Startup Financial Tips: How To Thrive in Your New Business
Startup is a sexy word in today’s explosive entrepreneurial landscape, but the reality behind the curtains is much different from what people perceive. Coming up with a great business or product idea is one thing, but turning that into a viable, sustainable, and profitable business is a whole other beast. That’s why we’re sharing our best startup financial tips to help your business thrive.
One of the biggest challenges of getting your business through those early stages of hustle and struggle is managing your finances. Resources are always limited, and making the wrong decisions with the funds you have access to can be enough to sink the boat.
Here are some solid financial tips to help you through the launching phase of your startup!
Create financial goals
Create milestones and reachable, achievable goals. Knowing that you want to break $1M in sales in your first year isn’t good enough. You need to break this into monthly, weekly, or daily revenue goals to create a financial action plan.
Keep your fixed expenses as low as humanly possible
Resist the urge to rent out the best office in town — that stuff will come in time. Right now, you need to focus on generating revenue and ensuring the money coming in is available for re-investment into growing the business, and not bleeding out to overhead expenses.
Track and audit where every penny goes
Use accounting software and ensure this responsibility is delegated to someone capable of handling it. You will have expenses and obligations galore so it’s essential you know where your money is going. Ensure money being spent is directly attributed towards growth and scaling measures, and cut out anything that isn’t directly impacting your financial goals. You can’t control what you don’t track.
Establish a plan for cash flow management
Along with the tip from above, you need to ensure you have enough money to cover your obligations. There will be tons of cash coming in, and sometimes even more going out. Running out of money crushes more startups than anything.
Pay yourself something
This can be a touchy subject, but the reality is that you probably have a mortgage to pay or maybe even kids to feed. If you’re going to be mentally and emotionally engaged in growing this business, you need to keep your personal life in order — and you can’t do that if you have no income. I’m not suggesting you pay yourself a big salary, but create your own personal financial plan and come up with a minimum amount you can survive on for now. Build that into the cash flow management plan to ensure it’s accounted for and available.
Remember how valuable your time is
Pay attention to where you’re spending your time. Time is money, and you need to ensure you optimize the time that’s available to you. If you have time to knock out a season of Game Of Thrones every weekend but can’t find the time to manage your accounting, it’s time to get real with yourself. Schedule out your own time to ensure it’s being optimized.
Prioritize customer acquisition
Customer acquisition is the lifeblood of all startups so it needs to be a priority above all else. At first, you’ll probably be doing this yourself. Once you have enough customers, you’ll be able to start testing and trying more cost-effective customer acquisition channels. This will be a huge factor in your scale-ability, so ensure you’re focusing on the most lucrative opportunities first.
Always have back-up
Hope for the best, but prepare for the worst. If possible, you always want to have emergency savings set aside for your personal and business needs. Many founders will moonlight for a while, to validate their idea before losing their main source of income. Whatever path you choose, just understand that in spite of our best intentions, bad things can happen and it’s better to be prepared than caught off guard.
These tips and strategies should help your startup get and stay on the right financial track!
David is the Co-founder and CEO of Goji Labs. David loves working closely with passionate founders to understand their vision and help them build beautiful applications while focusing on risk-mitigation. As an author, he focuses on informative and educational blogs that enable our clients to make the most of their businesses.