5 Financial Tips to Ensure Smooth Operations at Your Startup
First and foremost, we give our tip of the hat if you are on the road to launch a startup, because it is everything but easy.
Speaking of this, about 90% of startups fail and only 10% succeed. However, a lot depends on the kinds of strategies you employ and how broad is your spectrum of knowledge where startups are concerned. That being said, with the right approach and attitude, you can build a lucrative business out of your startup in just a matter of few years. One has to be adaptable and welcoming towards change to ensure success.
The driving force of a startup is the capital and its reign rests with you. If you know how to handle the finances, then you know how to both survive and thrive. Here in this blog post, we bring you five tips that can help streamline your finance handling for you. Let's get started.
Management is the key
Mismanagement of cash flow is one of the prime reasons that takes a startup down the hill. As we discussed earlier, capital is the driving force, it is essential that you know where each penny is coming from and similarly, where each penny is flowing out.
No matter how good your business plan is, if there is no money then obviously no business could ever be carried out let alone running the operations smoothly. And here, budget is your best friend. It is the foundation block for any business out there looking to get established.
Related article: How to Create a Solid Business Plan for a Mobile App Startup
How to budget
Firstly, you need to figure out your monthly income and then determine the fixed costs and variable expenses.
It indeed is a hassle but maybe that smart phone you walk with could help you out. There are some really cool budgeting applications that can help you keep track.
When starting up a business, it is only natural to be consumed by impulsiveness. Keeping control for limited fixed costs is what allows you to carry the operations smoothly.
Keep these things in mind before starting:
- say no to a fancy office right in the center of a city
- try and cut back on rent
- top notch amenities; a big fat NO!
- cancel out any subscriptions you currently have on
- leasing of the equipment rather than purchasing is highly recommended
Setting up isn't the only concern you should have. Always remember that there are competitors who always want to stay on top of things, but your main focus should be on generating revenues to the maximum.
Traverse the alternatives
Someone with a startup would definitely keep other funding options absolutely open. It is a well-known fact that financial institutions hesitate to lend money to startups. Then comes the dreaded question as to where one must look out when the only option, the bank, does not have much to offer?
Here are a few options:
This can be your muse when a bank shuts the door right on your face. This is truly a godsend considering that it does not involve the kind of paperwork traditional institutions do. Moreover, the interests rates are relatively lower and do not at all mean a long waiting process.
It comes off from reputed investors, investment banks or any other financial institution. Investors provide finances to those startup businesses with a great long term growth potential. The only drawback is that the investors end up having equity in the company it provides finance to.
Angel in disguise
Well, these are wealthy people or could be executives, who have retired from a company, who make a direct investment in small businesses. They have made a network of contacts over their career span.
Like venture capitals, in exchange of the investment, they get exclusive rights over the company and may require transparency in all the aspects and a full-fledge seat on the board of directors.
Crowd funding is meant for people who look for funds to run a project or venture via people from across the globe, typically from the Internet. Any who connects with your idea of the startup or shares the same passion as you can contribute money. It, however, involves a return to the crowd funders as a reward in form of a gift, profit or giving a share of the company.
You can also seek advice from experts to make better financial choices if you are doubtful or in any sort of dilemma between whatever options you are thinking to opt for. Or you could simply opt for fast capital loans; we understand it can be one daunting decision to make!
Hire freelancers or outsource
There is a pool of talent out there if you know how to get the best one for your startup and use it productively. Freelancing or outsourcing tasks only makes it better on the cash flow.
To begin with, hiring a freelancer cuts down on costs considering the fact that the result would be quality, yet easy on the startup's pocket as compared to a full-time employee; that too with the same skill set.
In addition to this, outsourcing means you have less pressure to deal with and all the chance to focus on your business model and on the fact of making it emerge as the most lucrative business ever.
Related article: Software Development: Do It In-House or Outsource?
Maintain the record
Keeping the finance record up to date is paramount when you dream of your startup soaring.
It is common to wait until the end of the month, or in some cases even a year to do the final accounting. However, it is better to do it on a weekly basis so that you know if you need to improve. Also, prefer mobile payment solutions to receive payments on a faster rate. This keeps the record in full alignment with the cash flow in real-time as there aren't any delays. Speaking of this, there are applications to make the mobile payment easier for you.
When you have a startup to run, it is wise to keep a constant check on to the accounts so that you are well aware of your business's footing; is it strong enough or is asking for a bit of tweak?
Considering that you have a startup, maintain accounts on Excel first and then move onto online accounting software such as, Wave or QuickBooks.
This is a guest post by Zyana Morris. Zyana is a passionate health and lifestyle blogger who loves to write about prevailing trends. She is a featured author at various authoritative blogs in the health and fitness industry. You can follow her on Twitter and Facebook.