Finance Management for Startups
Finance Management for Startups
Starting a new business is not the easiest thing in the world, especially when it comes to managing its finances. There is no denial that money is the driver for almost everything, and counting every penny is just what you will have to deal with on a monthly basis. But it is better no to do it just blindly, and that is our discussion topic for today: tips to make your finance management easier, or how not to go mad from all the responsibilities and number crunching. As a CEO of a new company, you might want to give them a good read and be more aware of what lies ahead!
Important notice: do not neglect finance management, and don't toss it in a drawer until better times come, because that way they certainly won't. It is crucial to start building your finance management routine from the very start.
If you have just started, chances are that you don't have a dedicated team to manage the finances. Don't worry too much about that, everybody had to start that way, you just have to brace yourself for more work than usual and pay attention. The tips below will be most helpful for the new founded startups, but it won't hurt to read through them even if you're a pro with years of experience to freshen your beautiful days as a new CEO. 🌱
- Get a business bank account. This is something that you want to do first. You absolutely need to separate your personal expenses from your business, and there is a good reason for it: taxes. When the time comes, you will have a hard time trying to figure out which bill is your own, and which belongs to your beloved company. Do yourself a favor, and save your soul from a couple of nights of a financial nightmare. Besides, don't forget that you can make some mistakes and miss something, and that is never a good thing. Overall, getting a separate account will help you to take full control of your business' finances and never miss a single cent.
- Work on your financial literacy. You don't have to be a mega mind when it comes to money, but it will never hurt to work on your financial literacy. There are tons of educational content on the internet like free and paid courses, articles and other sources that you can use to be more aware of the hardships that you may encounter. Gathering important information in one place for ease of access and consulting purposes is a good idea, this way you will be able to return and remember the part that you are not too certain about.
- Learn to manage your cash flow. We have already determined that money is the driver of your business. Like an engine of your car that makes it move, cash pushes your start up forward. That is why you have to make cash flow management a routine. There are plenty of tools that you can use that will help you with that, besides, with almost all of the banks making their apps better and better, it will become only better. Anyways, you might want to monitor and log all of your expenses, debts, and savings. Also, always be on lookout for places where you can cut some corners, but be careful with that, you don't want to sacrifice any quality for money.
- Hire an expert. While trying to figure out everything by yourself is a good starting practice that will help you to gain some priceless experience, going with hiring an expert is the best way to get a perfect start. You may also do this after going solo for a while. The thing is, your time and money are what really matters, and you want them to be spent accordingly. Most newbie business owners do not understand what they are doing even though they may try really hard, and they can't be really blamed for that: we all have to start somewhere. That is why it might be a good idea and practice to invest into hiring a financial expert that will help you to kickstart your money management game.
- Customer acquisition is the key. Your business depends on the customers, and it's no secret. You will have to go through the process of testing all the possible channels of customer acquisition, but it is essential to have the money to in, not just out. There are many possible ways to earn your first clients and start building a base that you can work with, for that you can check out our blog posts on how to make sales, and start tuned because there are more to come soon!
- Build strong relationships. People are more valuable than money. They are what really drives your company behind the scene, and you should never forget that fact. Building strong and stable relationships should be on your agenda every day: suppliers, customers, your employees, you should do everything that you could possibly think of to establish trust between you and them. Remember, the company is only that good as its people.
- Establish goals. You want to set reachable goals for every week and month. That way, there will be motivation to do more, and break those records again and again, making more profit. You will also be able to see your progress and make necessary adjustments to all the processes that are going on in the company. Mental part of it is really good too: no one should deprive themselves of that much needed confidence growth!
- Be prepared for a worst-case scenario. You can never know what will happen next month, well, even day. If you don't want to listen to me, listen to a world-known classic Bulgakov and believe him: a man can't surely know what his evening will be, but a day, month, week? Surely not. So always keep emergency cash in case something happens, and it applies to your personal life as well, apart from your business.
As your company grows and scales with you, you will find yourself in need to bring your finance management to the whole new level. To ensure the bright future of your company, you may want to look into these advanced tips to make your start up into a go up:
- Build a dedicated finance team. Once you have grown into more or less stable company, you will want to set up a dedicated finance team that will manage your budged. Your finance team will be responsible for all of your income and expenses, taxes and all other precious things that you had the pleasure to spend countless nights with. They will ensure the company's growth and stability, save your time and make your life easier.
- Manage and track all the expenses. When your company gets bigger, it will be harder and harder to track every bill that comes through your door. That is why you would want to keep a close eye on every expense yourself and make sure you approve them before letting your employees go on with what they wanted to spend the money on. It is better to deal with every expense at once for more control rather than blindly approve every bill and review them at the end of the month (or every year). Thankfully, there are countless tools that can help you with that, and there should be no trouble tracking everything once you're all set.
- Invest into good software. It has been many, many years since the world gone digital, and many jobs that required hard manual work can now be done online, in front of your trusty computer friend. Be sure to invest into good accounting software to ensure that your company can track all of its expenses.
- Make sure to use secure payment methods. The times when you had to rely on just one credit card for all employees are now long gone, and there are plenty of ways that you can track and customize on what and when your workers can spend company's money. Some banks even go as far as setting limits on a certain categories like travelling, ads, or marketing purposes and so on.
- Build outside connections. Since the pandemic hit, everybody went digital because they had to, which led to a stunning online presence among newly founded companies. As a good CEO, you always want to look for investors and partnerships, and here where LinkedIn comes in. It is the best tool for building connections outside your company, and there is nothing like it for now. Having a professional LinkedIn profile is absolutely a must, and you should never skip such a powerful tool that can lead to many great possibilities you don't want to miss.
That is about it, we hope that our tips were helpful to you! Whether you are just starting, or you have been keeping your business for a long time, we all need a new (or old) perspective from time to time.