5 Simple Financial Tips for Startups and First-Time Entrepreneurs

Simplest-Financial-Tips-for-First-Time-Startup-Entrepreneurs

As an entrepreneur, you’ll have to make hard choices day in and day out. Money choices can be the trickiest when you're not sure exactly what the ROI will be on your decision. Here are five simple financial tips for startups and first-time entrepreneurs that may help you in this regard.


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1. Your time has its value

The first financial mistake that first-time entrepreneurs fail to understand is the fact that your time has an actual monetary value. Start thinking of your time in terms of money, because if you spend time doing something that someone else could have done cheaper, that's a cost to your business. Every task you don’t have the time to do, you’ll have to entrust or pay for someone else to do it.

Therefore, the first financial tip you have to learn is to start looking at your time and that of your employees as a finite resource.

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Recommended reading: The Quick Start Guide to Startup Fundraising

2. Cash-flow is your No.1 concern

Without enough money, your company can’t run. It really is that simple. Having just enough money to hire people, get the necessary equipment, pay for the first month of utilities and get a lease on an office is not enough.

Keep in mind that the overhead of your company determines for how long you can run and, since it may take up to 1.5 years until you’re self-sustainable, finding a way to maintain a healthy cash-flow becomes your No.1 concern.

3. Don’t sell equity early on

Applying for a loan seems too complex and not feeling like committing to pay it off in years to come is a smart thing to do. Therefore, you will probably decide that it’s for the best to sell some of your equity and, in this way, resolve this momentary financial shortage.

In the long-run, you’ll give out control in your company to someone with a vision that differs from your own for only a fraction of your company’s real worth.

Instead, it would be much smarter to simply overcome your fear of getting start up business loans and talk to your bank.

4. Use financial apps to track spending

When on a tight budget, you will be surprised just how much of a difference a minor expense can make. Coffees, diesel, it all adds up. With the right financial app or platform, you can track spending easily and get a much better insight into the real state of your finances instead of waiting to completely run out of cash. Some of these apps are free, while some are more than worth paying for.

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5. Sometimes trying to save money results in other costs

Sometimes by trying to save some money, you end up spending even more. A good example of this is – employee bonuses. You might think that giving your employees a bonus will help save money, but think of it this way, keeping your current employees happy, means you retain them, which saves you money by helping you avoid making new hires. It's always more expensive finding and training up someone new.

Or doing your books yourself because you want to save money on an accountant or book keeper ends up getting you an audit or a fine from Revenue because you forgot to include something important. 

The problem with becoming an entrepreneur lies in the fact that it requires you to alter your mindset. An employee only has to worry about their next bonus, paycheck and extra hours, while for an entrepreneur these are the least of concerns. I hope these simple tips will help start you thinking about money and expenses in a new way.

Over to you now. Do you have any financial tips for startups to share based on your experience? Share them with us in the comments below. 

 

 

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Thursday, 16 August 2018
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