1) Plan Ahead & Set a Budget
It might seem like this one goes without saying, but surprisingly, many entrepreneurs fail to adequately plan prior to launching their startup. If you’re a planner, pat yourself on the back, because a lot of folks out there are just winging it.
When it comes to budget management, it’s especially important to establish the following:
- CPA (Cost Per Acquisition): How much it costs you to get a solid lead or make a sale.
- Expansion: How much you project it will cost in the next 3, 6, and 12 months to expand your business (consider the cost of marketing, hiring employees, etc).
When budgeting for your startup, remember: your budget is the first pillar, your plan is the second, and the strength of your resolve is the third. It’s important to update your budget regularly based on current performance and growth projections.
2) Consistently Monitor Your Finances
Evaluating your startup’s financial circumstances on an ongoing basis is the only way to make the right decisions for your business and achieve your long-term financial goals. In order to reveal hidden costs and minimize business risks, it’s essential to keep track of your expenses and cash flow.
When it comes to monitoring your business expenses, accounting software is pretty much a must-have. If you haven’t already done so, check out our top 7 business accounting software tools for our recommendations.
3) Work With a Financial Mentor
If you have the means, it’s worth it to invest some time and money into building a relationship with someone who has lived experience of starting a business -- i.e. a financial mentor. Here are a few reasons why:
- They come with their own professional networks
- They’re familiar with the tricks of the trade
- They understand how to maintain financial health
- They’ll know where to seek out startup funding
- Their advice will save you an immense amount of time (and heartache)
Finding a mentor who can provide consistent, strategic guidance and timely advice is one of the wisest choices you can make for your business. If you have good chemistry, the benefits of mentorship are truly endless.
4) Know Your Sales Cycle
This one is impossible to achieve right off the bat, but critical to keep in mind -- even in the early stages of your business.
It’s going to take some time to develop and sustain a predictable sales cycle, but don’t lose sight of that goal. Knowing your sales cycle will help you identify peak times for your business and encourage growth during the off season(s). It’ll also help you pinpoint your business’ strengths and weaknesses and develop more effective marketing strategies.
There are often many stumbling blocks on the road to financial health, but the work is well-worth the rewards of entrepreneurship. Remember, running a successful business takes more than just passion -- financial literacy is essential to keeping your startup afloat. Following the tips above is a great place to start.