7 Street Smart Financial Tips For Startups
Every entrepreneur has to struggle with scarce financial resources to keep his/her Startup alive. There’s always a thin line between loss and profit making it even more difficult to sustain and grow.
In this dynamic business environment, you’ve to be street smart to make the cut and manage your finances intelligently.
7 Street Smart Financial Tips For Startups
Let’s not fear, because you’re not alone. You can manage your financial easily maybe boost it by religiously following intelligent financial tips and regime.
I’ve compiled seven financial tips that you can follow to save on cost, and increase profit.
These tips are easy to follow. So, without much ado, let’s get started.
Bootstrap to Minimize Your Investment and Cost, and Maximize Profits
In startup world, “bootstrapping” is highly popular term, but what’s not so popular about it is the concept.
If you think with bootstrapping you can save cost everywhere then you’re wrong, because your cost cutting everywhere can harm the quality of your work/service/product or even worse, you can lose customers/orders/projects.
I don’t mean to scare you.
It’s just as entrepreneurs, we tend to focus more on product development, customer relationship and marketing and usually forget to manage finances.
I can tell you that, because we’ve been handling financial bookkeeping for startups for quite sometime.
But, you can manage it.
Bootstrapping is fun to implement, all you need is discipline in spending and detailed record of each penny spent.
Just remember these words before spending a single penny – “spend wisely” and “a penny spent is a penny earned”. It will be a piece of cake to bootstrap and at the end of financial year you’ve extra at hand to spend elsewhere.
2. Always Bargain, Haggle and Ask For Discount
– Never Forget To Ask For Discounts!
I know, I’ve started to talk like a broken record, but it is important.
It is not as if you will look like a stingy for asking discount or haggling. You’ve lot at stake to run a startup, most probably your career and family’s future.
So, make sure you save everywhere you buy, whether you’re purchasing a printer online, paying for lunch with a client or offline marketing and advertising.
All it takes is to ask for a discount. And I bet you won’t regret asking for it.
There are special credit card schemes available such as cashback or discount, and try buying all items you require during clearance sale seasons. I bet, when you’ve prices up during normal months you would grin over the price tags you’ll see everywhere.
It is always difficult to convince your supplier/manufacturer to offer credit to your startup. But never anticipate, trying asking (you won’t be judged for it, rather they would take you more seriously). And if you’re fortunate enough you will get a credit for 40 or 30 percent for maybe 2 or 3 months time to repay.
To convince your supplier, you’ll have to build trust. You can ask your mutual friend to interfere, or you can use your market reputation to convince.
If you’ve a highly competitive market, where suppliers are fighting to get orders at cheaper rates then you can make it even more profitable. Just remember, focus on increasing time for repayment, however it is even great to have discounts.
Just choose wisely, when you’re offered 4 months repayment term for 10$ or pay 7$ on delivery. I would choose former as I’ve opportunity to earn and then pay.
4.Cheaper Loans With Easy Repayment
It is important to have capital in hand to smoothly run your startup venture. But repaying your loan can easily get onto your nerve, when you’ve high expenditure and low revenues. However, with easy cheaper loans and repayment schemes, you can substantially reduce your cost of loans.
There are graduated repayment scheme, in which you’ve to pay less in starting and amount increases gradually on monthly basis. This scheme is great for entrepreneurs, who need capital for investments in initial months, and then focus on repaying the loan back.
Again, you will need to understand your financial goals and follow your financial plan and then choose accordingly the repayment scheme that best suits you and your business model.
5.Special Schemes for Startups
There are variety of financial, marketing, mentoring, consulting and operational schemes and help targeting special requirements and needs of startups and small sized businesses.
In US, we’ve SBA (US Small Business Administration) helping small sized businesses get the active attention and help to expand, grow and become profitable in short span.
For Startups, there are schemes, contests and plans that are enabling them to reduce cost substantially by collaborating with government bodies, venture capitalists, marketing agencies and others.
You may’ve doubts about, but you’ve to open up to allow your startup/small business to open her wings and explore further.
These schemes for startups and small businesses have been quite successful, but I’d recommend that you should go with only those organizations that have had experience in your vertical before.
Because, experienced investor can also mentor you and build network in the industry easily, you never know, maybe he/she can get you trade credit.
6.Outsource Financial Accounting
-Outsourcing Is Effective Way To Save Cost!
Now comes the outsourcing part. You might have heard n-number of times that outsourcing is cheaper and effective option. I can’t agree more.
However, you’ve to be careful in outsourcing bookkeeping and financial accounting services. Because, if some company you’re outsourcing to is not experienced in your vertical, geographical region and country then most probably it can be counterproductive to whole exercise and your business.
So, search for someone, who’ve customer centric approach and services with experience and expertise in latest accounting technologies – XERO, Intuit, MYOB etc. and fully acquainted of law of the land.
Someone, who are always available at just call away and always keep you updated with changing taxation laws and compliance rules and regulations. Also about the incentives and benefits, your startup is eligible for and other important things.
7. Have At Least One Fix and Reliable Income Source
Many times, I’ve faced question about “how should I ensure that my Startup don’t fail?” or “what’s your special advice about launching startup?”. And I’ve only one answer – “before you launch your Startup, you should’ve fix income source from somewhere”.
We at Bookkeeping Monster have one client from Phoenix (Arizona), who has innovative mobile cloud technology startup. He’s full time into his startup and part-time on oDesk offering mobile app development services to other companies.
I can tell you (we’re handling his books) that he’s is doing really great in just few months of launching.
You can do this, just remember if you’ve skill(s) then most probably there are other companies, who want to hire you.
Apart from freelancing, you can rent out your space in residential or commercial property to others. There are more ideas to build fix reliable income sources, just Google search you will find many, I’m sure.
Bonus Tip – One Page Financial Plan
It is important to have financial goal with a timeline. Moreover, you can improve your efficiency further and save, if you have one page financial plan that you can look to daily (you can use Henderson Maxwell’s One Page Financial Plan here).
You can paste it in your workstation or keep it somewhere you can look at everyday. In this way, you’ll stay motivated to achieve your financial goals in time and budget.
Now you guys.
I bet you’ve more tips to share, please use comment box for it.
How do you manage day-to-day financials? Do you follow a strict plan or regime for it? Have you lately started to plan financials of your startups efficiently? If yes, then we’d love to know it.