Money Matters: Getting Your Startup’s Finances In Order
There’s something very romantic about the idea of setting up your own business. While it’s true that being your own boss can bring you unbridled joy, it’s simplistic to think that running a company is a walk in the park.
One of the greatest hurdles you’ll come across when taking the plunge and trying to get a business off the ground is money matters and managing your money.
With up to 90 percent of new businesses failing, there’s nothing more important than ensuring you’ve got your finances in order.
Financing your startup
No matter what kind of company you’re establishing, there will be costs involved. At the outset, you need to determine whether you can cover those fees with your own money or whether you’ll need assistance in the form of a loan or external investment.
If you are thinking about borrowing money, it’s essential to work on your business plan first. The people you ask for money will want to know the ins and outs of your plans to determine how much of a risk you pose and what they can expect to gain from their money if they are investing.
Work on the numbers and make sure you have the answers to the questions they’re likely to pose. Consider all your options before making a decision and make sure you’re confident that you can make this business successful.
If the figures aren’t looking good, take more time to work out if this a punt you want to take.
Setting a budget
Managing a business on a daily basis involves paying out money. As the manager, it’s your duty to work out how much you can afford to spend and where you’re going to invest your money.
Use budgeting tools and accounting software to keep your records in order and think about simple solutions like managed IT services, which give you access to an inclusive package in return for a single monthly or annual payment.
Chase payments, keep invoices and stick to a budget that enables you to make money. If you’ve got a budget and you know exactly where your money is going each month, this will reduce the risk of overspending and running into cash flow issues significantly.
If you don’t have any experience with accounting and you’re not familiar with the latest programs, it’s worth seeking expert help. This is an area where you can’t afford to do an amateur job.
Reducing your running costs
Making money in business isn’t always about bringing in sales. While it’s brilliant to generate orders, it’s also essential to keep an eye on how much you spend.
If your sales are fantastic, but you’re not still making much money, have a good look at where your money is going. It’s almost always possible to make savings and reduce running costs.
Consider making changes to your staffing structure, investing in technology to save time and money, negotiating better deals and streamlining your marketing costs.
Any savings you can make without compromising quality will increase your profit margin.
If you’re preparing to launch a startup, there’s nothing more important than having a firm grip on the figures. If you’re committed to balancing the books from day one, you’ll stand a much better chance of avoiding common pitfalls and keeping your new business above water.
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