Creating a startup is an endeavor in itself and requires the utmost dedication and unwavering perseverance to be kept afloat. Going with this ship metaphor, one of the main reasons for leaks in the hull of this metaphorical ship is a poorly thought out business plan. With cash seeping through the cracks, even the greatest companies will fall. This is especially true for startups where proper fund management is mandatory from the get-go, lest the whole thing sink.
1. Set up incentives
This one is pretty straightforward, incentivize spending by either providing minor discounts or any variant of a subscription plan. If clients feel like they’re somehow “cheating” the system and getting more bang for their buck, they’ll be more inclined to spend more than originally planned. It also helps pave the way for a reward system that can further increase spending by offering a special offer i.e. every X purchases. Positive reinforcement can really go a long way in ensuring customer loyalty.
2. Go digital
Managing money is a hassle in itself without bringing business funds into the mix. A business thrives on information, and none important than the one showing us where we stand financially. This is why checking a bank account every couple of days is not the way to go, guesswork has no place in accounting. Investing in proper accounting software will help keep owners up to date with their financial standing as well as any transaction that has taken place from day one.
3. Save up
It’s a dog-eat-dog world out there, there’s no telling what might happen and what might be waiting around the corner. Even private citizens have back-up plans/nest eggs and a company should be no different. However temping it may be to start spending the moment profit starts rolling in – don’t. A rainy day is bound to happen, things have a tendency to go awry and let’s face it – no one likes to be caught with their pants down. Stay smart, save up.
4. Stick to a budget
A robust budget will set apart good startups from the great ones. That being said, even the best budgets can’t help much when owners refuse to adhere to them. Sticking to a budget is crucial because it helps manage spending in accordance to company growth and ensures a steady incline in profits while keeping the business going. Remember: the budget may feel like a bottleneck, but it’s one we put on ourselves, it’s there for a reason – honor it.
5. Analyze the market
The market is a powerful tool when one knows where to look. By examining the market thoroughly and figuring out what’s currently working and what’s not, businesses have an opportunity to take this information and make an educated guess about the next move. This move will have an impact on the future of the company, and as such justifies in-depth analysis of the market. If you know the market and know yourself, you need not fear the result of a hundred transactions.
6. Hire an accountant
This can come as quite the hit to some owners, but it is a necessary evil. As a company grows, its finances will scale up accordingly, soon becoming way too much for owners who have enough on their plate as it is. Simply put – it becomes hard to stay objective when so much time, money and sweat have been spent raising the company from the ground up. A professional will halve the workload while also utilize their very own set of tricks to keep everything running smoothly.
7. Stay legal
Despite what one might hear from other owners, the law is there for a reason. The company you’ve spent so many hours, days, months, years even, is not worth losing over a couple of bucks here and there? Experienced tax specialists cannot stress this point enough, explaining that these things always have a way of spiraling out of control. Offence by offence, it starts to snowball and can crumble a business in one fell swoop, like many other companies that came before it.
But wait, there’s more™
To reiterate, managing a startup is hell. The profits are there but it takes quite the journey to move up the ranks. This is why it is important to keep these accounting tips in mind whilst climbing the proverbial ladder. The market is perpetually shifting and there’s really no telling what tomorrow will bring, all the more reason to set up a decent financial plan and see it through. At the end of the day, everything’s a coin toss, all we can do is make sure we have more than one coin to flip.