A startup that doesn’t manage to take off successfully will undoubtedly end in the business gutter. However, on the other side of this scope, there are startups that grow too quickly. So, business owners who accept too many projects and don’t plan their development can also be overwhelmed by some difficult issues. Similar to the failed ones, blooming businesses can also face a closedown. Because of that, new entrepreneurs should stick with the following points of efficient startup financial planning.
Precise Workforce Budgeting
The number of people on your payroll will affect your overall financial condition. The biggest mistake that some business owners make is keeping people employed even when there’s no need for their work anymore. A true business professional should never do that. Paying employees who are redundant at the moment will put other workers’ positions at risk. Since firing employees is always a difficult task, it’s crucial not to rush into offering long-term contracts to your new staff in the first place. For instance, when you need a new worker, you should offer them a short-term contract. When it expires, sign a new one. This practice should be used as long as your workload doesn’t require long-term employees. Moreover, according to an employment analysis published by Forbes, avoiding long-term work agreements should improve business productivity and growth.
Strictly Controlled Expenditures
When a recently launched business spends money, every single dime has to be invested in a smart way. Translated to your everyday obligations – first cover the overhead expenses, then your employees’ payments and finally the suppliers and other associates. These are financial essentials that keep your business rolling. As for other expenses, always set your priorities. That way, you can save a lot of money if you buy used items for your office. While basic technical equipment, like computers and laptops, should be brand new, you could go with second-hand monitors. Many websites offer refurbished monitors and other devices with substantial discounts. When it comes to your personal expenses, make sure that your business assets and personal money are kept separated.
Planned Production Pace
The law of supply and demand plays a major role when it comes to financial discipline. Although those rules are simple to understand and apply, many inexperienced entrepreneurs don’t follow them. They simply get euphoric about their initial success or they just don’t listen to the pulse of the market. Therefore, if you notice that you’ve received fewer orders in the last few months, reduce the production rate. At the same time, offer special packages and discounts for the products you have in stock. On the one hand, you won’t waste precious resources manufacturing products with unpredictable sales. On the other, you won’t keep your cash trapped in unsold items. This simultaneous approach to product placement in a slow market will protect your business from failure.
Maintaining Cash Properly
Entrepreneurs that always have some just-in-case assets can overcome difficulties with ease. To make this cash cushion, you should put aside a certain percentage of every single sale or business deal you make. The aforementioned tactics of gradual employees’ raises and strictly controlled expenses will also contribute to the desired cash discipline. Nonetheless, collecting too much on a saving account is quite counterproductive. Instead, you need to find a way to distribute the saved assets between your backup account and new investments. However, this is probably something you should consult your tax accountant office from Sydney about, rather making such an important financial decision on your own.
New business owners don’t have experience necessary for prompt reactions in difficult situations. Because of that, they should rely on self-discipline and smart financial planning. If these two aspects of management become the dominant factors of your governing style, your business will stand out from other similar ventures and grow into a distinguished enterprise.
Dan Radak is a marketing professional with ten years of experience. He is a coauthor on several websites & regular contributor to BizzMark Blog. Currently he's working w/ digital marketing companies, closely collaborating with some e-commerce companies.
I hope you enjoyed this article about financial planning strategies that can be utilized by new lean startups.
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Read My Posts:
- The Art Of The Startup: Initial Needs
- Smart Ways To Make Your Money Work For You
Published by Michael J Schiemer
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