th images menu user export search eye clock list list2 arrow-left untitled twitter facebook googleplus instagram cross photos entrep-logo-svg

8 Financial Tips for Entrepreneurs Launching a Startup

Here's how to lay the foundation for a sustainable business
By Jonathan Long |


 

I’m not a legal or financial professional . . . I’ve just started and bootstrapped a lot of businesses. Building a company from the ground up is one of the most difficult things I have done.

 

If you are thinking of launching a startup, my hat goes off to you because it’s far from easy. Here are eight tips to help you avoid some of the common financial mistakes entrepreneurs make when starting a new business.

 

 

1. Cash flow management is key

Most startups fail for a variety of reasons, but one is far more common than others -- running out of money. You need to know where every single dollar is coming from and where every single dollar is going.

 

If you don’t stay on top of your cash flow, you are going to put your business in a very dangerous position. It doesn’t matter how good your idea might be when you run out of money you hit a brick wall. Establish a budget and stick to it.

 

 

2. Track and monitor all spending

With a new startup, there are going to be expenses coming at you from every direction. Hiring a full-time staffer to handle the books in the beginning isn’t very budget-friendly, so use accounting software to remain organized.

 

Not only will this help with cash flow management, but it also makes it much easier when tax time rolls around every year. As you grow and the accounting becomes more complex, you will need to consider hiring a professional. 

 

 

3. Limit your fixed expenses in the beginning

In the beginning stages of a startup, keeping your expenses low is the key to longevity. You don’t need a huge elaborate office in the heart of your city or fully catered meals three times a day.

 

Operate thin so you can allocate the majority of your capital to growth, which will enable you to one day implement any perk you want. Too many startups focus on the wrong things -- like fancy offices and over-the-top amenities -- and forget that generating revenue should be their top priority.

 

 

4. Remain optimistic but prepare for the worst

You never know what can happen when starting a business, so it is best to prepare yourself for the worst possible situation. Don’t quit your job and eliminate your main source of income until your business can replace that income.

ADVERTISEMENT - CONTINUE READING BELOW

 

Keep reserves -- both personal and business -- in an emergency savings account. You can never be too prepared for bad situations. Sadly, they do happen, often when you least expect them. As an entrepreneur, you are responsible for your retirement, so when you start making money consider things like a Roth IRA and some investments, even small ones. Anything is better than nothing -- consider micro-investing opportunities or allocating funds on a monthly basis to an online platform like E*TRADE. I found their fees to be on the low side.

 

 

5. Every minute of your time has monetary value

I’m going to keep this short and sweet: time is money.

 

Nothing has more monetary value than your time. You only get so much of it every day, so take that into consideration when you are planning your schedule and day-to-day duties. Every second you spend doing something unrelated to your business is time (and money) wasted.

 

 

6. Focus on customer acquisition

Without customers, you have no business. The sooner you figure out how to acquire customers and scale, the greater the chances are of your company making it. Once you identify different acquisition channels, work on optimization to lower your costs.

 

It’s impossible to test every possible acquisition channel at first, both in terms of time required and cost, so focus on the most lucrative opportunities. Once you successfully scale those, you'll have the financial capability to explore other channels.

 

 

7. Make sure you pay yourself

Your hard work and dedication to your business alone isn’t going to put food on your table -- you need to pay yourself. While you don’t need to compensate yourself with a big fat salary in the beginning, make sure you pay yourself enough to live.

 

Give yourself enough to live comfortably and focus on building your business. When you eliminate personal financial stress, it allows you to stay ultra-focused on your business. You can’t eat ramen noodles forever. Give yourself some padding and comfort.

 

 

8. Establish financial goals

Rather than just say, “I want to build a multi-million dollar company,” you need to break financial goals down into reachable and measurable ones. 

 

Monthly, weekly or even daily revenue goals allow you to stay on track and make the adjustments necessary for constant growth. You can even set milestones to hit along the way, giving you a lot of smaller goals to constantly hit. Knocking out little goals can give you the confidence needed to keep powering through the entrepreneurial journey.

ADVERTISEMENT - CONTINUE READING BELOW

 

 

Disclaimer: This post is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other financial professional to determine what may be best for your individual needs.

 

 

*****

 

 

Copyright © 2017 Entrepreneur Media, Inc. All rights reserved.

This article originally appeared on Entrepreneur.com. Minor edits have been done by the Entrepreneur.com.ph editors.


Latest Articles

The Surprising Second Act for One of YouTube's Biggest Stars

Connor Franta has begun planning for a life after YouTube -- building a business that, one day, he...

byLaurie Sandell | September 21, 2017 09:00:00

The 4 Skills Needed to Make a Great Impression

Check out the research behind the first few seconds of meeting someone and how to make a great and...

byVanessa Van Edwards | September 21, 2017 07:00:00

The iPhone of Drones Is Being Built by This Teenager

With the millions he's raised, his flagship product might become one of the most game-changing...

byJesse Hyde | September 21, 2017 06:00:00

Pinoy Kids Need Not Worry: It's Business as Usual for Toys "R" Us

Local franchise holder assures all 34 standalone branches and 44 toy box outlets are open ahead of...

byElyssa Christine Lopez | September 20, 2017 18:00:00

How Much is the Typical Filipino’s Budget for Buying a House?

Real estate portal Property24 profiles the typical Filipino property buyer

byLorenzo Kyle Subido | September 20, 2017 10:00:00

(Video) Meet the Business Owner Who Caused a Z Movie-Like Stampede for the Php8 Zark’s Burgers

Why thousands of customers risked hurting themselves for a burger sandwich

byEntrepreneur Staff | September 20, 2017 10:00:00

What Has JAZA Got To Do With the UN’s Sustainable Development Goals?

Ayala Corp. chairman recognized as pioneer in crafting business strategy and operations around 17...

byElyssa Christine Lopez | September 20, 2017 09:00:00

The Luxuries People Can't Live Without (Infographic)

A recent study found that more people would give up Spotify for Netflix.

byRose Leadem | September 20, 2017 08:00:00

The 3-Step Approach for Testing Out Your Business Idea

Here's how to learn the most from your potential customers and get honest feedback

byVanessa Van Edwards | September 20, 2017 04:00:00

How 6 Business Titans Created a Thriving Team

As the host of podcast Masters of Scale, Reid Hoffman asks everyone from Mark Zuckerberg to Sara...

byEntrepreneur US Staff | September 20, 2017 02:00:00

Financial Adviser: 5 Ways to Make Money from Freelance Consulting Without Losing Your Day Job

Long experience and deep knowledge in a field are key ingredients of a consulting career

byHenry Ong | September 19, 2017 12:00:00

Ex-BlackBerry PH Manager Raises Php32-M for Online Store Selling Electronic Gadgets

Poundit wants to be the top-of-mind for consumer tech products in the country

byLorenzo Kyle Subido | September 19, 2017 11:00:00