When you’re starting up a business, money matters. As the old adage goes, you need to spend money to make money- but when you don’t have a whole lot of it to begin with you need to be careful. If you overspend and get into the red early on, you could go bust and it be game over for your business before you’ve even really started. Here are some things to consider when it comes to your finances.
Start on a Smaller Scale
Instead of throwing everything you have into your venture and hoping that it does well, why not start on a smaller scale? This way you can see that it actually works and let it expand and grow organically. You could start in a small office hiring just a couple of staff members and focusing on providing an excellent service to the customers you get. This way you’re not overstretched, and if you find you do well and are getting more custom than your small setup can handle, you can use profits to move to bigger premises and hire more people. That way you’re not sinking a load of cash into your business and losing the lot if doesn’t do as well as you thought. Renting equipment instead of buying is another good way to keep it small and avoid large upfront costs. Once you know your business is doing well, you can buy this equipment for yourself.
You might be under the impression that outsourcing is something that larger businesses do, and maybe is something to consider later down the line. However it can be a lifesaver for smaller businesses. While you will pay for the services of a third party company, you’re able to reduce upfront costs as you don’t need to buy additional equipment or hire more staff. Recruiting and training can be expensive, if you hire a specialist company to deal with certain areas of your business then you don’t have to worry about this.
If you have a great business idea but really need a cash injection to get started, one option would be to seek out an investor. Here you will be offered cash for a share in your business, and your investor will also act as a mentor in many cases. There’s a lot of competition for this kind of help so you will need to stand out. An interactive annual report with all of your figures, earnings and projections is a smart move. Be ready to answer any difficult questions and practice your pitch until it’s spot on.
Expect The Unexpected
No matter how well prepared you are in business, something could go wrong. For this reason it’s well worth having an emergency fund as a buffer that you can fall back on just in case. Anything from a burglary, a fire, a flood could occur, or a crucial piece of equipment to your businesses could stop working. Give yourself some funds to fall back on, and take out the right insurances too just in case.