Not every entrepreneur is a finance wizard and a start up business’s finance should be planned well ahead. Many startup companies have failed financially leading to shut doors. Every business especially a startup should have a proper finance. Inadequate finance will make it hard to meet the customer’s demand and an abundant finance over a period of time will lead to losses. To avoid such circumstances, it is good to create your own business financial plan. Successful business owners and startup entrepreneurs have provided the best free financial advice to their future competitors.
Financial plan for a business has to be done with absolute care and should cover every detail. Here are few free financial planning tips that entrepreneurs can follow for planning their startups financially.
Monitor the cash flow
Whether you control your startup finances or your partner does, you should always monitor them. Be clear of every penny spent and make sure that the money spent will be fruitful. In a startup business, chances that your money is used up unnecessarily are good and in unmonitored startup financing, the chances are great. Even when you are loaded with cash to employ a financial team, make sure you are aware of the company’s finance (where the money flows in from and what it is spent on).
Here are few means from where you can flow money into your business:
Personal funds: It is good to have most of your seed money from your personal savings. Using up your personal savings in your startup, will let you keep full ownership of the company and prevents the risks that your company gets overtaken by a partner or a professional lender.
Borrow from family: This is the second best financial advice in securing seed money to your startup. When preparing your business financial plan, consider the fact that you can borrow money from friends and family. Friends and family are well aware of your potential and negotiating terms are much easier when compared to a professional money lender.
Loans: The option of obtaining a loan from a bank is always open. Recently banks and private firms offer microloans to startup companies that do not qualify for a long term bank loan. Microloans are also preferred by business owners are not interested in a normal bank loan. Short term business loans have proven beneficial in a startup business.
Equity: This is by far the best method of obtaining the startup finance for your company from a third party. The advantage is that money borrowed need not be returned. But it also leads to the disadvantage that you will have to share your ownership.
Startup finance collected or obtained by whatever means, if overspent, will leave your efforts futile. The best free financial planning tip to prevent this is to simply avoid it.
This is one of the best financial advices any successful entrepreneur would give. Yes finance is essential in running a business. But unmonitored and insufficient finance will lead failures in all business endeavors. No entrepreneur is looking at spending company money for leisure. But overspending, even when done with the best interests will deplete your capital. Rethink whether the expenditure is necessary and the ways it will benefit the company.
Here are few financial advices on places where you can spend less:
Office space: Rethink on the fact that your company needs an office space to operate. With the startup financing obtained, an office space leads to expenditure and less funds for other necessary needs. At the early stage of a business spending much for a space to operate is only risky. Plan on cost effective ways where you can operate your business from. And if your business does not necessarily require an office like space the financial advice will be to start your business at home or just your garage.
Employee expenditures: Does your business necessarily require employees? If so hire smart. There is no necessity to pay your employees more than that you can afford. There is always qualified labor to work in your terms. If you are running an online business, consider hiring freelancers than full-time staff.
Marketing: Marketing, the backbone of every business is definitely costly. However there are a lot of cost effective ways to market your business. Fliers, business cards, emails and social media are techniques to spend less on marketing. Social media marketing is the best proven way in marketing a business at much lower costs.
Always keep a track of your expenditures and your income however low they might be. Avoid unnecessary expenditures. Financial plan for a business should be prepared taking into account every penny that will be spent or received.