As a startup, you would want to save money in every way possible. After all, having a good financial cushion is crucial, and you would be able to create one only when you are consistent and persistent with your money management efforts. Here are some money management tips for startups to help you along the way.
1. Create an accurate and detailed business plan
Every entrepreneur knows exactly how frustrating it can be to create that 50-page document that ultimately ends up with cobwebs. But that isn’t the one you should be focusing on. You must create a straightforward and realistic business plan which can help you guide your financial goals, cash flow, and regular operations.
Whenever you are estimating cash flow and costs for your purposes, you must be honest. It doesn’t make sense to exaggerate when you are trying to establish your earning potential. When you have a business plan, it helps keep you on track while achieving your money goals.
2. Always Maintain a Budget
One of the most important aspects of having an accurate and realistic business plan is to create a detailed budget. Most people shy away from doing this, and a budget is really never fun or exciting to develop or manage. It is also why most people have someone else handling the numbers game for them.
There are many other aspects of running a small business that are more fun. However, it is never a good idea to ignore your budgeting. It is necessary to create a realistic and measurable budget. After that, you also need to map out and plan your projected cash flow carefully. This will go a long way in helping you create a solid foundation for your overall business goals.
3. Do Not Deviate From Your Budget
When we talk about creating a realistic budget, it means you should be able to function within its parameters. You might need some professional assistance to help you create this budget and stick to it regardless of your business’s ups and downs.
4. Have a good understanding of your numbers
You must track all your expenses, no matter how big or small they are. While it is easier to remember all the significant costs, it’s generally the smaller stuff that ends up throwing your budget out of gear.
Set some time aside each month to go through your numbers in a detailed manner. When you are planning how much to charge for your services or products, you must know your numbers. As the business owner, you need to know your time involvement, business expenses value, and IP.
All of these are significant determining factors in running a successful business. If you notice that there are many budget blowouts or unnecessary expenditure, you must change your spending habits. You can also work with a reliable bookkeeper who can help to keep all your accounting up-to-date. It will allow you to get a better idea of your numbers at a glance.
5. Axe Costs Wherever Possible
This sounds pretty straightforward. However, most entrepreneurs get caught up in the day-to-day operation of their business. Ultimately, they end up forgetting to seek new opportunities to streamline their processes and systems. Without looking for cost-efficient ways for delivering services and products, your cost-saving efforts will stagnate.
When you are setting up your business and just getting the gears into motion, several costs are involved. Each year there would be ongoing overheads, additional costs, and various things that need replacing, upgrading, or fixing. When you review all your numbers regularly or at least have your bookkeepers and accountants evaluate them, they would help you determine in which areas you can save more money.
6. Make sure you are investing in your business
If you are running a small business, there are two main things you need to do. The very first thing is to pay yourself. Also, you need to have some additional money that you can put back into your business to give it a push in the right direction.
This would require some amount of planning and strategising, which is why it is good to consult with business management experts and accountants. They will help you with these aspects and set you on the right track. They will show you how you can use your profit and expense allocations to invest in the marketing and development of your business.
7. Save, Save, Save
Try to set aside an account where you can continue saving some money. When you do this compulsorily, you will find you have something to use when you need it. You also have the option to save or reinvest it as required to grow your business.
Put some of this money away for the future and save it for critical emergencies. You can also allocate some portion of it to your superannuation. If you are saving money regularly, you will find that even your savings account earns a decent interest which means more money in the bank.
8. Do not underestimate or underquote
This is one of the most common issues in startups. In any small business, a product isn’t just a sum of the cost and profit margin, and an hour means more than an hour. You also need to factor in research, training, administration, marketing networking, travel, HR accounting, cleaning as well as several other big and small things that are part and parcel of running any business.
When you have the right understanding of how much all of this will cost, you would be able to know what your expenses are. You can then price your services and or products accordingly. You can also consider working with a business strategy advisor who would help create a pricing strategy that will ensure you do not lose money unnecessarily.
9. Be Very Confident And Proactive With Asking For Money
Many new entrants into the entrepreneurial space have been used to getting a steady remuneration in their account each month. However, as a business owner, you need to make an extra effort and ask to get paid. At times, this might feel as if it’s the only thing you do, and it also becomes one of the most significant mindset blocks for business owners.
You can work with a money mentor who will help you with ideas on how to lose your inhibitions about requesting for payment. If you need help with this money mindset, that’s what you should do so that you will end up saving a lot of time and money in the long run.
10. Create A Detailed List Which Includes Strategies For Increasing Cash Flow
Every small business owner knows exactly how work and money can ebb and tide. When you are going through a trough, you need to have a detailed list of effective cash flow injection strategies that will help catalyse your business and boost your bottom line. This strategy needs to be specific to your startup; however, it could include:
- Creating bundle offers
- Having flash sales
- Special offers for your existing clients
- Designing incentives that will encourage your customers to make an early payment
- Offering existing clients incentives for referrals
- Offering training
Make Money Management a Habit
Money management is never a set-and-forget effort. You need to be on your toes and continuously review your expenses and books. There is always something new that can help you save money, and there will be something new happening all the time. If you look hard enough, you will find several opportunities along the way to grow your business. Prioritise reviewing your numbers with regularity and create a strategic personal and business plan. It will help you think smarter about money and save much more of it.
For more information about how to reduce recruitment costs in our business, contact the experts at Benchmark Cost Solutions at this number – 02 9525 0777. If you prefer, write to us at this email address, and we will revert quickly.
Thanks for reading,
Benchmark Cost Solutions Team
02 9525 0777