By Damilola Faustino
A major challenge that many startups face is finance. It can make or mar any business enterprise especially if you are not financially prudent. It is even worse for the startups who have not hit profitability but are having serious financial problems. Here’s how not to fall in this category:
Set reasonable and measurable goals
Every entrepreneur has lofty goals and they dream big and do everything to achieve these goals even if they have to stretch their balance. Sooner rather than later, your liquidity will dry up and at some point, your lenders will refuse to borrow you. So, a good idea is to break down financial goals into achievable and measurable ones. You can set targets for a week, month and eventually on yearly basis, which will help you make the necessary efforts for consistent growth.
Manage the cash flow wisely
The most common reason due to which most of the startups fail is poor management of cash flow. It is important to keep track of every single naira being spent and received from. Many people think that a good idea is enough to make a business survive and other things such as money, people, resources etc., aren’t that important. It is true that a business idea is important. But remember that money is the most important medium to make sure you are able to invest in a good team, resources, infrastructure etc. Ignoring the cash flow management of your business means directly putting it in danger.
Do not forget to invest in technology
A startup business firm cannot afford to hire full-time professionals who can take care of your money, you will be running short on cash during the initial days. You can invest in a budget-friendly accounting software which can help you manage the cash flow.
Save that equity
In the beginning, you or your co-partner have full right over the company and its equity. But if your capital goes low then you will have to take financial support from angel investors by giving a part of your equity. This seems an appealing option because you don’t have to give that money back, but it takes away a part of your control over your company. Thus, it is advisable to save your company’s equity and keep it in your hand. This will save you a lot of money.
No customers, no business
There is no doubt in this — without buyers, there is no role of seller. The quicker you grab this phenomenon, brighter are your chances of success. Identify customer acquisition channels and begin working on optimization to lower your costs. Since it can be difficult to test every possible acquisition channel at first, so choosing the most lucrative opportunity can be a wise choice. Once you are able to scale those successfully, you become financially capable to explore other channels.
Paying yourself with a decent compensation is a good way to pamper yourself for the hard work you had put in over the last month. Although this doesn’t mean a big fat salary but something that is enough to fulfil your needs. This is also a great way to eliminate financial stress at the personal level and to encourage yourself to focus on business building.
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