Money makes the world go around. This phrase gets an additional layer of meaning when we’re talking about startups and their limited budgets. Entrepreneurs and startup founders are usually people with innovative business ideas, but on the other hand, many of them don’t know the first thing about financial aspects of running a business. Managing your money and funds is extremely important and a few seemingly small mistakes could turn into a huge setback, so before you do anything you need a sound and detailed financial plan. If we mention that many startup founders use their life’s savings in order to start their business, it’s clear there’s a lot at stake for them and that’s why they need all the help they can get. Here are a few financial tips that will show you the ropes.
Understand your cash flow
Once you start running your business, you need to keep track of your cash flow and make financial projections. Every business has seasonal ups and downs, so in certain periods your conversions will increase, while in others theywill be sluggish. The trick is to identify these periods and be ready for those months when your business will have lower conversion rates. You need to have a cash cushion in order to be able to seamlessly and smoothly overcome these dry spells. Sometimes you’ll have to get a loan, but it’s always better to stick to your own resources. Since this can be tough to plan and carry out, it’s best to hire experienced financial advisors who will keep an eye on this and make sure that everything is taken care of. Luckily, there are reliable agencies providing financial services in Sydney that you can hire tokeep money troubles at bay.
Know the length of your sales cycle
B2C businesses have way shorter sales cycles and they usually don’t have to be too concerned about leaving cash on the side that will help them make it through while they’re waiting for their sales cycle to complete. On the other hand, B2B businesses have sales cycles that can last months or years, which is why they need to have enough cash to keep things running smoothly while they’re waiting for a deal to be closed, or for the revenue from some of their past sales to finally come through. If you fail to make a good assessment, you risk being left without much-needed cash for operating your business which can prove to be fatal for your startup.
Work-life balance is the key
Many entrepreneurs believe that they should put all their time and energy into their business, which is ok, but many of them take that phrase “no pain, no gain” way too literally. The whole point of building your own business and being your own boss isn’t to spend more than 10 hours a day at your office and neglect your personal life and health. It’s the other way round, and if you find yourself working 80 hours a week only to keep your business afloat, then you’re doing something wrong. Such strenuous work and long hours will eventually start affecting your health and result in burnout. According to statistics, about one-third of employed Americans say that they have difficulty managing work and personal life.
Limit your expenses
You’ll have to prioritize when it comes to your fixed expenses, especially in the beginning. If you need an office, be practical and avoid renting a big place with fancy furniture when you start making a healthyprofit. Many startup owners make this mistake and that is a huge waste of money. Identify what the essential things resources for running your business are and cut back on everything else that isn’t a necessity. Being frugal is a goodthing while you’re developing your business, and so make sure to spend your hard-earned money wisely. This means that you should invest everything you can in the growth of your startup, but only if you have a sustainable and feasible business plan.
Don’t work for free
It’s important to realize that although you’re your own boss, you need to pay yourself and do it properly. We’re not talking about big fat paychecks, but about the need to compensate yourself for all the hard work, and to make sure that you’re not working only to make ends meet. Having a comfortable life is very important, so don’t go stingy on yourself.
Polishing your financial skills will help you keep everything under control and be on the safe side even when during the hard times.
My name is Alex Williams, born and raised in beautiful Sydney. I am a journalism graduate, and a rookie blogger trying to find my luck. Blogs are the perfect opportunity for presenting yourself to wider audience, getting the chance to showcase my expertise and receiving recognition. I am a regular contributor at BizzMark Blog.
Facebook: Alex Williams | Twitter: @alextmwilliams1