Startups are an incredible way to establish financial autonomy and self-employment. The typical startup tends to be funded by the founders, and the most difficult part of launching one is often laying a foundation for long-term sustainability.
Startups can be established in nearly any industry where there is an identifiable niche and marketable audience. Some of the most successful and recognizable businesses began as startups, including Airbnb, Uber, and SpaceX.
The amount of funding and organization that go into creating a startup can often seem daunting. However, with the proper planning and some hard work, you can begin a startup that has long-lasting implications in its industry.
Successful entrepreneurs offer the most valuable advice regarding how to begin a startup while sustaining a proper economic foundation. Here are financial tips from industry leaders that will help you launch that revolutionary business idea.
Financial Tips for Launching a Startup
- Cash flow management is crucial.
Without proper financial planning and budgeting, a startup will quickly be placed in a dangerous situation. You need to ensure that you are aware of how every dollar you are spending is used.
It is essential that any entrepreneur understand their budget fully, including their cash flow, greatest expenses, and sources of income. Create a thorough budget, and do not deviate from it! By doing so, you can prioritize certain expenses and avoid overspending in any one category.
Richard Branson, the founder of Virgin Group, is a business magnate and investor responsible for over 400 companies. Regarding cash flow management, he says, “Well, I think there is a very thin dividing line between success and failure. And I think if you start a business without financial backing, you’re likely to go to the wrong side of that dividing line.”
Your startup’s success undeniably relies on proper cash flow management. Even a revolutionary idea cannot save a business from financial ruin.
- Prioritize setting low fixed expenses.
Another common action that can compromise the health of a startup is spending too much money on image. Even though big offices, new cars, and top-of-the-line equipment are impressive to customers, these things do not truly reflect the success of a company.
While building the foundation of a startup, it is more important to keep fixed expenses as low as possible. By doing so, you can ensure your capital is being allocated to growth rather than glamour.
Suze Orman, a financial advisor and founder of the Suze Orman Financial Group, asserts, “Look everywhere you can to cut a little bit from your expenses. It will add up to a meaningful sum.”
Prioritizing company development includes evaluating the efficacy of your marketing strategies and catering to your customers’ needs. In addition, using online accounting tools like online small business payroll is an easy way to save money that would otherwise go to hiring an accountant.
- Remember the value of your time.
The famous phrase “time is money” rings true, especially when planning to launch a startup. In everything you do, ask yourself whether the time is being allocated efficiently and helping your startup grow.
It is essential to plan your time wisely. Bill Gates, one of the world’s richest people, plans each day down to the minute because even though he has unlimited monetary resources, he cannot buy time.
Buy a planner or utilize a calendar to start scheduling each week and day and ensuring that you are spending your time wisely. Any minute you spend doing something unrelated to your business is less time devoted to helping it grow, and time wasted often equates to money lost.
Stephen Covey, the author of The 7 Habits of Highly Effective People, states, “The key is not in spending time, but in investing it.” Treat every moment of your day as the time that could be spent investing in the future success of your startup.
- Customer acquisition is essential.
Acquiring new customers is the fastest way to increase your profits and expand your business. A strong customer base will especially support a startup throughout its early developmental period.
There are many ways to acquire customers. Talking to friends and colleagues is a straightforward way to spread information about your company. Furthermore, taking the time to understand your target audience will allow you to tailor your marketing to that demographic.
Jonah Sachs, an author, and entrepreneur, explains, “Good marketers see consumers as complete human beings with all the dimensions real people have.” Being charismatic and personable towards your customers is an important investment in your future customer base.
Social media and the internet are fantastic tools to attract new clients and promote referrals. An organized online platform will give customers easy access to streamlined information and encourage them to stick around.
- Set specific goals.
It is important to set goals that are not only well-thought-out but also attainable. Monthly, weekly, and even daily revenue goals allow you to stay on track and make any necessary adjustments to promote growth.
While in the planning phase, draft a thorough outline for the company and expectations going forward. Ensure that you have a concrete idea of where you expect to be in 5 years and how you plan on getting there.
Alan Lakein, the author of How to Get Control of Your Time and Your Life, asserts, “Planning is bringing the future into the present so that you can do something about it now.” Breaking up long-term goals into achievable milestones is motivating and allows you to properly track your progress.
Regularly hitting smaller goals is what every beginning entrepreneur needs to instill confidence that the company will be successful in the future. Setting these goals for future growth will allow you to conceptualize what lies ahead.
- Be prepared – for both the good and bad.
Having an optimistic attitude is great and will undeniably help your business. However, bad things sometimes happen, and it is important to always be prepared in case the worst unfortunately strikes.
Especially in the early growth period of your startup, ensure that you have another stable form of income that can support you in the event of something unprecedented. Do this until you can ensure that your business will support your financial needs.
Keep an emergency fund for both your personal life and business and build upon it regularly. Furthermore, invest in your retirement through assets and a Roth IRA so that you can support yourself after you have stopped working.
Roger von Oech, a speaker and author, says, “It’s easy to come up with new ideas; the hard part is letting go of what worked for you two years ago but will soon be out of date.” Be willing to adapt. The best way to avoid preventable disasters is to evaluate the efficacy of your current business model.
- Make sure you are paying yourself the proper amount.
It is essential to be meticulous when deciding how much to pay yourself. You cannot live without compensation, and there is a desirable middle-ground between neglecting yourself to enforce the bare minimum pay and lavishing in newfound financial independence.
Compensating yourself enough to live comfortably will help you focus on your business without having the burdens of personal financial struggles. Launching a startup should not come at the expense of your own well-being.
John Rampton, an investor and startup enthusiast, states, “A cardinal rule in budgeting and saving is to pay yourself first. Once your paycheck hits your account, wisdom has it that you should move some amount to savings even before you pay the bills.” Consider paying yourself properly as an investment in your future success and well-being.
Having a stable income is essential to give yourself a satisfactory life and provide your business with some protective padding. While building your startup, make sure you are providing yourself with the means of growing, as well.
Get Out There and Do It!
It is undeniable that beginning a startup is a long, difficult process. However, with the right knowledge and some helpful advice from successful entrepreneurs, you have the potential to create a business that is both profitable and fulfilling.
Internalize these seven tips and use them to guide you in your startup’s planning and execution. In doing so, you can avoid some of the challenges to your business that could result in a fatal downfall.
Remember that the process of launching a startup comes with highs and lows. It is normal to make mistakes, and if anything, the experience will allow you to learn from your errors and better plan for what happens to your business in the future.
Be kind to yourself. Expect that things can and will go wrong, and that is okay. As you continue to adapt and grow, your company will grow with you.
Do not stand between yourself and the successful business you have always dreamed of starting. Get out there and do it!