6 Financial Tips for Startups By Benito Keh
May 11, 2022
What are some financial tips for startups?
- Establish a budget and stick to it
- Set financial goals
- Cut down unnecessary expenditure
- Prepare an emergency fund
- Focus on customer acquisition
- Secure enough funding
Starting a new business can be a fulfilling and exciting milestone in life. However, it can also be challenging, especially when it comes to finances. Many startup businesses fail because they can’t handle their finances from the beginning. Fortunately, to push past short-term survival and into a profitable company, there are a few proven things business owners can do. Here are six financial tips for startups from Benito Keh. Benito Keh is a serial Filipino entrepreneur that helps businesses achieve their growth potential and succeed.
Establish A Budget and Stick To It
Most startups fail due to various reasons, but one of the most common reasons is running out of money.
You’ve got a brilliant business idea, developed a business idea, and jumped into becoming an entrepreneur from the ground up. As a business owner, you now need to keep your company profitable. To do this, establish a budget and stick to it. Know where every single cent is coming from and where every single cent is going.
In terms of cash inflow, concentrate on your revenue and lifetime customer value. When looking at cash outflow, you should consider employee salaries, logistics, office facilities, supplier relations, as well as customer churn rate. Understanding these variables will give you a great start in analyzing your company’s cash flow health and also help you in creating cash flow forecasts.
If you don’t stay on top of your finances, your startup can end up hitting a brick wall and running out of money.
Set Financial Goals
Many startup owners often focus too much time on nurturing their new product or service. While there is nothing wrong with this, finances should also come on top of your priority list.
Develop short-term and long-term financial goals. Break these into measurable ones. Having quarterly, monthly, weekly, or even daily financial goals allow startups to stay on track and make the needed adjustments to sustain growth.
Cut Down Unnecessary Expenditure
Startups should always aim to cut down unnecessary expenditure. Evaluate what is needed and what is not. Some examples of unnecessary expenses can include costly business travel, elaborate employee perks, and lavish celebrations. In the early days of your startup, you need to focus on generating revenue.
Prepare An Emergency Fund
Having an emergency fund will serve you well during the first tumultuous years of a startup’s growth. This fund should provide a cushion from costs like VAT payments and any unforeseen expenses like raw material price increases and faulty supplies.
Preparing an emergency fund starts from the very beginning. Before you even plan on establishing a startup, don’t quit your day job completely if you don’t have an emergency fund.
Focus On Customer Acquisition
Without your customers, you have no business. So, focus on customer acquisitions to survive and scale up. Identify different customer acquisition channels and then work on lowering your expenses.
Secure Enough Funding
Most startups fail because they don’t have enough capital. If you have enough capital, you can easily conquer financial obstacles and reduce relying on investors just to get your business running. There are a number of ways to get enough capital. Get funding from crowdfunding or bootstrapping.
Creating a startup is not easy, especially when managing its finances. But if you follow these financial tips for startups by Benito Keh, you can plan for your success while avoiding common pitfalls startups make.