Launching a startup in today’s competitive world is not that easy and making it a successful venture is even more difficult. You’ll need to overcome various roadblocks in order to make a handsome amount of profit from your business. A report was published on the Forbes website which stated that 90% of startups failed with only a handful making it to the 5th year. What is the reason behind this failure? There are various reasons such as investing in the wrong idea, not using the right tools and technologies, or not able to manage the finances well.
Financial management is the key and it has been seen that most of the startups fail because of the money related problems. Therefore, it is important to have a proper financial plan to help your startup to grow better and become successful.
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Clay Advisors 5 Financial bits of Advice:
- Manage your cash flows well
If you don’t know how to use your money, you are going to fail. Prepare a financial plan and try to stick to it. In the beginning stage of your business, you should try to keep your expenses low so that you can go long. Invest most of the amount towards growth and not on fancy offices and too many amenities. In the starting days, your top priority should be to generate revenue. You have to make a good financial plan for cash flow management.
- Monitor the spending
When you start afresh, there is a lot of expenses coming to your way. But stick strictly to the budget. You have to know where every single penny is going. It might seem hard to manage yourself the hundreds of bills, receipts, invoices on a monthly basis particularly if you have no experience in accounting. So you can prefer using accounting software (such as FreshBooks, Xero, QuickBooks, and Kashoo) at the beginning which will also help with your cash flow management and tax assessment also. Later as you grow, you can hire a professional.
- Focus on acquiring more and more customers
Business means you have people to buy your products. Therefore, your motive should be to acquire more and more customers. What you need is to build a solid customer base. Figure out the ways by which you can acquire customers and then work on optimization to lower the costs. Start with the ways which are cheap and less time taking. Once you are successful with these channels, go for exploring other channels.
In the beginning, you can focus on building a digital marketing campaign. It is one of the most affordable and effective ways to attract customers. Build a user-friendly site optimizing it for search engines, you can start your company’s blog, try to be active on social networks your customers use and invest in the email marketing campaign. You can also prefer using guerrilla marketing techniques such as street art, organizing stunts or throwing flash mobs, and promote them through your social media profiles or website.
4. Prepare a backup plan
You never know what tomorrow has in store particularly in the beginning stage of your business. You should be prepared for the worst possible situation. 82% of small businesses fail due to cash flow problems so you need to have an effective backup plan. Choose the funding option that best meets your needs and will help you keep going no matter what. A business almost takes two years before becoming self-sustainable. Maintain an emergency savings account, both personal and business. And never quit your job because it is still the main source of your income.
An entrepreneur has to plan for your retirement. Look for small investments, Roth IRA, allocating funds on a monthly basis to an online platform like E*TRADE and other investment options. Moving online is the best backup plan if you are still in an offline business way.
5. Build your financial goals
Dreams come true only when you know how to achieve them. Break down your financial goals into reachable and measurable ones. You should have your monthly, weekly, or even daily revenue goals at the place. This will help you stay on track and make the necessary adjustments for constant growth. Set smaller achievable goals as this will boost your confidence.