28 August 2017
To be successful startup, it is required a combination of skills and capabilities. One of the most important ability needed is how to properly manage your company’s finance. The market firm CB Insights did a research on 135 failed startups, and 29% failed because of their reckless ways to manage money.
But, this does not mean that you will end up failing too. By picking smart choices, you will gain insights in how you invest your money in order to avoid early cash flow problems.
Here are 5 smart financial steps every young entrepreneur should consider:
1.Watch Out Your Expenses
Spending capital money on things you don’t need his is the most common problem for startups have. However, monitoring and categorizing your expenses can help to find ways to control overhead costs or other spending that doesn’t add impact to your business’s growth. It will also save you the hassle of going through a pile of receipts during tax-filing season.
2. Have emergency funds
Startups should save their excess money in case they run into a crisis or an unexpected financial problem. It will allow you to be safe in low earning months while making sure that you can pay your main expenses on time. According to NerdWallet, the key to building an emergency fund is to save during your high-earning months. That will allow you to pass leaner months comfortably while ensuring that you can pay your bills on time.
3. Working with Interns
Interns are a student or trainee who works at a trade or occupation in order to gain work experience. They are usually hired by startups because they value more on experience and network, not finance. Utilizing this strategy can reduce labor costs and also provide the interns with valuable experience and networks that can benefit their careers.
4. Use Flexible Coworking Spaces
One of the biggest money drains for any startup is the cost of renting an office and paying monthly maintenance. So before you go looking, consider an affordable coworking space that covers your extra monthly expenses and additional ongoing cost. Unlike office space that offers yearly rents, coworking spaces have daily and monthly pass so you can decide how long you want to rent the space.
5. Pay Yourself!
While you don’t need to treat yourself with a big salary in the beginning, make sure you pay yourself enough to live. Give yourself enough to live comfortably and focus on building your business. When you eliminate personal financial stress, it will allow you to stay ultra-focused on your business without worrying about the company’s expenses.
As we can see, financial planning is very important and plays a crucial role towards company’s sustainability, profitability and growth. As a busy startup founder, you might have to put in a little more work towards getting a hand on your personal and business finances. But being smart with your money from the moment you start your business will pay off in the long run!
FINANCIAL PLANNING STEPS THAT CAN HELP YOUR STARTUP’S LIFE