It’s pretty obvious that for any budding company, the first few years are the most important, and the most difficult. You need to find customers, to run a team, create a service or a product that can really put you above the rest. You need to stay relevant, to track changes in your chosen field, and, of course, to stay sane. But, probably the most crucial part is actually managing your finances. That’s where this article comes in.
Managing your finances is supposed to keep you afloat, to keep your company running and growing. If you do this poorly, you are in a world of hurt. You will bleed money, lose out on excellent opportunities, and just, in general, get into trouble. Below are a couple of methods you can utilize to manage your resources properly.
Automate as much as you can
Automation is your friend in general, but this is nowhere more apparent than when you approach your finances. Of course, you can always hire somebody, but the best choice is to get systems to this for you. Now, a quick disclaimer: not all companies can do this, depending on their size, the line of work, and general tech savings of the employees and managers. Another disclaimer: you will need to learn some basic accounting functions. However, if you can use this, definitely go for it.
You can track all your prices, your bills, and expenses in excel. Or, you can ask around and get some accounting software, like Xero, or FreshBooks. If you are able to hook these up with your account numbers (something outside the scope of this article) you will make life even easier.
Think about how you allocate your funds
There are two important resources for any startup. The first one is, obviously, money. The other is time. But the allocation of both is paramount. As far as funds are concerned, you need to know where to invest, where to draw back, where to wait. Sure, you may have a shiny interesting new idea you want to inject with some money. And sure, it may be the best thing since sliced bread. But, until you get in the black and stay stable for at least a year, you should wait. You need to get the basics down before you can actually experiment. Now, if your entire company hinges on this idea, that’s a completely different matter. But, try to stay smart.
Later, you need original ideas to stay competitive. You always need to be on the very edge of your field. But first, you need to invest in other areas to stay competitive. Pay your people on time, pay off your loans, and your bills, and invest in slow and steady financing options. Later you can have the freedom to go wild.
Handle debts and secure deposits better
If you’re looking for any good debt consolidation in Australia, England, the US, or any other place you are working at, you need to first get your other finances in check. At the very least, figure out a plan to keep things steady.
First of all, get in the habit of getting deposits from your clients. This not only makes things safer, and presents you as more serious and professional, but it also leaves room for you to invest in other areas. Know that deposits are a must if you need to invest some of your own money to get the project done (like materials, contractors, or certain fees and permits).
Avoid getting any credit deals, unless you believe this kind of things will make you competitive. There’s a fine line between being wily, and being taken advantage of by your own clients. Remember, if you want to manage your finances properly, you need to know that it’s all about investing it, about letting it flow. If it’s just stagnating, just waiting to be collected, you are missing out on real money, and real investments.
If a client seems like he won’t be able (or willing) to settle his debts, you need to act accordingly. A first (but non-threatening) email, followed by a phone call, will mostly keep things in line. If not, have a good lawyer on retainer. It’s a sad fact that these things happen more often than not.
Track everything – time is money
Time is money, a cliché, but oh so true (which kind of makes it a cliché to begin with). Every moment during your workday you don’t spend on making more money, or figuring out how to get more money, is a minute wasted. You can always make more money, but a day always has 24 hours, no more, no less.
If needed, you can always hire an accountant. Of course, it’s up to you to figure out if you actually need one (and can actually afford one as well). This makes it much easier to track your expenses and costs. But even with an accountant, you need to keep everything in line.
Starting your own startup is no easy feat. However, if you get things under control, you will reap the benefits in no time. Starting from actually becoming stable, to getting a good paycheck, to investing in real projects, you will see just how worth it everything was. But, getting your finances in order is the very first thing on your list. Getting a handle over them is the truest freedom one can get in this modern world.
