Zen Accounting Solutions’ Lauren Kelly gives us expert tips and insights to help fledgling startups maintain financial strength…
Financial management for startups is, without a shadow of a doubt, the key to any startup’s success. There’s going to be myriad of things to manage and keep track of and it can become quite overwhelming without a solid plan in place.
You’ve got the idea, developed a business plan and jumped into building your very own business from the ground up.
But there can be several pitfalls that new business owners fall into when it comes to the financial structure and maintenance of the startup.
To push past short-term survival and into a thriving, profitable company, what steps do you need to take to be prosperous?
Lauren Kelly, the director of Zen Accounting, helps small businesses achieve their growth potential on a daily basis. Here she gives us her top six pieces of advice about financial management for startups, to get young businesses off the ground and into its own financial rhythm.
Set up a business bank account
First things first… Stop using your personal account for business transactions. It might sound simple – but this can become a real issue.
It can develop complications if the personal and business ins and outs are not kept separate – especially when it comes to tax time. It would become apparent incredibly quickly that things could be missed.
If nothing else, it allows you to keep complete control of your finances and in the long run will make your life easier.
Manage cash flow
This is fundamental. Not just during the startup period, but throughout your entire lifetime as a business owner and entrepreneur. So much of financial management for startups is knowing where your cash is coming from and when it will arrive.
Starting off it’s important to negotiate good terms with your suppliers and stick to those terms. There’s no need to pay early… pay for invoices when they’re due and preserve cash flow.
On the other side of the coin, when it comes to sending out invoices, make sure they are done in a timely fashion – pretty much as soon as possible after the work has been done.
Make sure when you invoice you undertake good credit control procedures. Be on the ball with getting the money and getting people to settle their side of the agreement on time.
It’s simple…without money coming in, there’s no money to go to suppliers.
Build strong relationships
A strong network goes a long way when you launch your startup and beyond.
Develop relationships with suppliers, clients, connected companies like GrowthMinds and even your trusty accountant, if you have one. These are the people that will keep your business afloat. Without them -and the customers, of course- your bright idea will fall flat.
You might want to go at it alone, but be sure to keep the right people sweet and ask for advice when you need it.
Keep good records
There’s going to be invoices, receipts, and all kinds of paperwork and finances to keep track of. Make sure you have a system in place to ensure that nothing gets lost amongst the chaos.
Keeping good records is vital to the on-going health and viability of financial management for startups. Keep hold of everything.
Also, make sure you claim everything you can during tax season. To be able to do that accurately, you’ll need to keep note of every little detail and outgoing that can be reclaimed.
For example, ensure that you log miles and claim it back off the business, as well as keeping hold of receipts for anything you buy for the firm.
Create a budget and financial projections
Set yourself a budget at the start of each year, creating a goal for you and your team to work towards. From there you can check in at quarterly intervals to ensure things are in order.
Financial projections are crucial to know where you’re heading and what you want to achieve as a business. It also helps to identify peaks and troughs in advance to allow you the opportunity to rectify them before they become a real problem.
Finding any issues early can highlight areas that you as a business owner should be working on and can indicate where you need to invest.
Set yourself a budget at the start of each year, creating a goal for you and your team to work towards. From there you can check in at quarterly intervals to ensure things are in order. Click To Tweet
Get an accountant
Keeping on top of everything involved with financial management for startups, will be hard work for any fledgling startup – especially if number-crunching isn’t your strong suit.
While there are several tools out there that can help you track cash flow, send automated invoice reminders and organise records, it’s still smart to speak to an accountant, and/or a bank manager.
It might be smooth in the early days to handle everything alone, but things will become increasingly complicated and it’s a good idea to have someone who understands the ins and outs of business finance to guide you through it.
They can help you plan and budget for the year, as well as work out where changes need to occur to boost profits. So be sure to ask for the help and advice you need early on and before an issue arises.