rewarding and enriching if properly managed. For any business, small,
large, new or established, financial management is crucial to healthy growth.
In the case of startups, financial planning
and management is even more vital for success as these business need capital to
establish themselves and have little capability of sustaining losses. Here are
some tips for budding entrepreneurs and startups
Manage cashflow minutely
Cash or in more general terms money is the
foundation of any business.
Therefore it is important to ensure that your accounting is immaculate. A chief
cause of failure if startups are the ill management and the subsequent lack of
cash. It is recommended that you make an exhaustive budget for a fixed time
period. It is also essential that you leave some elbow room in this budget, to
account for any surprise expenses that might occur. Invest time in preparing
plans for money management. Also make sure to track every bit of your money,
where it is coming from and where it is going.
Monitor and record all expenses
A budding startup incurs innumerable
expenses, from office stationery to employee salaries and benefits. It is
necessary o keep expenses in control if your venture is to succeed. A way to effectively manage your accounts is
to make note of every expenditure, however small it may seem. This shows you
trends in the expenses and allows you to cut corners wherever necessary.
You may want to initially invest in a cloud
based accounting software, a professional may prove a little out of your
budget. Only when the accounting gets too complex should you hire a
professional.
Prepare for the worst-case scenario
You may be jacked up to give your
everything to your startup. However, things do not always go favorably. It is
always advisable to have more than one backup plan for all kinds of scenarios.
Most startups face a lack of cash, a
problem that is difficult to go around. Therefore it is always a good idea to
keep substantial reserves in a liquid form. This helps you sail through most
problems easily. Even so, prepare for the worst-case scenario of failure, and
keep a reliable income source within your grasp. It is also a good idea to
invest some of your liquid cash in long term bonds, which may serve as a backup
for your future plans.
Manage time extremely well
Time management is the key to success in today’s world, regardless of the
field occupation or any other circumstance. For an entrepreneur of any stature,
time management is highly crucial. You must always ensure that you are getting.
Maximum possible productivity out of your time, for, every minute wasted, costs
you money. Therefore, the value of time couldn't be stressed enough for a
budding startup.
Increase your customer base
Customers are your means to achieve your
goals and targets. Therefore, you should focus on acquiring customers, and
keeping them. Both of these activities
are equally important. You can use various marketing channels such as mailing
lists, social network marketing, digital marketing campaigns to attract new
customers to your business. More the number of customers more is the stability
of your business.It is equally important to keep your existing customers loyal
to your business. This can be achieved by ensuring quality services, support,
and good customer experience.
A wide customer network is of huge help.
The word of mouth is perhaps a more effective mode of marketing than most other
means. This automatically helps you acquire new customers, which in turn
increases your income, leading to greater stability.
Allocate maximum capital to growth
It is important to keep your budget
focussed on the correct areas. For example, staff parties, posh office spaces,
etc., should not be at the top of your expenditure. You must focus on the
growth of your business and allocate maximum funds to it. For example, to
increase your sales, you must allocate funds for your marketing
campaigns. This may include expenses on software that facilitate online
marketing. This is another reason for the failure of startups; the fact that
they give importance to trivial things.
Keep your accounts transparent
For optimal growth of your business,
outside investment is necessary. Therefore it is important ot attract
investors, venture capitalists, etc. A great way to gain the confidence of
investors is to ensure that your books are transparent. Any shady dealings on
your books and investors hesitate to trust you and your business suffers as a
result.
Set a series of achievable financial targets
Rome was not built in a day. Similarly,
your budding startup will not turn into a multi-million dollar company just
because you want it to. It is advisable to follow a financial target oriented
approach. You should set weekly, monthly and quarterly financial targets and
work towards them. Most importantly these targets should be achievable, yet
must not be too easy to reach.This way, you get the confidence and the
motivation to keep up your work. It also leads to steady progress towards your
bigger milestones.
Conclusion
Entrepreneurship is a highly rewarding
journey but is filled with obstacles. Startups specifically face many problems
related to finances and fiscal management. The above tips can definitely help
in circumventing most financial troubles faced by startups. However, it is
recommended that you consult a financial consultant and a lawyer before taking
any major decision.
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