Recently updated on June 8th, 2021 at 11:35 am
Are you entrepreneurs who’s gearing up to launch your business idea and nurture it into a successful startup? Or perhaps, you’re struggling to secure investors and government grants to finalize funding for your business plan?
Launching a startup is an endeavor riddled with challenges and complexities. Aside from the complicated legalities and corporate formalities, financial planning is the most challenging aspect. Most businesses fail to survive the first six months after launch because of inadequate financial planning.
So, how can you ensure a successful launch and sustainable growth model for your startup? Keep reading to arm yourself with savvy financial tips to support you on your entrepreneurial journey.
Building Financial Acumen
All businesses rely on financial strategizing and forecasting to maintain growth, profitability, and liquidity. Startups require extensive financial planning, and entrepreneurs with limited financial knowledge always find themselves at a disadvantage.
Unfortunately, hiring financial advisors and accountants doesn’t solve the problem. But instead, it places you, the business owner, at the mercy of other professionals to make critical decisions. Relying on someone else’s knowledge and expertise will deny you transparency, putting your business at risk of fraud and theft.
Business owners must build financial acumen by pursuing higher education, digital certifications, and financial training. For instance, you may consider enrolling in a master of accountancy online to advance your skills and expertise. An online degree is much more manageable and won’t conflict with your work routine and startup launch preparations.
More importantly, it will equip you with a well-rounded financial skill set to manage all accounting activities and strategizing. With advanced training, you can manage your taxes and avoid hiring additional help until your business can afford it. If pursuing a financial degree doesn’t align with your core interests, consider short courses and workshops to build essential skills.
Hiring the Right People
As a startup, talent acquisition requires you to set priorities and hire talent that aligns with your immediate goals. You can broaden your HR goals gradually as your business continues to grow and enjoy higher revenues. But initially, address your staffing needs with professionals that empower and enrich your startup with the necessary skills.
For most businesses, hiring an accountant is a vital consideration to ensure compliance and support financial planning initiatives. Entrepreneurs often struggle with the financial accounting vs managerial accounting debate to determine the right professional for their team.
Hiring a managerial accountant makes more sense for menial and mundane accounting responsibilities. However, a financial accounting specialist has more to offer in forecasting, strategizing, and decision-making strategies.
Experts typically advise startup owners to limit their staffing needs and hire professionals with diverse skill sets. Professionals who can manage multiple responsibilities are the right partners to take on board your growth journey.
Budgeting & Expense Management
Most startups end up withering away because of uncontrollable spending. The lure of spending large amounts of money and effort on impressing your clientele with flashy elements always results in waste.
As a startup, sustainability is your core focus and priority. It will guide you towards survival, growth, and longevity.
Budgeting and expense management is crucial to ensure your fixed expenses remain controlled and well-regulated. Entrepreneurs must set priorities and focus on elements that offer long-term benefits.
Overspending on building image and unnecessary promotion can do more harm than good. Draining your financial reserves on one activity, be it branding or technology acquisition, is a damaging strategy that will cause harm.
Preparing a comprehensive and flexible budget and sticking to this budget is of the utmost significance. As a startup owner, your goal is to minimize your expenses as much as possible and maintain substantial financial reserves.
Setting goals and priorities are essential to growing a financially savvy and successful startup. You cannot control your expenses and stick to your budget without priorities compelling you to stay focused and steadfast.
Being entrepreneurs, it’s often hard to avoid taking money from your business account to pay for household expenses. But your priorities and goals will serve as a deterrent, always keeping you on track with robust accountability.
To set grounding priorities, you must understand your core focus and goals. What are your goals as a startup? Typically, startups aim to acquire customers and build awareness for their products or services.
Initially, while you are struggling to cement your foothold in the industry, you should focus on the following financial priorities:
- Maintaining minimal expenses
- Prioritizing small-scale operations
- Spending wisely on equipment & marketing
- Budgeting extensively
- Allocating capital to build startup strengths
- Adequately forecasting demand to avoid overspending
This minimal-expenses approach may not seem as glamorous as you imagined your entrepreneurial journey, but it works wonders at ensuring survival. Remember, setting priorities and reducing your expenses is crucial to actualizing your dream for success.
Robust cash flow management and expense reduction allow entrepreneurs to grow and build sustainable business models. Companies and startups have to struggle against many unfavorable odds, such as economic conditions, financial shortages, and rising inflation.
Business owners cannot hire professionals and put themselves at their mercy without any core knowledge or skills. It’s wise to avoid entering the corporate arena before empowering yourself with financial skills to understand business formalities.