Start up cash can seem alot at the outset and the key to a world of possibility however one of the top reasons for business failure in the early days was running out of cash. In order to protect your startup, you need to keep a make that money work hard and last a long time - at least until the business is standing on it's own two feet or you invite another source of finance. Here are five ways to make your money go further.
Launching a startup is incredibly exciting and as a passionate entrepreneur it’s only natural that you want to go in all guns blazing, but consider starting small instead.
Limiting your initial outlay allows you to gradually increase your spending as you gain skills and experience that will boost your chances of success. Increasing your spend on equipment and product development in increments allows you to review the effectiveness of each stage and make informed decisions on how to proceed. This way, there is less risk involved and you won’t burn through cash as quickly.
Purchasing a lot of brand new equipment outright will make quite a dent in your business budget, which is why you should consider a lease or loans.
Equipment leasing means renting equipment for an agreed-upon period, often with the option to buy or upgrade at the end of the contract. This is a particularly great option if your equipment requires regular upgrades or if you only need it for a short amount of time.
Equipment loans allow you to purchase the equipment but pay it off in manageable instalments, which is great news for your cash flow. This agreement works in the same way as a traditional bank loan but it tends to be lower risk.
Every entrepreneur loves the idea of a flashy office with funky furniture and eye-catching artwork, but you certainly don’t need this to succeed. Don’t be drawn in by the idea of an Instagram-perfect office, because this could be a serious drain on your budget. Instead, consider purchasing second-hand furniture and equipment to keep costs low. Yes, brand new luxury office chairs would be nice, but they’re hardly a necessity.
Where branding and websites are concerned, think of the business in stages. At the beginning you need to test your market and a simplicity is best. Once you know that your business has got legs, then we swear by getting a professional branding expert in to create a comprehensive and compelling enterprise. But until that point, work on a shoe string.
Many business expenses can come in the form of long term commitments and these include hiring people and lease contracts. At the beginning however, you don't know exactly how your business will unfold. What you think you need and what you actually need may be very different, so the key is flexibility. Think of your expenses as being bubbles. Can you burst them quickly if the business shows that you don't need that expense? Think outsourcing instead of employee contracts or short term hires instead of long term leases.
Cash fuels your business. Without it, you’ll soon arrive at a standstill. It’s important to keep a careful track of your cash flow from day one to ensure that you always have enough funds to continue operations. One of the best ways to do this is to prepare monthly cash flow statements so that you can see exactly how much is going in and out of your business, and identify areas for improvement. This can be a time-consuming task, so it’s worth seeking the help of a professional accountant who can manage your cash flow whilst you get back to running the business or look at some of the cash flow apps that can bolt on to popular cloud accounting software.
The best way to stop blowing through your startup budget is to take careful, measured steps when growing your business, rather than risking all your capital by making one huge leap. Whilst it’s only natural to nurture big dreams about your new business, try to focus on what is strictly necessary so that you can balance financial conservatism against growth. Of course, not investing in your business soon enough can also be prohibitive to growth and development, so if you're struggling to manage your cash flow and business budget, consider seeking the guidance of a professional accountant who can help you to save money and plan for the future.