Starting a new business, whether it’s by yourself or with a small team of friends and professionals, is no easy task. The number of startups popping up in all manner of industries might be growing exponentially but the number of those startups which achieve success is still relatively low. Many entrepreneurial individuals jump into the business world with their head in the clouds. It’s good to have innovative ideas and to be passionate about turning them into a reality but running a good business depends on you being level-headed and practical.
Don’t throw all your crazy ideas in the bin just yet. You shouldn’t dismiss your creative side, by any means, but you shouldn’t let it dictate your business decisions either. You need to focus on the financial side of running your startup, above all else. Money keeps the wheel of productivity turning. Whilst your sole goal shouldn’t be to make a profit at any cost (given that you most likely want to retain integrity and provide a top-quality service), you should certainly focus on managing your business’ funds sensibly and effectively. Here are some pieces of financial advice for your new startup to help you avoid going under before you’ve even really started.
Keep track of expenditures and income.
This might seem like a lesson from Business 101 but it’s baffling that so many companies make the mistake of overspending. You need to keep track of your profits in weekly roundups, ideally. Think of this in the same way as managing your personal finances (in a sense, these company finances are personal because you own the startup). You need to reflect on the money your startup has earned, take a look at the business plan, and start to make some decisions with regards to planning upcoming expenditures. Your startup still needs to spend money to improve itself; if you’re too afraid to make investments then you’re actually taking a bigger risk by failing to progress your business forward with higher-quality services, more employees, and so on.
Just to reiterate, the most important thing to remember is that your expenditures shouldn’t ever exceed your profits. You wouldn’t spend beyond your means with regards to your personal finances or you’d end up in debt. It’s no different in the business world. Your company’s bank account only runs so deep and if you’re a startup then it probably doesn’t run very deep at all (for the moment, at least). This doesn’t mean you should play things safe because you still need to spend money to make money, as mentioned before. However, keeping track of spending and frequently referring back to the budget is essential if you want to safeguard your startup’s finances.
Use personal funds.
This startup is your creation, isn’t it? Perhaps you co-founded it with some friends but you own a stake in this business. You’re not some worker bee at any old firm. You’re your own boss. And that means you have a real investment and stake in this company. You can’t just jump ship if things look dire. It’s up to you to keep things afloat. That’s why you should be striving to pour as much of your personal funds into the startup as possible during the early days, in order to get things started. You might not be seeing the sales you want just yet because you don’t have a big enough client-base, so the money your startup needs in order to grow has to come from somewhere else.
Of course, you’ve probably quit any 9-5 job you might’ve had because you need to dedicate all your time and effort to this new venture. Perhaps, instead, you could look for other sources of revenue. Investing in property is always a smart and stable way to gain some extra income. You could look into a hdb rental in order to make some money from leasing out properties to other. Investing in property is a great way of ensuring return on investment; people always need places to live. There are other ways to invest, of course, but the goal is to look for low-risk, high-reward opportunities.
Remember that automation is your friend.
Time is money in the business world. When you’re running a startup with only a small team at your disposal, you’re already fighting an uphill battle against all the huge competitors in your respective industry. They can get more done in a shorter space of time and maximize their profit potential. They have a superior financial model, surely? Perhaps not. Digital technology is the slingshot you can use in order to take down Goliath. Rather than wasting your time focusing on administrative tasks and other dull aspects of daily business life that are taking your attention away from the “real” work, you should automate as many tasks as possible; payroll software and many other types of automated services can take a load off your mind. It’ll also free up more time for you and your team to work on creative ideas and talk with your clients. You’ll be able to focus on the money-making side of things rather than basic tasks which need to be completed but don’t need to be done by humans.
Build up that client-base.
Do you still not have many loyal clients? Make that your priority. Sales are everything. Don’t get swamped by all the technicalities of running a business. You’ll be growing and changing all the time, so your startup’s organizational structure will always need to be reworked (new job roles will need to be fulfilled, the budget will need to be revisited, and so on). What you need to focus on today is gaining customers. You need effective marketing and top-quality products or services. It’s important not just to reel in potential customers with an enticing brand but to make sure that the service is great enough for them to return again (and to leave a positive review which captures the attention of other potential customers). You can’t just fake it until you make it. Your startup really needs to be as good as it says it is if you want it to make money and grow.