“Beware of little expenses. A small leak will sink a great ship.” – Benjamin Franklin
One of the many reasons so many startups fail is because of financial shortcomings.
So you’re an entrepreneur. Living the dream, eh? Except, as soon as you launch your startup, your big picture dream starts getting bogged down in tax deadlines, bookkeeping, expense forms and generally the stuff you’d rather not think about. Unfortunately, you DO have to think about it… so here are 18 finance tips for startups to make things easier.
In this article, we’ll cover 18 finance tips for startups divided into the following categories:
- General Finance Tips
- Small Business Accounting
- Keeping Costs Down
Let’s get to it, shall we?
General Finance Tips
1. Keep a calendar or spreadsheet of when money is due in and payments go out to make sure you don’t have a cash flow problem!
2. Invoice quickly, right after the job is complete.
3. Give your customers plenty of ways to pay, including easy online options.
4. Always keep enough money in the bank to cover a few months’ wages and operating expenses.
5. Try to make sure you’re never relying on one customer for more than 20-25% of your income. If you lose them, you should still be able to survive!
6. Draw up a financial strategy and projections and review this every month or so.
Small Business Accounting
7. Invest in decent accounting software (for example, Quickbooks or Xero or Sage) to keep track of everything in your business.
8. Consider using a bookkeeper to keep things in order.
9. Keep on top of tax deadlines (the last thing you need is a fine!)
10. ALWAYS separate business and personal finance.
11. Consider asking an accountant to prepare your end-of-year tax accounts. It costs money now but it can save you a fortune in the long run.
12. Keep EVERYTHING – receipts, paperwork, bills of sale – and keep it SAFE!
Keeping Costs Down
13. Be super frugal about travel and other business expenses. You don’t want to create a culture where employees go nuts on a jolly.
14. Pay yourself modestly (at least until you’re raking it in!)
15. Use DIY legal documents and contract templates rather than paying lawyers to draft these.
16. Rent, don’t buy – Opt for suppliers that cover maintenance costs and monthly licenses (that you can always cancel) to put less pressure on your business.
17. Cloud-based software or SaaS versions are great for the same reason. You can also scale up and scale down when you need to without breaking the bank.
18. Make use of free tools like Hootsuite and EmailOut to manage your social media and email marketing.
Ah, whilst you’re implementing our top finance tips for startups and observing the way they optimise your financial strategy, why not take a look at how to do digital marketing on a shoestring; it’ll teach you how to ‘make it‘ on a tight budget.