When you decide to start a new business, there are lots of things to think and learn about if you want your venture to be a success, including product development, sales and marketing, customer service, assembling a team, and more.
No matter what industry you’re in, though, or the kind of business you’re running, if you don’t keep your finances in check from the start, you won’t have a venture for long. You need to be able to keep the cash flow running smoothly month after month, and not get yourself into trouble where you can’t pay staff for their time, suppliers for their goods, or all your other bills. To help you run a business in a financially savvy way, read on for four key tips you can follow today.
1. Plan, Budget and Set Goals
First up, you’ll make things easier for yourself if you do some planning, budgeting, and goal setting from the beginning. Know what you’re trying to achieve, when and how you plan to get there, and how much money you have available to help you on your way. Be sure you know why want to actually start the business in the first place, and what goals (financial, personal, career, and other) you want to achieve.
A great step is to create a detailed business plan that covers lots of different facets of your venture. For example, this plan should include info on your business idea; target market(s); competitors; strengths, weaknesses, opportunities, and threats; financial projections; budgets for various areas of the business; analysis of the current market and what is and isn’t being offered; what you’ll do differently; and your plans for the release and distribution of your products and services. This business plan will help you to get a lender or investor interested in your business and its potential too.
2. Find the Right Funding
If you’re like most other entrepreneurs creating a new business, you’ll probably need to get access to funding to start and/or grow your venture. To increase the health of your business finances, it is vital to find the right type of funding for your organization and goals; don’t just go to the closest bank or the provider you currently deal with and leave it at that.
Complete research on the various types of lenders and investment options available so you can find the best fit for your particular needs. On top of traditional bank loans, there are also things such as online and boutique lenders; venture capitalists and other people looking to invest in new businesses; government financial grants, private equity loans and the like; merchant cash advances; invoice factoring; equipment finance; and crowd-funding campaigns.
On top of considering whether you’re looking for investment partners or just loans, plus things like how much you want to borrow and for how long, consider whether you will actually qualify for the type of funding you’re interested in. There’s no point spending time on applications that you simply won’t meet the criteria for, so always look at the terms and conditions and other details to find out who qualifies for funding before you submit paperwork.
3. Keep a Close Eye on Spending
Next, don’t forget to keep a close eye on your spending as you’re creating and building your business. It’s easy for money to be spent at a rapid pace at the beginning especially, so track and monitor your spending daily (or weekly at a minimum) so you don’t end up burning through all your cash in the first couple of months.
A great way to make your life easier with this task is to utilize technology. These days there are hundreds of free and low-cost apps and other software on the market that can help you create and stick to a budget, pay bills on time, and see at a glance where your business is at financially.
4. Be Prepared for Things to Go Awry
Lastly, while it’s important as an entrepreneur to stay positive and passionate about your business, it’s also necessary to remember things can, and will, go wrong in the course of running a venture. As such, be prepared for things to go awry by always keeping some money aside to fall back on if needed.
For example, unexpected expenses could crop up that urgently need to be covered, or changes to laws or government regulations could cost you additional money. If you have surplus funds set aside as a buffer, this will not only ensure you can pay your bills and keep the doors to your business open, but also considerably reduce your stress.