While starting your own business from bottom up can be thrilling, startups need to manage their cash wisely or risk losing their investments. Having sufficient funds is necessary for a company’s daily operations and activities. For this week’s Financial Tip Friday, SprinkleBit is providing you with 4 financial tips for startups-
#1 Get a professional opinion
Find a financial consultant. While this may seem like a huge expense, CPAs, tax advisors, and other financial experts are helpful resources that can provide guidance for your company, especially when it comes to business tax and regulations. They can maximize your company’s tax returns and bring sound advice for managing your money wisely.
#2 Learn some finance
Just as important as maintaining your service or product, it is important to obtain an understanding of business cash flow and financial statements. Knowing the inflow and outflow of cash allows you, as the business owner, to see where the cash is allocated, whether it be operating or financing activities.
#3 Manage company debt
Grants and business loans. Where does the borrowing stop? The more loans you ask for, the more financial liabilities your company has. Therefore, a simple way to resolve debt is instead of requesting a loan from banks, turn to other lenders for loans and instead of paying them back with cash, give them equity in your company. A caveat, however, is that the more you pay investors back with company equity, the less ownership you have over the company.
#4 Just say no
Maintain your company’s funds by saying no to unnecessary expenses. It is very easy for early startups to overspend on the wrong types of purchases or extraneous loans. Before any purchases, ask yourself, “how would your company benefit from having this?” Having a strict budget and getting the most productivity out of it should be the standard for any business startup.