When you start a garden, you plant seeds in the ground, water them and hope for the best. You can’t control the weather, and you can’t stop the many insects and animals that might try to disrupt your garden; all you can do is plant your seeds, tend to them and hope they grow.
In some ways, starting a company is like planting a garden. The economy is sort of like the weather, as its changes are totally out of your control. On the other hand, there are a few things that you are absolutely able to influence.
Among the things that you can change and control, the biggest is your company’s finances. In entrepreneurship, managing finances successfully is as important to growth as water is to a garden.
If you’d like your startup to bloom as beautifully as the Gardens of Versailles, follow the top five financial tips for startups below:
Build a budget
There’s a known fact about startups that’s hard for many entrepreneurs to stomach: 90 percent of startups fail. A variety of issues can lead to this outcome, but one of the most common fatal mistakes is having an insufficient budget. Many new business owners underestimate how much money they will need for their startup, and this misconception often forces them to stop operating before they have a fair chance to succeed.
To avoid this issue, entrepreneurs can create a realistic budget before they start their companies. During the planning process, upcoming business owners should also budget for their personal lives. It often takes months or years for a startup to start making money, so entrepreneurs need to build their salaries into their budgets.
Understand your credit
When a business first starts out, it has no credit history. Therefore, the credit history of the entrepreneur stands in its place. If you have a 690 credit score, you’ll be able to avoid the poor personal credit history stumbling block that often delays other entrepreneurs. Alternatively, if you’re an entrepreneur that has a poor personal credit history, you can work with a credit repair company (or engage in some do-it-yourself credit repair) to improve your history.
Focus on cash flow
If you do not track where every single dollar is coming from and where it’s going, your startup will run into financial trouble. One of the best tips for startup survival is to meticulously pay attention to cash flow. If you have a strong understanding of exactly how the cash is moving in your startup, you’ll be better equipped to stick to your budget and position yourself for positive cash flow.
Remember, time is money
Entrepreneurs are forced to wear many hats at one time. Due to this requirement, it’s easy for them to forget that they still can—and should—be protective of their time. If you start your own company, you’ll be stressed for time, and giving away the little extra time you do have will be a big mistake.
You might feel like you can’t say no as an entrepreneur, but before you agree to anything, understand that every moment of your time has a monetary value. With this mindset, you’ll be able to only agree to opportunities that’ll help you improve yourself and/or your business.
Work with a mentor
If you speak with an entrepreneurship expert, they’ll tell you that one of the top tips to startup survival is to find a mentor. These seasoned individuals are experts at running new companies, and they provide the guidance and advice that’s needed to keep entrepreneurs going through the ups and downs of starting a company.
A “pro-tip” to finding a great mentor is to select someone that has strengths different than your own. This way, you’ll have the best guidance in the areas that plague you the most, enabling you to overcome them with proficiency.
Starting a company often feels like a gamble, but a lot more is within your control than you might think. More specifically, your company’s money—and how it’s managed—is within your control. As long as you take the time to implement the tips above, you’ll be well on your way to running a successful company that’s sure to produce fruit.
DISCLAIMER: This article expresses my own ideas and opinions. Any information I have shared are from sources that I believe to be reliable and accurate. I did not receive any financial compensation in writing this post, nor do I own any shares in any company I’ve mentioned. I encourage any reader to do their own diligent research first before making any investment decisions.
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