Setting up a new business is both exciting and challenging. It is also very costly. Whether you’ve secured funding or not, you’ll need to be on top of your game. It’s likely as an employee that the company’s finances weren’t anything to do with you, and even if you managed a budget, you might not have known all of the running costs associated with your business. To help make sure you don’t get off on the wrong foot, here’s how to ensure you cover everything when working out your startup’s finances.
Make a list of everything you can think of
Right down a list of all of your potential outgoings, including staffing costs, electricity bills, equipment hire and everything else. Use a list of startup costs compiled by experts to help you. When you’re done, put the list to one side. Pick it up again in a day or two, and see if there’s anything new you’ve remembered that should be on there.
Give the list to someone else
After you’re satisfied that you’ve thought of everything to your knowledge, give the list to someone else. It could be your business partners, a friend, a fellow business owner or a startup advisor. Choose someone that has experience in running a business who will be able to use their own experience to give you advice and help you work out any costs that might be missing.
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Think twice about the obvious
If you think you’ve got all your costs worked out, take some time to think if there’s anything obvious missing from your estimated costs. It sounds really basic, but say for example you’ve set up a construction company and will be working with sand or salt a lot, have you factored in the cost of salt storage or protective equipment? These things might seem obvious, but when you’re focused on other costs such as marketing or materials, the seemingly obvious things can be forgotten.
Hope for the best, but prepare for the worst
When it comes to working out startup’s finances, you should always take the ‘worst case scenario’ approach. How would you cope if you failed to turn a profit for longer than expected or how long could you survive without investment? Hopefully, it’ll never come to it but if you run into problems, at least you will have prepared for it in advance.
Know who to turn to for help
When setting up a new business, there is a lot you won’t know about all sorts of elements, but there is plenty of startup advice for newbies that will make the process much less painful. A financial adviser or a business coach could also help you to work out everything you need and a good relationship with your bank will be vital should you encounter any problems.
Managing your startup finances will be one element of establishing yourself as a successful startup leader and will be a good indicator of how you perform going forward. If finances aren’t your strong point, make sure you hire someone either as an employee or a freelancer to look after this element for you.