With every new business, entrepreneurs are responsible for making decisions and it’s part of their daily routine. Initially, managing finance becomes the single most important task of an entrepreneur. As they say, it’s not how amazing your idea is, execution is what determines a startup’s success. Questions like, how do I manage my funds initially? What’s my branding strategy? What would be the color scheme of my logo? How do I manage my startup’s burn (expense) rate? are some of the most basic and regular topics as an entrepreneur, you might face. Many entrepreneurs who try to handle everything by themselves, make their financial decisions by themselves too and often end up making these three major mistakes and end up with severe cash crunch. Been there? These mistakes could be simply averted in startups. We’ve identified a few of them here, to help you understand.
- Taking everything up by yourself and not investing in human capital
As the only founder, you might take up every role available, right from being the CEO, salesperson and a marketer, though it may come across as being efficient, it won’t let you scale up quickly. You’ll need to hire employees and assign these tasks to them. Combine your ability with the right human capital, based on your financial reality to propel your idea. Also remember, human capital is the business owner’s future asset with potential and should consider human capital as an investment and not an expense which enables you to devote your precious time to chase targets.
- Going ‘all in’
Many entrepreneurs have focused on growth with a far- sighted mindset and it’s a common blunder. In business, focusing on short-term goals is mandatory. Ignoring this could be one of those mistakes which can turn your worst financial nightmare to reality. When your revenue slightly increases, investing 100 percent back into your company; like shifting into a better space, making new hires, upgrading to new technology , may sound ideal, but isn’t. What good is it if you can’t predict your cash flow and can’t don’t have the resources to write a cheque for the next month. By re-organizing expenses and having a steady strategy to keep up cash flow, you could take your business a long way making it a most profitable businesses, with a peace of mind.
- Not having a financial mentor
One of the most prominent mistakes an entrepreneur can make at an early stage, is to not consider a financial mentor, you have a limited knowledge on how to handle financial crisis, when the scenario sort of goes uphill, you might have to compensate quite expensively. It’s quite mandatory that all startups find a financial mentor as they can foresee and avert financial disasters that you may have over looked. They could even predict and help you find and cut the issues on financial structuring of the company, so that it can have a continuous cash flow while you are all set to take it to the next level. Even your level-headed colleague, accountant friend or a financial firm can guide you at any complicated financial crisis to always stay on top.
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