By Nazlin Amirudin
Starting a new business? Is your startup in its early stages? Keeping your business from declaring bankruptcy and/or failing, ultimately comes down to the cash flow of the company. Here are some financial considerations that are useful (and important in the long run) if you have a startup.
Startups typically only need a simple accounts system. Make a system that is simple to understand and also user friendly. You will thank yourself later when things get more complicated. Starting off with something simple and later advancing into a more fancy accounts system is a lot more easier than starting off with something that is difficult to understand and potentially messing up a lot more.
Track cash flow
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Keeping a track of your cash flow (both in and out) will help you in analysing your financial status at the end of each quarter. Remember that achieving a balance in your cash flow is ideal and should be the goal at the beginning stages of your startup. Knowing where your cash is going can help you figure out if you need to cut back on other expenditures.
Investing the right way
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They say in order to make money, you need to spend money first. Investing is an important factor in a startup. Thinking about investing also means you have to think about your priorities. What does your startup really need as opposed to what you want it to have? For example, you can cut back on the expenses of renting an office at a popular area by starting off working at co-working spaces (insert link) instead. Items like printing machines and other expenses like paying for electricity will be taken care of if you and your team decide to work at a co-working space. Remember, this is just the beginning. There are many more things you will have to invest in in the future.
Back up bank
“Better be safe than sorry” is a motto that every financial team in a startup should keep in mind. Having financial issues is inevitable for every startup and small business. This means having money stashed for future emergencies is always a good idea. Having a plan b to a negative financial dip will not only save you time later on, but also make you extremely prepared for the worst.
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Build a timeline for your business; no matter how new it may be. Ask yourself these questions:
– What should the profit margin be?
– When is the time to break even?
– When can you afford to hire more employees?
– How else would you like to expand later on?
These questions (amongst many others) will help you in having direction for your business. It will also provide your business a benchmark in which you can evaluate your growth and progress.