Setting up and running a startup is a tricky business. First time founders are naïve and are not aware of every tip and trick. More often than not, it leads to serious mistakes.
Setting up and running a startup is a tricky business. First time founders are naïve and are not aware of every tip and trick. More often than not, it leads to serious mistakes. Some of these mistakes are manageable while others not. The startup world is full of the stories in which a single financial debacle sunk the whole venture. So, we have rounded up a few helpful financial tips that will make sure that your startups does not become a cautionary tale.
Pay close attention to cash flow
Cash flow is equally important for every business, small or big. Founders must understand that staying on top of company’s cashflow is crucial to ensure a healthy business. The founder must be aware of every single rupee, incoming or outgoing. Startups that make the mistake of taking cash flow lightly seldom get a chance to fix it. Not matter how brilliant and innovative a startup idea is, it won’t amount to anything if the business suddenly runs out of capital. The trick is to make a budget and follow it religiously.
2. Keep an eye on every spending
While starting up, expenses are inevitable. From hiring new resources to setting up an office, every single activity incurs cost. Therefore, it is imperative that all expenditure are tracked and monitored closely. Hiring an accountant might not be cost-effective in the beginning for a startup, in that case, an accounting software can be used. It won’t only help you with cash flow management but also with taxes at the end of financial year. As the business and number of transactions grow, then a professional can be hired.
3. Be a miser in the beginning
If you have just secured funding, make sure that you contain your initial expenditures. You don’t need that office right next to the central business district. You can also do without that annual office trip to a foreign destination. The key is to start small and eventually grow. A lean startup in the beginning goes a long way. Channel the capital as well as revenue into growth so that you can do or buy anything you want one day.
4. Be optimistic but never myopic
Startups must act like a paranoid mother – wishing for the best, prepared for the worst. Never put all your eggs in one basket, unless you are very, very sure. Don’t leave that job and kill your main income source until your business is not making at least double of that amount.
Maintain reserves for both personal and professional contingencies. Bad times are inevitable but never unmanageable. So, start preparing early.
5. Invest in customer acquisition
Customers make a business, not the businessmen. Find your customer and acquire them fast. Find or reinvent acquisition channels, and then start optimizing to bring down the acquisition cost. You must understand that while every authentic acquisition channel can bring you customers, you can’t invest in every single of them. Find the most profitable channels and explore them to their core.
6. Make sure you pay yourself
An entrepreneur who does not pay himself is not a successful one, no matter how big the company becomes. All the hard work and hustle will only be worth it if you get your worth. Therefore, it is important that the founders must pay themselves enough to ensure a comfortable and dignified life.
7. Know when to take help
Every startup needs support and handholding, at least in the beginning. Therefore, the founders must identify the people and platforms they can approach for help. For example, hundreds of budding entrepreneurs are participating in Inter College Innovation Challenge by Rajan Nanda Innovation Lab in search of that support and help. Here at ICIC, not only these participants can validate their creative and innovative product ideas but will also get an opportunity to secure seed funding of Rs. 50 lakhs. If you are interested, log on to their website and get more information.