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Tuesday, April 1, 2014

5 smart money tips for new startups

By Kelli Cooper

New start ups may have difficulties handling money responsibly. Just because you have a vision and serious drive doesn’t guarantee that you can handle money. Many focused, hungry entrepreneurs go belly up by mismanaging their cash.

Use these tips to build your startup on a stable financial foundation.

Pay yourself

Bootstrapping entrepreneurs make the common mistake of cutting their own costs to finance their cash strapped business. You cannot live on bread and water for months and expect to attack your startup with vim and vigor each day. Figure out a way to pay yourself as you grow your venture. If you find yourself in desperate situations financially because you are spending all of your money on your start up you’re bound to make foolish, irrational business decisions. Pay yourself a salary to avoid this risk.

Manage your cash flow responsibly

Cash drives your new startup. Learn how to manage your cash flow to fuel business growth. Going heavily into debt or using complex financial instruments to raise capital are risky ventures for a bootstrapping startup. Be fiscally responsible. Create a strict budget. Increase the amount of money you’re generating through sales and make sure each business dollar you spend works to expand your venture. Sticking to your budget can help you build your startup on solid ground.

Be cautiously optimistic

Being optimistic yet preparing for the worst helps you to maintain a healthy view of your startup’s prospects. You are bound to run into big obstacles early on as a new entrepreneur. If you can rein in your enthusiasm you are less likely to crash and burn as a start up. Expect the best things to happen for your business. When the road does not seem as smooth as anticipated fall back on the idea of learning how to embrace opportunities amid the appearance of chaos.

Time is your most valuable asset

Spend time wisely because time is ultimately all you have as an entrepreneur. Instead of spending days or even weeks shuttling from country to country for business meetings focus your energies on developing your product and building stronger connections online. Leveraging the power of the internet helps you to create the groundwork for solid and prospering offline relationships. You can talk on Skype or via Google Hangouts with a business associate from halfway around the world without spending serious money on airfare or serious time in traveling to the locale.

Setting clear goals gives you a definite target

Stop over thinking your new, innovative concept. Focus instead of setting clear, actionable, targeted goals to build an effective plan and use your start up funding as wisely as possible. Aiming at something creates a sense of certainty about your entrepreneurial venture. Most startups lack direction. If you move forward without a goal in mind you are unlikely to attract guidance from your intuition or from mentors. Get clear on what goals you want to reach. Stop dreaming and start testing your concept with real world customers. Gain valuable experience. Tweak your plans if necessary but hold your goals front and center or you’re bound to steer off course.

About the author: Kelli Cooper has blogged about all things businss, and particlarly enjoys sharing tips on just starting out.

Image license: FreeDigitalPhotos.net