Starting a new business for the first time can be overwhelming, especially when handling finances. Research shows that about 29% of startups fail due to financial instability. Starting a business can be extremely expensive, but you should navigate your way to entrepreneurship success with proper financial planning and management. Here are a few tips to help you get started:
You already know the basic costs you will most likely face once you start operating your business, from renting office space to employee payroll. But you might be surprised to find some unexpected hidden costs once you start. That’s where budgeting comes in. Creating a budget helps you prepare for emergencies, attract investors by showing how much your business anticipates to make and spend, and it can help you set sales goals in the long run. Ensure that your sales goals are SMART – specific, measurable, attainable, relevant, and time-bound. Once your business is up and running, be sure to continuously reevaluate your budget after a while.
As a budding entrepreneur, you might be tempted to charge all tasks and activities to help with expenses. While it is important to conduct your research to understand business operations, outsourcing to professionals might be the best choice in certain instances. Consider hiring a lawyer who will help you structure your business and handle all legal issues. It would also be best to hire a business accountant or a bookkeeper to help you make important financial decisions that work for your business. Outsourcing saves you the time and energy to handle other aspects of your business that will benefit your business’s growth, so keep this in mind.
When starting, whether as a partnership or a sole proprietorship, it would be best to separate your business and personal finances. You can open a new bank account and apply for a business credit card solely for business purposes and other business-related transactions. Separating your finances has many benefits in the long run. You would be able to track all your expenses for tax purposes, as well as protect your financial security so keep this in mind.
It is common for budding entrepreneurs to spend on things that may impress new customers and those close to you. There is the tendency to focus more on your image than the growth of your business. So, as you are still finding your place in the business world, it is important to allocate your finances responsibly and keep your expenses as low as possible. Instead of big office space in an upscale business district, you can choose a smaller, less expensive office and spend that money on scaling your business.
Becoming an entrepreneur and running a business with little to no information on operating your finances can be daunting. Fortunately, many more financial tips are available to help keep your business afloat, especially in the first few years of operation.