Starting a business comes with many challenges. But one of the most daunting ones is managing the finances. Many startups shut down soon not because they are not unique enough but because they do not have enough financial resources. So here are some of my essential personal finance tips for startup entrepreneurs that will help you get through the rainy days.
#1 Set Financial Goals
Now that is pretty obvious. Yet, many new entrepreneurs do not set clear, attainable, and realistic goals for themselves. So the first step to achieving financial independence in a startup business is to have clear goals for yourself. For instance, you can set your automatic bill payments, open a separate savings account or start putting money in an emergency fund. Setting goals helps you understand why you must focus on your finances and the best ways to use your money. After all, you need money to keep your business up and to run. So why not stay organized from the beginning?
#2 Cash flow management
It will become much easier for you to reach your financial goals if you keep track of your money flow. So make sure you know where the money is coming from and where it is going. Study your credit card statements and your bank account statements. See how you spend your money and whether there is any chance to cut off some expenses or you have got everything under control.
Moreover, keeping a check on your cash flow can help you set up a budget for yourself. For instance, you might find out that you spend a lot of money eating food from restaurants. You can cut down that expense by switching to home-cooked meals. Similarly, you can track your internet bills, electricity bills, etc., and find out where you can cut costs and create a budget.
#3 Start small
It would be best if you learned to expand your business slowly. Restrain yourself from taking big loans or investing in things that you cannot afford at the time. For instance, start your business from your home if you can. Do not buy an office straight away. You might begin to save a bit every month for an office but before you buy one, make sure that your business brings in enough profits.
Many startups focus on the wrong things in the beginning. For example, they promote a ‘cool work culture’ because they do not want to be just another business world. Make sure you are not doing that. Instead, your priority should be reaching more customers and increasing the revenue.
#4 Seek guidance
Being an entrepreneur does not mean that you must be a master of finances. Instead, you might consider an expert to guide you through. They can help you create monthly budgets for different aspects of your business, such as brand awareness, product costs, and online marketing. In addition, you can seek advice on how you must invest your money or whether there are any ways to cut down taxes.
#5 Create a second source of income
It would be best if you had a steady income until your business does not start making profits. This way, you can make sure all your expenses are being taken care of. Moreover, it would let you focus on the main aspects of your business, like the product quality or creating a reputation for your brand. However, you will have to manage your time to do a job and run a business simultaneously. But, that is the only safe option for you, especially if you have a family to take care of and bills to pay.
Charlie, who has recently started his online merchandising business, also works as an essay writer and provides assignment help in Australia. But, he says, “the first few months will test you. There will be anxiety and overwhelm. But what kept me sane was the assurance that I did not have to worry about paying my bills for now. I can experiment and try different things in my business.”
#6 Have a monthly budget meeting with your family
Since your finances include your family, you must keep them aware of your ‘financial situation’. You can start with creating a budget for your family members and have a monthly meeting with them. For instance, you can sit with your family at the beginning of every month and discuss the upcoming expenses. For example, your kids might have something in school for which they need money, or they might have to buy new stationery. Similarly, you can consult with your partner and set a budget for groceries, bills, and so on.
#7 Be prepared for the unexpected
Despite all the monthly budgets, there can be unexpected situations where you have to spend money. For instance, your car might break down, or anyone might fall sick in your family. So make sure you keep an emergency fund for such sudden unexpected situations. Jane, who offers essay help in entrepreneurship to college students, says, “your decision of not quitting your job in the first place would sound right when a sudden need for money arises. Many finance experts also recommend that entrepreneurs should create a retirement fund and start planning for their future right from the beginning since everything is unexpected in the business world.”
Financial planning is an essential aspect of starting a business. You must begin with setting up some financial goals. Set budgets for your business and personal requirements, track the cash flow, and seek guidance from an expert on managing your finances. Also, it would be helpful if you kept a second source of income for yourself. Even a part-time job of assignment help would also work as long as it helps pay your bills. Last but not least, take small steps to success so that you do not have to take any financial risks in the beginning.