A business startup will always have a goal of being successful in its chosen industry. Starting a new business is a hard task to fulfill, especially in the competitive market. All business, whether big or small, is very much concerned in its growth. To achieve this goal, the one thing that should be given focus is money. Effective and efficient financial management is crucial to the success and growth of any business. It is one of the major factors that will decide whether a startup will survive in the big market or lose in the industry competition.
Startup companies need to be more cautious with their financial decisions compared to other established businesses. Since they have fewer resources, which means less room for mistakes, a business will not flourish just because of a good idea. A business will always need a proper financial structure that will generate profit and bring in revenues. An entrepreneur will need to have right business skills and the ability to execute them if he or she wants the startup to get that success.
As it is, you already need to deal with other challenges in running the business. If a businessman does not have a good sense of financial management, then the business is bound to have more problems. Understandably, not all entrepreneurs are adept at managing money. Take your time for preparations to be able to ensure that your business startup will succeed.
Here are some of the helpful tips you can use to handle your finances properly and not fail in your startup business.
Managing Business Finances
Learn About Financial Management
Many of the new business owners give focus on how to acquire resources but forgets about how to keep and manage them. The first thing that an entrepreneur must do is to educate themselves about different aspects of finances. You can start by learning how to read a financial statement or cash flow statements. Learn to analyze where your money came from and where it is going.
This can be considered an essential requirement if you are planning to have a startup. You need to know in this field as this is a critical part of the business. On most startups, the responsibility of monitoring and verifying tasks will still fall with the owner if you do not have an idea of what is going on. Therefore In a particular aspect of your business, how do you expect to check it?
If you are not confident in your current skills but still want to have your business, you should start studying. You can choose to attend training or seminar about it, read a book, or ask someone to teach you.
Consider an Insurance
Entrepreneurs, especially those starting, have different views about insurance. Some say that it is just a waste of money, while others say it is helpful. First, let’s discuss what insurance is and how it affects your business. Insurance is funds that you pay to a particular institution, and you will be able to get an amount in return in specific situations. You can either have insurance for a person and also property. The particular circumstances in which you can get funds are accidents, health issues, damages, and death depending on what kind of insurance you purchased. It sounds helpful to anyone, right? So, why do others think it is a waste of money?
The thing about insurance is you only get it on certain situations stated in your coverage. If you pay insurance for accidents and you did not get into accidents, you don’t get any funds. Same thing if you are paying for insurance that covers particular illness and you did not get that illness, you also don’t get paid. The payment terms are usually monthly, but it can be altered to quarterly or yearly depending on the insurance company. If you covered more situations in your insurance, then it will mean higher payments.
Insurance is a matter of how well would you value a particular thing. But since there are no sure things in this world, why gamble with it? It would be better to have it and don’t need it rather than need it and don’t have it. Remember that as an entrepreneur, it would be your priority to ensure and help the success of your business.
Avoid Expensive Credit
One of the most well-known tips for a business startup is to build a portfolio. It is rather hard to do since you need to get a good client or project to create a good portfolio. To land a client or project, then you need to show them what your business can offer to them. With this in mind, one thing you can also show them is your financial goals.
If you want to set a desirable financial goal, then you must avoid having expensive credit. Having these kinds of the loan will mean that you have a large amount to pay. Considering you are just a startup, there is no guarantee you can pay this, and investors will see this as a liability. Investors will always go where they can get more value for their money. If you can show them that you don’t have any substantial amount of credit, then it can increase the trust that you can run the business even after a few drawbacks.
Invest in Technology
The business has evolved along with technology, and it actually comes a long way. It already had reached a point where if you don’t innovate, you will be left out. Technology now plays a big factor in growing your business as we now have digital business tools that can help us in growing our business. A business that we’re able to integrate technology with their business had a greater chance of success compared to those who did not.
Most businesses are now marketing with the use of social media platforms which is different from before. You can expect more innovations and changes in how the business world moves. It may be hard coping up and learning new things, but it is always worth it. If it can result in better productivity and helps you manage your business well, then it’s worth it.
Separate Personal and Business Accounts
Even if you are the owner of the business, it does not mean that you should share your account with your business account. This does not only apply to corporations but to all types of business ownership. It may sound easier since you would only manage one account, and the money in both those accounts are technically the owner’s anyway, right?
Though it may seem easy, it will only give more problems than advantages. If you have a different account for your business, then it would be easier to track down your expenses. The money your business generated should be set aside for business purposes. This is one of the essential practices successful businesses do. Also, it can keep you from being tempted to spend the money since it is in a different account.
Since the account of a business can also be used as a deciding factor for investors, it would be wise to separate it. If the company is being audited, it can also be helpful. Mixing up things, especially money, would only bring problems to your startup, and you don’t want that.
Negotiate Before Signing a Contract
Most new entrepreneurs get excited when they get a contract. Most of the time, they just accept what is in it and does not even bother or try to negotiate. Negotiating terms and conditions is not a new thing in business. In fact, it is a common practice to try and negotiate the contract to a more favorable term for you and your business.
Being able to negotiate is one of the skills of a good businessman. That is why there is a need to sign a contract before it is taken into effect. A contract handed down is not yet final and is still available for changes. But this does not mean you will force your terms on it. Try and balance to satisfy both parties regarding what is in the contract.
There will be a time when you won’t be able to handle everything and would need to hire an assistant or someone to help you. Of course, this can also apply to financial matters. You are having someone to help you manage the business finances will be a great help since this is one of the most tedious and critical tasks. Just make sure that you hire an able and trustworthy professional. It is your money we are talking about, and you don’t want just someone to keep watch on it.
There we have it, tips on how you can properly manage your business finances. We hope that it would be helpful to you and your business. Financial management is one of the most important tasks you will do in your business. Do you know any other tips in handling finances? Write it down in the comment section below, and we can talk about it.