4 Financial Tips for Entrepreneurs Launching a Startup
As you launch a new business, you may be bursting with confidence—you’re sure this idea is special, and that success is just beyond the horizon. But you might also be worried, the thought of failure looming over you like a dark cloud.
You’ve seen it before: a fresh new startup crashing and burning in its first year, weighed down by financial strife. You don’t want your company to suffer the same tragic fate.
If you’re determined to beat the odds and achieve success as an entrepreneur (but you’re not sure how), check out these simple financial tips to help get your startup off the ground.
#1: Create a Budget
Many small businesses are doomed from the moment they launch. Why, you ask? Because they don’t create a budget.
Don’t wait until you hit a financial roadblock to start budgeting your company’s money. The best way to start a business on the right foot is to come out of the gates with a realistic but flexible budget. While budget-making is subject to variations depending on the market, here are the main factors that apply to most startups:
- Production Costs – While the nature of every business is different, it’s important to familiarize yourself with how much it costs to provide your product or service. This will help you determine an appropriate cost vs. price ratio, and ensure you’re making a reasonable profit.
- Office Space – With all the unpredictable costs that can crop up while running a business, you’re going to want to start with what you know. If you’re renting out an office space, calculate the monthly rent into your budget right away.
- Payroll – Understand how much money you can allocate to hire employees. This will help you determine the size of your team and prevent over-hiring and subsequent layoffs. Don’t take on more employees than you can afford.
- Miscellaneous – It’s important to save money for the various expenses that come with business ownership. Whether it’s unexpected fees, business lunches, or computer repairs, you’re bound to face expenses that you couldn’t have foreseen.
If you find you’re struggling to keep track of everything that goes into your budget, try using a budgeting app. This is an easy, tech-savvy way to keep a record of all your recurring expenses.
#2: Work Remotely
With COVID-19 pushing even the biggest corporations to opt for remote work, now is a perfect time to build your business right from home. Obviously, working from home saves you from paying for a flashy office space (particularly in large cities), but the savings don’t stop there.
Additional expenses you avoid while working from home include:
- Utility bills for the office
- Commuting costs
- On-site technology and tools
- Office snacks
Many successful companies have humble beginnings. Don’t let the allure of a decked-out office space keep you from having the money you need to actually run a successful company—the ball pit and napping pods can wait.
#3: Get Some Help
Managing your company’s finances isn’t going to be easy. The more you make, the more complicated fiscal planning is going to become.
If you find yourself struggling with the facts and figures, try reaching out to a wealth management company. A wealth management company will help connect you with a broker dealer network and set you up with the right financial professional for your budding business. They will have the expertise to help you make sound investments and establish achievable financial goals.
#4: Utilize Freelancers
The rules and regulations of full-time employment may be too overwhelming for a fledgling startup. Hiring employees full-time may be dependable, but it can rack up some steep expenses, like:
- Paid time off
- Insurance benefits
Instead, hire workers from a reliable freelancer network, so you can get the same services with more flexibility. If you’re choosing to work remotely, this will also help you follow guidelines for freelance employment and prevent an audit from the IRS.
Don’t Explode on Impact
The beginning stages of a startup can be a rough ride. However, it’s okay if you’re not making millions in your first year. Your main goal at this time is to avoid spending all your money too quickly.
Create a budget, cut down on unnecessary costs, and keep chugging along. It might be a slow ride to success, but as long as you’re still moving, you’re on the right track.