Bottom-line realization and optimization-this is the ultimate goal for any business owner. A company’s growth is determined by its financial worth in terms of assets and liabilities, and a brand can only grow as much as the money it churns. Therefore, as a startup business owner, you have to get your arithmetic right in many frontiers, notably your finances. Read on for a simple breakdown of how you can get it right on matters finance for your startup.
It’s vital to invest in the growth of your business, be it investing in upskilling your staff or simply investing some of the profits that you make into growing your portfolio. Your team will appreciate that you’ve invested in them, and your brand will garner more loyalty because the customers will appreciate your efforts in making their experience even better. Investing more for improved marketing and product visibility will also improve your revenue generation.
Safeguard Your Credit Score
At a particular juncture in your journey as an entrepreneur, you may want to depend on financing to meet your financial obligations such as business expansion, additional insurance policies, or diversification. A poor credit score will impede because the financial institutions will decline to assist you in case of a poor credit score. Therefore, maintaining an acceptable credit score is of the essence to your enterprise. Avoid over-borrowing and unnecessary borrowing, and observe timely payments of existing loans. Don’t issue bouncing cheques because this also serves as a red flag. Further, take caution, only accept credit that you can comfortably pay within a realistic timeline.
Your Capex and Opex
If you want to dive in and are still in the budgeting stage, it’s best to determine the nature of your business to establish how much your Capex-capital expenditure will look like. For example, how much will it cost you to set up your website, raw material cost, initial office set-up, statutory Costs, etcetera? You can minimize your capital expenditure costs by setting up an office in your home garage. You can also bring down costs by substituting paint jobs with the application of rough wrap adhesive vinyl on your office walls. You also need to set aside a few dollars for the operational expenditure of your venture, which ensures that you don’t suffer hiccups midstream.
For a startup that’s already up and running, you or your financial managers must prioritize the operational expenditure while ensuring optimized cost control. While keeping a keen eye on your Capex and Opex, be alive to the fact that your return on investment ROI must make business sense.
The biggest challenge to most startup businesses is the teething problems and the pilferages that come with them. During the early stages of any business, teething issues will arise. Many unscrupulous employees and external forces take advantage of the conventional weekly procedures to defraud the companies. This underlines the importance of making it a habit of scrutinizing your books or systems to keep appraised with the daily operations of your business. Even if you have a bookkeeper, it’s essential to go through your books of accounts, more specifically, your bank reconciliations. It’s also important to spend some time reviewing your outstanding invoices at least once a month.
On many occasions, the business will experience delayed payments. Customers who drag on their payments do not miss any business. Because of this, your business requires a well-strategized business billing system of the essence to avoid cash flow problems for your business.
Offer incentives on timely and early payments, which will go a long way in motivating your clients to pay in a timely fashion. Timely payments will improve the sustainability and the daily operations of the business. On the flip side, numerous delayed payments can strangle business operations and force you into financial turmoil.
To be forewarned is to be forearmed. Ust like any other activity, planning and preparing for the future is crucial. Because there will always be business issues, be it litigation or emergency expenditure. Planning and saving for the future may save your business from collapse or catapult you ahead of your competition.