Starting a new company can be an incredibly exciting time, and hopefully, you will find great success, but often, business owners find that money can create a range of issues when starting out. It can be costly to get a business up and running, and it can take some time until you get any money coming into the company. This means that you need to be intelligent with finances when starting out, as this can help you to manage during this tricky time while the business finds its feet. Here are a few financial tips to keep in mind.
These financial tips should help you to manage your money smartly when setting up a new business. It can be a difficult period to manage financially, because you will be spending a lot getting the project up and running, with no guarantee of money coming in straight away. Being sensible with money will also put you in a good position for the future and help you to operate more efficiently.
Read next: The Big Five’s Biggest Acquisitions (infographic)
Secure Sufficient Funding
It is important that you work out exactly how much money you need to get the project up and running and then find ways to secure this finance. Although you should keep the setup as basic as possible early on, you still need to provide a high-quality product/service from day one. You have a few different options for securing finance, such as:- Business loans
- Venture capitalists
- Angel investors
- Crowdfunding
- Personal savings
Keep Costs Low
As mentioned, it is a good idea to keep the operation basic when first starting out and then look to upgrade once the money starts coming in. There are lots of ways to keep costs down when starting up, such as:- Outsourcing instead of hiring
- Remote working
- Leasing equipment
- Negotiating with suppliers
- Using second-hand furniture and equipment
- Using open-source software
Keep Track Of Finances
It is an obvious point, but one that needs to be emphasized, because if you do not have a good system for tracking finances from day one, it can get complicated and messy. Use high-quality accounting software, which will allow you to get a clear overview of the business finances and monitor expenses and income. This will help you to make smart business decisions, and it is also important for filing taxes at the end of the financial year.Keep Business & Personal Accounts Separate
Leading on from this, you must also ensure that you keep your business and personal accounts separate. Many aspiring entrepreneurs make the mistake of using just one account when starting a small business operation, but this is a dangerous move. Separating accounts can make accounting much more straightforward and makes it easier to monitor your finances. Additionally, it should stop you from using personal funds for business spending and vice-versa, as this never ends well.Arrange Business Insurance
Business insurance is an essential investment to make and one which needs to be in place from the start. Unexpected things can happen in the business world, and as a new small business, you may not be able to afford to take care of the problem. Small business insurance will help to provide cover and allow for peace of mind, knowing that you have protection in place.Create An Emergency Fund
Following on from this, it is also a wise idea to have an emergency fund in case things do not work out as planned. You may find that sales can fluctuate drastically month to month (particularly if you have a seasonal business), which is why it is helpful to have a fund that can tide the business over during quiet periods.Take Preorders
An intelligent move for getting money to help set up the business is to pitch to your target customer and take pre-orders or set up subscriptions. This allows you to receive money before you have actually set up the business and can help to provide a cash injection. This can be a smart move, but you need to make sure that you do not keep your customers waiting for too long as this could have a negative impact on your brand reputation.Set Financial Goals
Setting financial goals for your business in both the long and short-term can help you to stay on track and always be wary of your financial state. A smart business owner will always be working towards a financial goal that will help to improve the company’s bottom line and put them in good financial health.Pay Yourself
It is important to pay yourself once you have got the business up and running. Obviously, you should not be paying yourself a huge salary when there is not much money coming in, but you are doing the company a disservice if you are not paying yourself enough at the start.These financial tips should help you to manage your money smartly when setting up a new business. It can be a difficult period to manage financially, because you will be spending a lot getting the project up and running, with no guarantee of money coming in straight away. Being sensible with money will also put you in a good position for the future and help you to operate more efficiently.
Read next: The Big Five’s Biggest Acquisitions (infographic)
