Being responsible and financially conscientious is difficult. Here is a brief, concise list of 8 financial tips that may be useful for your early startup:
By Sean Price
- Set clear goals and milestones. The first point is fairly simple and straightforward: if you don’t have clear financial goals and milestones, you don’t have clear objectives. If you don’t have clear objectives, you won’t be able to take the appropriate steps toward an optimal financial situation for your company. You will just stumble around unsure about where you and your business are headed, and that’s no good.Always ensure you have a measurable, tangible, realistic idea about where you want to be financially.
- Establish a simple accounting system. Here you want to think about a simple system you can start things off with to establish the base of your cash-flow. The sooner you do this, the easier it will be in the long term.If you leave this step to later when things start picking up financially for you and your company, it will just be harder and more of a headache to implement.
- When you can, limit your expenses. This particularly applies if it is your first business venture – keep your expenses low wherever you can. If possible, try not to compromise customer satisfaction too much for this as it is also essential.Keep one word in mind: building. You’re building something for yourself, your family, your community, the world. You don’t want to rush things or be financially careless, as it will be detrimental to what you’re building.
- Establish your payment collection process. This is sometimes called a “collection management process”, and it is of vital importance to your business’ functioning.How are people going to pay you for your services? Will it be in cash, credit, checks, or through online payments?Are you going to have rules in place for handling payments? How will you deal with unforeseen circumstances?These are just some of the questions you need to ask yourself in regards to setting up a payment collection process for your company.
- Create a system for monitoring your spending. As previously mentioned, it is of the utmost importance that you track your business’ expenses. By creating a system for monitoring your spending, you can make this process ten times easier.Remember, the most essential thing here is to ensure that your expenses don’t exceed your available income. Make sure you regularly consult your financial summary report.
- Build your budget. In order to build a budget, calculate your income and expenses (fixed and variable); think about the first point on this list in relation to having clear financial goals and objectives, and always be realistic in relation to your long-term financial plans.
These are the key points in this regard – I do not have the space to set out a detailed budgetary plan, however, you can look at software such as Xero to help you out with this step.If you are saving up for a business mortgage, you may find it useful to use a business mortgage calculator as this will make it easier to build a budget.
- Prepare for your taxes in advance. You surely know by now that you don’t actually own every dollar you make. When the taxman comes knocking at the door, you want to make sure that it’s not a surprise visit. Always prepare for your tax returns in advance, as taxes are effectively expensed you need to deal with. Do not leave them to the last moment – or worse, after the deadline.
- Financial success means startup success. Because finances are such an essential element of starting a company, your business’ success is basically inextricable from its financial success. The two go hand in hand.This is why If you are financially responsible, plan things in advance, maintain a proper budget and ensure that the tedious but useful stuff is taken care of, it is very highly likely that your business will succeed.This makes the opposite, unfortunately, also true. A lack of financial care and responsibility is likely to lead your business to ruin – so make sure you cultivate these good financial habits from the beginning and implement them in the way you do things. Your business – as well as your life in general – will undoubtedly benefit.
Sean Price is a community manager at RightSwitch, he has a passion for web design and user experience and when not working enjoys rugby, cycling and swimming.