Money is not easy to come for startups, and managing what you have becomes very important. Going for investor money may be the easier route to feeling cushioned, but it has its own disadvantages. Seeking investment early on will make you lose significant equity and control. It may not be a desirable situation considering the business is your brain child in the first place.
So if you are on tight budget, running a tight ship is the best way forward. Let’s have a look at a few things that will help you manage money better and give you the cushion to stride ahead with confidence.
Analyze Financials on a Monthly Basis
The importance of frequently evaluating your startup’s monthly financial performance can’t be stressed enough. You should keep a tight tab on how you are doing both in terms of spending and making money. This will not only allow you to monitor and assess business performance regularly, but will also bring to light any serious issues in time.
While analyzing your monthly financials, pay special attention to the costs and see if there are any areas where you can cut costs innovatively. Also pay close attention to the profitability of your customers. Analyze each client separately to identify the weak links and channel your energies accordingly.
Have Customers Finance Your Business
You are running a tight ship, so don’t shy away from taking advance payments and insisting on early payments. Most good customers will be willing to pay up if your services or products are worth the while. To them it’s the quality and value of services and products that will matter more than the lesser significant payment terms. Let your customers finance your business; there is hardly any prudence in paying from your pockets when the business can pay for itself.
Keep Fixed Overheads Low
Another golden rule to running and growing a startup is to keep the fixed costs low. This gives you the flexibility to cut down to being lean if the situation demands. Go for contracted assistance, monthly subscriptions for software, and other measures like telecommuting etc.
Create an Emergency Fund
You may be doing well, but it is always wise to save for the rainy day. Always maintain a kitty of emergency money, which you can fall back upon in case any difficult situation arises. This is the fund that will support you in case of temporary business slump or when you are waiting for receivables of a big project.
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