One of the greatest problems with running a startup is the fact that a person in charge seldom has much previous experience in this niche (at least in a managerial position) to begin with. Sure, there is always a chance that this is your second or third attempt at running your own business, in which case you have the privilege of learning from your own mistakes. Still, this learning method can be incredibly expensive. In order not to have to resort to it, here are five tips that can help you manage your Startup’s finances in the best way possible. Here are a few ideas.
#1 Be ready for the risks
They say that in order to succeed you need to be ready to put all your eggs in one basket but this is not necessarily a good idea. You see, 90 percent of all startups result in a failure and even some of the greatest names in the history of business weren’t spared from this harsh reality. We are talking about giants of the industry such as Henry Ford, major historical figures like Ulysses S. Grant and entertainment magnates such as Walt Disney. As you know, in all of their cases, this was a minor setback and it wouldn’t hurt your prospects of them getting rich on a later date. Just keep in mind that such a thing could happen to you as well and always have a backup plan to fall back to.
#2 Monitor your cash flow
During the initial stage of running a startup, the most important two issues you should focus on are generating profit by retaining customers and managing your cash flow. The first of the two is definitely something that everyone will focus on but the latter can be equally as important. The reason behind this is simple – it can take your business up to two years before it is self-sustainable. During this period, you may have a hard job maintaining a healthy flow of working capital. There are several ways to deal with this situation, ranging from selling your invoices to applying for a private capital investment to get you going. The choice is all yours.
#3 Turn to technology for help
In the 21st century, there is an app for virtually everything. This is something you could easily turn to your advantage and thus start running your company finances much more efficiently. While there are some apps that specialize in startups, there are also a lot of ways for you to get creative. For instance, if you plan to go on a business trip, you can use a travel budget app to help you manage your finances in a much better way. Seeing how this trip is something that would probably fall down to your company budget, this comes as a great help and no short of a real budget-saver.
#4 Be careful not to overinvest
While many business owners dream about the idea of seeing an increased workload, this can sometimes be quite problematic. You see, faced with this sudden success a lot of business owners decide to increase their investments and rapidly expand their capacities. Although this can sometimes be a good business move, there are situations in which this would be quite premature. You can never know for sure if this is a real boost in your popularity and corporate reputation or a fluke.
This is why it might be a better idea to outsource this extra work or even hire freelancers and remote workers to assume some of these responsibilities. Keep in mind, however, that your business has a reputation to uphold and with the latter method, you will have no guarantee whatsoever. This is why outsourcing seems as a much more sensible solution to this problem.
#5 Scale down your idea
Some people believe that the only way to reach their dreams and have them mean anything is to dream big. However, you shouldn’t be too afraid to downscale your business idea either. Sure, there are those who can say that instead of adjusting your end-goal you can simply work on your short-term objectives but this kind can, more often than not, backfire horribly. In a situation where your company is fighting to stay afloat, your dreams of becoming a regional powerhouse in your niche can only hold you back. On the other hand, downscaling your idea a bit can give you this much necessary breathing space and strategically justify a different allocation of resources.
Conclusion
As you can see, while managing your resources may somewhat depend on your business niche, in most cases it comes down to being frugal, carefully monitoring your finances and always being ready for a worst-case scenario. In order not to get discouraged, keep in mind that even this ‘worst case scenario’ isn’t necessarily the end of the world and you can learn a lot from such an experience. Nonetheless, as we already mentioned introduction, this kind of learning is extremely expensive and in the era of the internet, you always have the opportunity to learn from mistakes made by someone else.
Dan Radak
Dan Radak is a marketing professional with eleven years of experience. He is a coauthor on several websites and a regular contributor to BizzMark Blog. Currently, he is working with a number of companies in the field of digital marketing, closely collaborating with a couple of e-commerce companies.