Now that you have just rolled out your dream startup, as an entrepreneur, there would be several hard choices to make every day. However, money choices could prove to be the trickiest of all since you have no idea what the Return on Investment would ultimately be thanks to your decision. Let us explore some smart financial tips for boosting your startup and help you grow as an efficient entrepreneur.
Always Remember Time Is Money
Never forget that time is valuable and has immense monetary value for an entrepreneur. Now is the time to get into the habit of treating time as money. This is simply because if you waste your time doing some activity or task that somebody else could have performed better and cheaper, that certainly would be costing your business. Moreover, every task you cannot do because of lack of time needs to be entrusted and paid for somebody else to perform it efficiently. Hence, the first and foremost financial tip for startup owners is to start visualizing your time, as well as, your employees’ time as finite resources.
Cash-Flow Must Be Your No.1 Concern
Without adequate cash-flow, no business could run or survive. Cash-flow is the lifeline and lifeblood of all businesses especially startups. It is not enough to have the money for hiring people, getting the essential equipment, paying for utilities, and getting an office lease. You must remember that your company’s overhead would help in determining exactly how long your business could run. Since it could take almost one and a half years for your startup to become self-sustainable, identifying an effective way of maintaining a robust cash-flow henceforth becomes your foremost concern. You may seek assistance from the most reliable and reputed organizations such as https://libertylending.com.
Set Up a Simple & Easy Accounting System
You may not need too many complications at this stage so just stick to establishing a simple hassle-free accounting system. Most startups use QuickBooks, but you could choose from a host of other options. Remember that it is a better idea to set up your accounting system right from the initial stages, instead of trying to incorporate an accounting system later on when your finances seem to have become far more complex. You must build a simple and easy accounting system right from the word go and it should keep growing with your business.
Opt for an Accounts Payable System
In the initial stages, it is of pivotal importance to set up a solid foundation for boosting and maximizing your overall cash flow. Keep in mind all your business expenses and determine an effective way of recording and covering them. You could choose from the plethora of tracking systems. It is a good idea to consult a professional for assessing your unique needs and determining an accounting system that works best for your business. Once you have chosen a system, you simply need to enter all your expenses and even consider establishing an invoice AP schedule for religiously paying all your bills promptly and within the deadlines.
Set Up a Payment Collection Process
You could enhance cash collections simply by setting up an AR process for enabling you to efficiently list out all your balances and open invoices. Ideally speaking, it is best to set up your credit policies, guidelines, and collection timeline even before collecting the initial payments. Try to incorporate a customer incentive program for all those loyal customers who are in the habit of making early payments and you must also, have a strategy in place for effectively managing all late customer payments.
Come Up with Your Financial Projections
You must consider creating a financial forecast that would be using your detailed budget, as well as, sales projections, to start with. This must include estimates of expenditure by departments such as HR, IT office rental, legal, marketing, and other such professional services. You must not consider forecasting beyond 3 years since projections are not that useful or meaningful beyond that point. You need to go on updating all your forecasts every month and every time there are some remarkable tweaks in your overall business strategy.
Create a Budget
You must consider calculating your expenses and then go about subtracting the expenses from your revenue that is being earned every month. You must determine the resources you would be required for hitting or fulfilling your milestones. Once you have been successful in working out the expenses and revenues, you must start prioritizing your goals as you are hitting each milestone. You must realize that it could be pretty challenging to manage working capital at this stage as liquidity could be a huge issue. You must examine vendor financing and focus your attention on chalking out effective sales and marketing strategies.
Understand Your Tax Obligations
When your startup is at the pre-revenue stage, you are usually not very bothered about taxes, but you must fulfill your tax obligations otherwise, there could be some adverse implications. You must hire the services of a qualified and experienced tax professional for abiding by all state, federal, and even local obligations from sales taxes, payroll taxes, and even 1099s to the successful filing of all your quarterly taxes.
As per https://www.forbes.com, it is of pivotal importance for any entrepreneur or business to hire the services of a reputed and reliable financial consultant as that should make all the difference between having adequate funds for supporting your development and having the need to use up your savings to keep your business going. However, often business managers or entrepreneurs do not have a precise idea regarding what precise skills to identify in a qualified financial advisor. You must understand precisely what to identify in a tax consultant besides experience and expertise. As there is no standard industry guide for choosing financial advisors, you must rely on certain general factors such as choose a veteran, having the necessary experience, credentials, and qualities.
You must ultimately keep pursuing funding for your startup and come up with an effective and appropriate funding game plan. Initially, businesses are funded by close relatives and friends. You may consider crowdfunding, super-angels, and angels. There are yet more interesting funding options to meet your startup’s financial goals and aspirations.