Financial Tips for Start-Up Businesses

Financial tips are craved by start-up businesses. Why? Many people daydream about starting their own business and the idea of entrepreneurship has become even more attractive in today’s relatively flat job market. But starting your own company isn’t for the faint of heart. Not only will running the company demand a great deal of time, it isn’t necessarily guaranteed to be successful as 50 percent of companies fold in 5 years. These tips can help you bring your business to life and keep it in the black.

Ensure the Need for Your Product

In order to see a continued measure of success, an entrepreneur first needs to have a target market before they develop a product. While this might seem like common sense, 68 percent of entrepreneurs have admitted to starting a company in order to capitalize on their idea. No matter how good the idea is though, if there is no demand for your product or service, your company will not succeed and you’ll end up spending a lot of unnecessary money.

Create a Budget

The accounting part of a business might not be fun, but it is absolutely essential to your financial success. A sound budget doesn’t just help keep your company profitable. It also allows you to plan for the future so you can reach your milestones. Track all of your expenses and then subtract them from your current revenue. Identify all of the resources you’ll need in order to hit your goals and then balance their associated costs against your available funds. This is something you’ll do on a regular basis as you grow your company and will keep you from spending money you do not have.

You can also use information from your budget to develop financial projections for the future. Of course, you will have to estimate some costs especially if you plan on expanding from a one person to a 2 person team. It might be tempting to forecast for the long run, but your business can change dramatically in a short amount of time. It’s best to only project for three years and then update monthly or whenever there’s a significant change in your business plan or milestones.

Reign in Overhead Costs

As a startup, you probably don’t have a lot of money at your disposal especially during the first couple months. If you want to keep your costs down as much as possible, you’ll need to set aside certain resources until you do start earning more revenue. Things like full-time employees and an office space, while nice, can put a strain on your finances and that money can be spent on more pressing items like marketing. In the beginning it’s best to either hire contractors or part-time employees as much as possible. This way you will only have to pay a fraction of the cost of one full-time employee. As for office space, if you absolutely cannot work from home you should check to see if there are local office share programs. Many of these programs offer affordable monthly options and some might even offer daily or hourly rates.

Get Funding

You might have heard success stories where an entrepreneur bootstrapped his way to the top. Unless you have something guaranteed to sell from day one and have a good amount of savings, you’ll likely need to find outside sources for funding. Start-up funds don’t necessarily have to come in the form of venture capitalists. In fact, most companies get their money from friends and family in the beginning. While it might seem gauche to ask for monetary help, the people closest to you are usually more than willing to help you succeed. Crowdfunding sites like Kickstarter are becoming an incredibly popular choice to raise early startup funds for businesses.

If your startup requires huge startup costs, the best bet is still venture capitalists and investors. While you’ll have to give up some control of your company, you can much more than just capital. Many of these investors are entrepreneurs themselves and they can provide you with guidance, advice and connections to other potential investors.

Try and Try Again

Even if your first business wasn’t successful you can still gain valuable knowledge from it. In fact research has found that those entrepreneurs that are not discouraged by their first failure are more likely to succeed with their second or third time around. As well, these “serial” entrepreneurs are also successful in businesses that are different from their original ones. So even if your first ten business ideas are a flop, chances are you’re still gaining valuable insight and connections that will make your future business a success.


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