If you’re looking to build a sustainable start-up, smart business finance is key. Fortunately, you do not need to be a financial professional to be successful at managing finances and running a business.
If you know what to pay attention to and how to lay out a budget appropriate to your objectives, that’s a great start. Yet, even with a basic knowledge, there are no guarantees and getting going on a start-up is never easy. Here are a few tips to get you going on the right path towards successfully managing your business finances.
1. Know where dollars are from and where they are going.
Cash flow management is so important to start-ups. Entire businesses have failed because they don’t know how to manage cash flow. If you don’t stay on top of your finances, there will inevitably come a point where you need money you don’t have or where you run out of money altogether.
2. Track all spending and ensure your bookkeeping is on-point.
Any new company is going to have a lot of business financial decisions that need to be made. There’ll be a lot of expenses to cover, including staff and all the tax or bookkeeping obligations that come with that. That’s why all spending should be monitored, preferably in an Excel spreadsheet. This will make it easier for you come tax-time.
3. Limit fixed expenses.
When you’re starting out, the less you spend, the better. Ensure every spending decision has a reason behind it. A key to surviving long-term is being able to operate on a thin budget when you’re first starting. Allocate the majority of your capital to your growth and don’t shell out for the perks. If you’re focused on having a fancy office or trivial amenities, that’s a mistake.
4. Protect yourself against the worst.
Although entrepreneurs should always be optimistic, be aware of what can happen with your business finances and prepare for your worst. You never know what could happen. In business, bad situations happen often and unexpectedly. If you start making money with your company, know where to put it.
5. As an entrepreneur, you’re on the clock 24/7.
Time is money, as an entrepreneur. Thus, every day, every minute counts. When you’re planning your schedule, know what you want to accomplish and be sure not to waste time on activities that are sabotaging your success.
6. Customer acquisition is your start-up’s #1 focus.
There is no business without customers. Identify your customer acquisition channels and go after them. Know what’s required in terms of cost for each of them. Remember, the faster you acquire customers, the better your chances are at survival. After you begin scaling those channels, your business will have the financial support it needs to begin really thriving.
7. Pay yourself.
In any business, you need to pay yourself and put something on your table. It doesn’t need to be a big salary but whatever the number is, you need enough to survive. To stay focused on your business, you shouldn’t be struggling through personal financial stress. Don’t be afraid to give yourself enough to live comfortably while you work out the kinks to your business.
8. Break down your financial goals into smaller, measurable steps.
Instead of saying, “I want to make this a million dollar company by year’s end,” you need to quantify that and break that goal down into smaller objectives you can follow through on. Consider establishing daily, weekly, or monthly revenue goals. Always make sure your financial revenue targets make sense. Adjust as needed. Not only will these goals will keep you on track but they’ll give you the confidence to keep going.
