Starting a new business isn’t easy. Even if you have the luxury of having a large chunk of money to pool into your new business venture from the very beginning, it’s still challenging. This is especially when it comes to ensuring you’re handling your start-up money in the best possible way in order to see your business forward, and that you’re not draining your financial resources in the first go.
Below are 5 essential ways you can best handle your money when developing your startup.
Avoid Getting into Debt
You have a fantastic business idea, but you lack the money to make it happen. It’s very tempting to borrow money through loans and take out finance deals in order to get exactly what you need in the very beginning and get your business up and running as quickly as possible.
However, it’s not a good idea to get into debt fast before your business has even taken off. There is no guarantee your business will be an immediate success — or, unfortunately, a success at all. If this is the case, you don’t want to be left with a high amount of debt which you’re going to find impossible to pay back, because of a business which never took off.
While there are means for debt lawsuit protection, paying upfront for as much as possible in the first instance is always preferable.
Limit Expenses as Much as Possible
As an entrepreneur, you’re not expected to have a fully functional business suite and a team of employees from the first instance. Any way you can limit fixed expenses for as long as possible will help you financially. This could include:
- Working from home so you’re not paying extra rent and utilities for an office space
- Working alone so you don’t have to pay wages
- Avoiding extras like company phone or vehicle
- Doing as much as you can yourself (for free), such as free advertising and free website design
Focus on Gaining Customer Loyalty
Most of your revenue is going to come from loyal, returning customers. It’s important while attracting new customers that you also put a lot of effort into retaining current ones. This is because loyal, satisfied customers are more likely to make repeat sales, which could provide a steady income for you.
Track Your Spending
While you’re busy concentrating on growing your new business, you may be neglecting to monitor your cash flow. Hiring an accountant might not be feasible in the early days and is an unnecessary expense, as long as you develop a personal system to keep track of your spending habits and the amount of income you have — even if it’s a simple online spreadsheet.
Use Your Time Accordingly
As an entrepreneur, every second of your time is going to mean money. If you find that you are spending large chunks of time in the day on tasks unrelated to your business, then you are not making money. Consider better time management habits to ensure that you’re using your time wisely.