5 Financial tips for entrepreneurs while they are starting up
Either you are an established entrepreneur or going to start something the one and only thing you must have to check is your financial status and the way you manage. As you are going to start something the chances of getting any financial support for business not high and in fact, you should not expect something like this. However, that doesn’t mean you can’t start without any financial support from a venture firm. Before going to start, you need proper business finance to run your organisation without any hassle during the initial days. Here business finance meaning the basic financial needs of your startup that includes raw materials, assets, goods and other economic activities. Here is how to make a perfect finance plan for business.
Make a realistic financial plan
When you are going to start something new, you need to do a realistic financial plan for business else you end up by spending your money on unnecessary things. You need to prepare your budget in advance and the time which means how long you can survive without making any sale or acquiring clients. Here you should have some extended day to survive which means you are planning to manage for six months without any sales, however, you at least have two months extra in your hand. Make sure that lack of capital doesn’t deter you to enter in the market when you have an excellent plan and best sales and marketing team. In this case, you need to check your current credit report and financial status and how long you can survive without making any money. A realistic financial plan requires you to think where you can minimize the cost and to track every spend that you are doing for your business. Your way of spending will decide your future capabilities of raising fund because investors always want to see how you are managing their investment and without any realistic approach you wouldn’t survive at all. A year of advance planning will help you to reduce the burden, and the cash crunch that will ensure that you have money during the worst phase.
Work on pre-order sale
Though this may look difficult still the best way to save money as you are not going to spend extra money on unsold products. You will deliver based on the requirement, but the tricky part is you need to create an awareness of your brand. In this case, you can make a pre-launching campaign to attract customers for pre-order booking and most importantly, you will able to create a product exactly as per the requirement for your target customers.
Create an emergency fund
A Contingency fund will help you during the emergency period especially in case of medical or any other desperate requirements. Basically, you should have a 6-8 month of living expenses in this fund and should prepare in advance before you are going to start a new venture. You can start a Contingency Fund and can invest in debt mutual fund for a higher return than your savings account, and at the same time, you can enjoy the liquidity.
Create separate accounts
Though this is not new still people make the mistake often while they start a business and that ends up creating a cash crunch situation and also make the accounting complicated. Sometimes you need money for your personal expenditure and having a separate bank account for your business will avoid the disruption. The best part is this will make your accounting and tax ascertainment easy at the end of the financial year.
Spend in requirement
While starting a venture, you will need to calculate where is the exact requirement you need to invest, and what will be the return. You should not invest in those areas where the expected returns are uncertain, and to avoid this you can depend on freebies. Keep in mind using freebies doesn’t mean that you will entirely depend on it. This means scaling up slowly while maintaining your brand value. For example, you should buy a web hosting space and should not depend on free website option else customer won’t take you seriously but you should not also spend all your money on paid advertisement. Your smart thinking and money-saving habits will play an important role where you exactly need to spend or not.