So, you have decided to make that great step and launch your startup. There are so many things to consider before making such a move. It is not an easy decision after all, only 50% of businesses with employees survive past the first five years. It is important to properly prepare, do the detailed market research, ensure you have a service or product that can actually attract customers, secure finances and have a marketing plan in place to promote your startup. Simple isn’t it. Well, it would take a whole series of articles to cover all the necessary aspects of starting a business, so in this particular one, we will focus on the financial aspect, as it is the one that can essentially make or break a startup.
The starting capital
Before you even consider launching a startup you need to ensure that you have sufficient funds for at least six months. There is no guarantee on when exactly you will start making money, and without a steady cash flow, your business will be dead in the water. So, the first step is compiling the initial investment. There are several ways to go about this:
- Get investors – you can search for willing investors who believe in your product or service and are willing to provide a financial backing for your startup. You can always opt for a business incubator or angel investors to cover the starting costs.
- Consider loans – getting a loan is always an option, but at times it can be hard to get one from a bank, especially if you don’t have a perfect credit score. In those cases, you can opt for trusted unsecured business loans that can provide you with the finances you need. Just make sure you get a steady payment plan that you stick to.
- Get money from family and friends – this should be the last resort. Getting money from family and friends can be tricky. It can complicate your relations if something goes wrong with the finances. So leave this as your last resort.
Make sure you set clear goals
When it comes to finances for your startup you need to have a clear business plan which includes pre-set financial goals you need to achieve in order not only to gain profit but also keep your startup afloat. A lot of entrepreneurs make the mistake of throwing money into the startup after it continually fails to meet the preset milestones. And this is something to avoid at all costs. Set realistic and achievable goals that will be enough to keep your startup going and growing in the next few years. Each time you achieve one, you can easily make changes to the plan and even be a bit more ambitious if the numbers you are crunching allow you to be. But under no circumstances should you be trying to make your startup work well after it has failed to reach even its primary financial goal. It is far better to close shop, regroup and try again thus minimizing your financial loses.
Keep track of your expenditures
At the very beginning, you are bound to have a bit more expenditures than later on. There is the renting of the office space, procurement of equipment and employment. Of course, you shouldn’t go over the top with these things. Get the essentials so that you don’t run out of money before you have even started. You can easily expand in the future once your startup is off the ground. The next step is having an image of what your monthly expenses are going to be. This includes rent, utilities, paychecks and the money you need to put back into the company so that it can continue to grow. A good option would be to hire an accounting company to help you deal with all the paperwork and taxes. They can also send you monthly reports that will provide you with the necessary information on where you have more spending room and where you should cut back. That way you won’t overspend and get your startup into debt.
These are just some of the financial tips for you to consider when launching a startup. In today’s market, it is definitely not easy to succeed, but if you have a good product or service and you have done the legwork when it comes to the feasibility of what you are about to start you might have a chance. Just remember, without a smart financial plan the chances of your business succeeding are slim to none. This is not something you can learn along the way it is essential that you have a preset plan in motion to ensure you have enough funds to run your startup for a while before seeing actual ROI.
