If you’re interested in becoming an entrepreneur, there are many different areas you need to learn about in order to make your new venture a success. From branding your business and marketing your wares, to providing top-notch customer service, putting together a great team, and knowing how to sell effectively, the list of skills and experience required is long.
However, all new entrepreneurs need to make sure they wrap their heads around finance. After all, it doesn’t matter how well you do the other things in business, if you can’t control the money and keep cash flowing, your venture won’t last. To help in this particular area, read on for some tips you can follow to keep on top of finances when you launch a business.
Create a Plan and Set Goals
One of the first steps to take when you want to create your own venture is to put a plan in place and set various goals. After all, you won’t know how to go about building something that lasts if you don’t know what it is you’re trying to achieve, and how you might be able to go about getting there. Be clear on why you’re starting the organization and what you want to get out of it.
It is important to take time to put together a detailed business plan. This can be used to help you get a bank loan or other funding, as well as to give you direction and ensure you’ve really thought about your business idea, the potential target market, and the financial projections.
A proper plan will include things like a budget; analysis of the market and your likely competition; details on your venture’s strengths, weaknesses, opportunities, and threats; plans for product and service releases and distribution.
Prepare for the Worst
While entrepreneurs always need to remain optimistic about their ventures so that they can inspire their team, generate interest in the brand’s products and services, and keep their passion alive, it is also important to be prepared for the worst. When starting a business, you can never predict how things will turn out or what changes to laws, consumer preferences, and the like will occur. As such, it is necessary to make preparations for things not turning out how you had hoped.
For example, it is often a good idea to start your business on the side while you’re still working in your current job, so that you have a main source of income to fall back on, if needed. At the very least, have money set aside to cover unexpected expenses and situations. Having a buffer can make all the difference between being able to keep your venture open, and having to close the doors early on.
Track and Monitor Spending
With the launch of any new startup, money tends to be racing out the door almost faster than you can keep up with. To keep on top of finances at this stage then, it is necessary to track and monitor your spending so that you don’t burn through all your resources in a short period of time.
While you likely won’t have the funds available to hire a full-time staff member to handle the books for you, or even to outsource all of this work to an accountant, you can keep focused on the numbers yourself with a little organization and the aid of technology.
There are plenty of free and low-cost apps and other programs available these days which make it easy to be able to see, at a glance, what your cash flow looks like on a daily basis, and if your spending habits are on track with your budget.
Find the Most Suitable Funding for Your Situation
If, like most entrepreneurs, you need to get access to funding to start, and then grow, your business, it is vital to find the most suitable option for your particular situation and needs. Although you might initially think only of approaching your local bank for a loan, remember that there are now many different outlets to choose from.
You might want to investigate online and boutique lenders, venture capital firms and other investment partner opportunities, crowd-funding campaigns, government support programs, and even family and friends who are interested in helping support you.
In addition, keep in mind that it’s important to only borrow as many funds as is appropriate for you, personally. Just because you read about lots of firms receiving access to millions of dollars of startup capital, this doesn’t mean you should try to get a loan for such a large amount too.
It is beneficial to utilize a debt service calculator to see what kind of debt you can feasibly cover, and to seriously consider how long it will likely take for your business to start making a profit. This type of tool can also help you to discover the impact that a slight difference in interest rate or other loan term can have on your payments and overall financial position.