When you are just starting your own business, you need to make sure that you have the funding to cover all of the expenses. Setting up a business is not cheap and it will be a while before you start to make a profit. You need to pay for all of the materials or stock that you need, advertising, and even the employees that you need to hire to get the business up and running. Tons of new businesses don’t make it past the first year because of how difficult it can be to run a business without going bust but that doesn’t mean that you can’t make it work.
To help you run your business successfully, we have gathered some of our best finance tips for startups. Read on to hear what these are and put them into action sooner rather than later.
Create a Budget
One of the most important things that you should do when you are working on your start-up is to set a budget. It can be tempting to overspend on marketing or on products in your store at first, but this can be a big mistake. You need to know how much money you have to spend and where you can realistically spend it.
Your budget should include all of your outgoings such as rent on your business premises, the cost of your employees including benefits and pension contributions, marketing costs, and more. You probably won’t have many incoming finances at the start but if you do, these should contribute to your budget.
Once you have everything written down, you can create a budget that works for you. Don’t forget that you can adjust this as things progress – your budget doesn’t have to be set in stone.
Keep Personal Finances Separate
Next on our list of business finance tips for start-ups is that you should keep your personal finances separate. If you are just setting up the business on your own, it can be tempting to dip into your personal bank account and take money out of the business when you need it. This can, however, get very confusing and make it difficult for you to determine how well the business is doing.
Additionally, you could find that you have trouble with paying taxes when you are sharing your finances with your personal account and your business. So, create a brand new account and track every single payment. This should help you to keep things separate and keep your finances in check.
Hire Freelancers At First
To run your business and allow it to grow, you are going to need to hire employees. This can be an expensive task but usually, it is something that is required. You will need to pay them for all of the work that they do and offer benefits such as paid holiday leave and pension contributions and this can all add up over time. If you need a team of experts who have experience in a field, their salary is going to need to be relatively high.
So, to help you manage your finances a bit more easily at the beginning, we recommend that you hire some freelancers at first. The freelancers can do the work when you need it and only get paid for their time. This way, you won’t need to spend more than you can afford, and you can pick and choose when you need help. This can also save you a lot in benefits, but it is not a great long-term strategy. Once you get in the swing of things, you should look at hiring some full-time staff.
Look At Alternative Funding Sources
For any start-up to succeed, there needs to be funding in place. You can’t just rely on your personal savings or the income that you are generating from your sales, especially when you need to start making investments of your own. So, to run your business finances properly, you should look at some alternative funding sources that could help you to generate the money that you need.
For example, if you were to learn how to buy stocks, you could start to trade and make money over time. While stock trading isn’t always a great short-term plan, it can help you to get your business set up for the future.
Another idea that you should consider is crowdfunding. This can help you to not only get some funds for your new business, but you can also generate interest in the idea. There are tons of great crowdfunding websites that you should look into.
Hire An Accountant
Have you hired an accountant to help you manage your business’ finances? If not, why not? An accountant is experienced in dealing with both established and newer businesses and so can offer you the advice that you need to get your business on track financially. Your new accountant can help to look at where you are spending your money and help you to find better solutions. Additionally, they can help to make sure that you are paying your taxes correctly to save you some time in the long run.
Many start-ups avoid investing in accountants as they are simply another expense, but they can often be worth the investment. If you really want to avoid that commitment, you can look at some accountancy apps and programs that can help you to keep track of your spending. Just make sure you read the reviews and check what kind of pricing model they offer before making that final purchase.
Pay Invoices On Time
Our next tip for those who are hoping to manage their start-up finances a bit better is to make sure that you are always paying invoices on time. If you start to leave invoices until the last possible minute, you risk getting fees or fines attached to them. This can increase the total cost of the invoice and leave you out of pocket in the long run. Typically, invoices should be paid within a month of them coming in, but this isn’t always the case.
Ideally, you would pay an invoice as soon as you can. The longer you leave it to sit on your desk, the more likely you are to forget to pay it. These fees can start to add up over time and so you should think about this carefully. When it comes to paying your taxes, you need to be on time every single time, otherwise, you can face penalties, and this can be even more difficult to deal with.
Save Where You Can
To manage your finances a bit better, you should also try to save where you can. When you are just starting out and you need to find a range of suppliers and providers, it can be tempting just to go with the first option to tick another task off the list. However, you might find that you are paying much more than you should for a particular supplier and this can lead to financial difficulties along the line.
To save some money, you should try to shop around for deals. It might also be useful to start with your existing suppliers and try to negotiate with them. Not all suppliers will be open to negotiation, especially if you are creating a new relationship and haven’t been a loyal customer for long. However, you can always revisit the conversation in the future and see if you can get a discount to save yourself some money over the coming years.
Cut Travel Costs
Finally, we recommend that you try to cut travel costs where you can if you want to manage your finances a bit better. It can be tempting to visit every client in person to build a relationship, but this is not always the best route. It is often possible to have a meeting over the phone or even use video call software.
By cutting down on the number of physical meetings you have, you’ll be able to drastically reduce your travel expenses. For any travel expenses that you do encounter, make sure that you mark them down and account for them in your records. It can be so easy to connect with anyone from anywhere around the world so skip the trains, company car,s and planes and save some money that could be better spent on other areas of your business.
If you are running a new business and you want to make sure that you are properly managing your finances, you should try to take our tips on board. Think about the budget that you are following and don’t forget to pay all of your invoices on time.
Don’t let your bills pile up as this will only impact the overall performance of your business. It can be difficult to make money quickly with a new business but if you make the right decisions, you can get on track for success sooner rather than later.