If your startup is going to be one of the 80% that survives the first year or one of the 20% that survives the first five years, you need to be savvy.
You need to make smart money moves and keep track of your billing spending from payroll to materials to how much you pay in rent.
Business finance is a struggle for any kind of company but startups have the hardest time. Here are some tips for keeping track of your finances even if you don’t have a business background.
#1]. Segregate Your Finances
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When you’re starting a business, it can be tempting to pour your own money into it. However, that’s a sure-fire way to get your finances tangled. If you spend all of your money trying to support your business, it may never support you.
After you come up with a name and register your business, you should open a commercial banking account. Your personal bank account should be separate from your business bank account. You need to have a solid border between your personal and business finances.
This allows for your accounting to be done in a more straightforward way at the end of the year. It also keeps your business from being in a cash crunch because of personal use of business funds.
Keep loans and credit cards separate so that in the case that you face a lawsuit, you don’t go totally bankrupt. Your business’s problems can stay in your business and your personal problems won’t interrupt your business’s flow. Small business cash flow is a real issue, so make sure you’re always growing.
#2]. Always Negotiate
When you’re working with vendors, you might think that you have to agree to whatever price they quote you under any circumstances. Thankfully, that’s not true. If you’re good at bargaining, you can save money and end up with a better deal than your peers.
The fact is that you will need to develop persuasive business negotiation skills and techniques that can help you get better deals. Successful negotiators think about what they want before they start, long before they sign a contract. They ask for a good bargain and know how much they’re willing to accept.
Also, you will have to look at the purchase terms of a contract as well. If there are late payment penalties and grace periods, see if these can be changed. You might be able to get an extra month to pay for things. You might even get a discount on a long-term contract with a little bit of pushing.
#3]. Watch Out for Expensive Credit
Taking out credit is one of the best ways to sometimes raise fund to finance a business, however, if you want your portfolio to benefit you in the long term, you need to make sure that your credit isn’t getting in the way. Taking out expensive credit can do some serious harm to your long-term goals.
When you have an established business in a competitive market, find ways to build from within. You need to use funds that you have rather than putting your company in debt. During growing periods of your company, some level of debt might be inevitable.
Make sure that your interest is at the bare minimum price that you can get it at. Reduce your costs as much as possible so that you’re not wasting any of the expensive money that you’re borrowing.
#4]. Watch Your Expenses
When you’re first starting your business, keep your expenses as low as possible. It’s smart to manage everything that keeps your gross revenue from going back into your business. If it’s non-essential, it needs to get jettisoned.
Planning in advance for your payroll, taxes, and interest can help you plan for both expected and unexpected issues. The cost materials for most products tend to go up over time, so leave room for prices to climb.
If you make a plan, you can keep from taking on a huge financial burden. You can also keep your cash flow strong all through the year. If you don’t need to have a physical space, you can save on costs by working out of a shared or home space. You’ll save on rent, which could be digging you into a hole.
#5]. Get Insured
Having insurance is key to the growth of any kind of business and there are different types of insurance every small business owner should own. If you’re building a startup and have no insurance, you’re putting your hard work on a tightrope and gambling with everything you have.
If someone slips and falls or a worker gets hurt while on the job, you could be on the hook. While you’re building your company, you could be building a pile of money that you’ll have to hand over to a defense attorney.
Insurance gives you and your staff some financial security for your family and theirs. It ensures that you’ll keep the doors open, come what may. Make sure that your insurance is not only adequate for your industry but at the cutting edge.
#6]. Stay Tech Savvy
Speaking of the cutting edge, investing in cutting edge technology is a great party of any major business plan. Make sure that you’re using tools that make sense for your business.
If you can’t afford an accountant, you can maintain control over your budgeting with online software. You can keep track of accounts, payroll, and any kind of invoicing all in one place.
If you need the services of a personal assistant but can’t afford to hire one, consider hiring virtual assistants or getting an answering service. It can extend the reach of your business without you having to lift a finger.
You Don’t Have to be a Business Finance Wizard
Most people aren’t brilliant at business finances, but it’s not about being perfect. Great business finances are about knowing when to say you’re wrong, quit, and take the money you have made from the table and put it somewhere else. If you want more tips on spending for your business, make sure you bookmark our page today.