Finance

Surviving the Early Stages of a Startup

Starting a business can be an exciting time, but it can also be worrying one if this is our first time in the world of business. While it should never be underestimated how harsh the world of business can be, it can also be easier to navigate if we put some contingency plans in place. As the old saying goes, it’s better to be safe than sorry, and this especially true when operating a start-up for the first time.

Ensure You Maintain a Healthy Work-Life Balance

When starting a new business, it’s not unusual for us to ivest a large amount of time into it, and this is commendable. However, doing too much too soon can mean that we’re simply wearing ourselves out. Should we become ill as a result, the business will run into its own set of issues. As such, all work should be planned, and you should be ensuring that you’re getting the respite you need.

If we do too much too soon, it will often be the case that we become tired. This can lead us to not thinking clearly, which can poison the well in relation to making the right business decisions.

Perfect Your Hiring Process

One of the most important aspects of any business is the people you have on board, as such one bad egg can bring the whole house of cards tumbling down.

While it may take some time, you should always look at your hiring processes when taking on other employees. This will allow you to build a profile of potential employees, and ascertain as to how these people are a good fit for your business.

It’s never nice refusing people a position, but it’s much better than having to bring the business to a close because of the actions of a minority.

Invest Time Into Your Working Processes

While many businesses will strive for ultimate customer satisfaction, different people will see things from different perspectives. With this in mind, it’s not unusual for some customers to be dissatisfied with a service, despite your best efforts.

However, having processes in place for those who have grievances will ensure that your business is able to move ahead. Some issues can be due to a misunderstanding,whereas others can be due to the fact that the customer simply has too much demand.

Handling such scenarios in a professional and prompt manner may not help win everyone over, but it does show that your startup has integrity and is always willing to step in should things not go as expected.

Manage Your Time Effectively

You may have heard the saying that time is money. When operating a startup, this can certainly be the case.

Managing time effectively means managing deadlines, be it for a project or simply calling a customer back. Allow your time-management to fall by the wayside can mean that you’re losing out on potential customers, which will also mean that you’re losing income.

If you have other team members on board, then you should also ensure that they are fully aware of what’s expected of them. For example, if you have three people working on a particular project, then each team member needs to ensure they can complete their roles within a specified period.

Borrow Money Responsibility

A few search terms entered into Google tells you that there a series of providers out there all looking to fund your next venture or help you with your loan, but we shouldn’t take these at face value. For us to fund our business in the right way, we have to be aware of the financial commitments it has, and look at ways in how to meet these. If your business is not yet operating, there is very little point in investing in a high.-end office if it’s not required.

Similarly, you shouldn’t overlook more important aspects of your business, such as marketing and security. With this in mind, you should look to make a checklist of the most important aspects of your business, and look for the most cost-effective solution for each.

Should you be able to keep your costs down, then it’s likely you will be able to use a personal loan to help build the foundations of your business. This can mean lower interest rates and shorter loan periods than some of the business offerings available.

Get To Know Your Market as a Whole

While valuable research should be done in relation to competitors, you should become familiar with trends and developments within your industry, as a business that knows its stuff is more likely to instil confidence in the customers it deals with.

Research as a whole is the key to success for any new startup, but ascertaining what customers are looking for and when they’re likely to make a purchase puts you in a much better position when it comes to success.

For example, is there a problem that’s often listed online that your service can help with? Then this can be a good direction for your marketing o head in.

Think Outside the Box

There’s nothing wrong with being inspired by other businesses, but this doesn’t mean that your business model has to emulate that of others. For example, if you’re looking for accountancy software, but feel that the initial costs would be too overwhelming in the interim, then why not consider an open-source solution, which is often free, or offered at a very low rate.

This ensures that you’re only investing money where it’s really needed, and not spending money on your startup unnecessarily. Remember, the lower the costs, the bigger the profits.

Bumps in the road are a regular occurrence for start-ups, but it’s how we navigate the road the makes the difference. Having contingency plans in place doesn’t mean that your journey will be stress-free, but it will be more manageable, and ensure that you not only able to see out the first year, but many more moving forward.

Top five tips for managing money in a start-up

Most small businesses fail for one simple reason: running out of money. This can happen for a host of reasons and, whilst demoralising, will always be a risk for new start-ups.

However, you can significantly reduce your risk of being left without sufficient funds by managing money intelligently. Every business is different, but staying in control of finances is vital across the board; below are some tips for making the most of your funds.

  1. Be in the Know

Although it sounds obvious, knowing as much as possible about your inflow and expenditures is the single best way to make prudent financial decisions. Ensure that you keep track of your cash flow from the outset – in the early stages, it might be worth investing in accountancy software such as Quickbooks. This means that when it comes to growing your business, and your cash flow becomes more complex, you already have a system in place to keep track of things.

Alternatively, you could make use of software which you may already have – Microsoft Excel or something similar – to create a simple spreadsheet for recording monthly income and outgoings. Remember to find out how your business will be taxed as early on as possible, to avoid any surprises or headaches in the future.

If you intend to cover setup costs through a lender, you should carefully research your options. Using price comparison sites can be a great way to shop around, and decide which lender might be right for your business. Bank loans are not your only choice, though – your first port of call might be investment from friends and family, and you could also consider crowdfunding. Ensure that you have planned your debt management strategy in the long term when considering your choice of lender.

  1. Plan ahead

Successful entrepreneurs think carefully about the future; it is a good idea to produce forecasts for your business in its early stages. These predict your business’s income and outgoings for up to three years, since trying to predict any further ahead than this is generally unhelpful. These forecasts should be regularly updated as circumstances change, so you always have a good idea about what to expect in the near future.

These predictions should help you to plan your budget. This should be done carefully, and take into account all costs associated with your start-up, no matter how small – small expenses can quickly add up. When budgeting in the early stages of your business, fixed expenses, such as employees and office space, could be a good area in which to make savings. For example your budget might constrain the salary available for any staff, but this could be supplemented by offering equity in the company, or other perks depending on the nature of your business. You could also consider offering part-time work at this stage, or working from home if this is possible to save the expense of office space.

  1. Set some money aside

When your business is thriving, it can be tempting to re-invest all profits straight back into it for further growth, but this is not always the best strategy. Instead, it is sensible to set aside a portion of your profits so that, should the start-up falter, you have some funds available to cover running costs without taking on debt. Ideally, this monetary cushion will cover three to six months’ running costs.

Remember to allow enough money in your budget to give yourself a decent wage. You might feel obliged to pay yourself an uncomfortably small amount, so more of your profits are freed to grow the business, but this is not the best move. You will be less able to focus on your start-up if you are preoccupied with personal financial worries.

  1. Set realistic goals

Goal-setting is key to most endeavours, and establishing a business is no exception. Your goals should be realistic, measurable, and have a timeframe. They could be anything from a profit target, to reaching a product development goal, to getting a marketing campaign off the ground, as long as they are achievable and will help your start-up to grow.

Setting a series of smaller goals, rather than relying on one larger vision for your company, makes it easier to stay motivated, and will also let you keep better track of how things are progressing.

  1. Be prepared for the worst

Having a financial back-up plan is always advised. If you are currently employed as well as managing your start-up, ensure that you do not leave your job until your profits can comfortably replace your wages. Having an alternative source of income is a good back-up – if possible, you might consider going part-time as you transition from employee to business owner. The funds set aside from profitable periods should also be treated as a back-up, and could keep your business afloat during challenging periods.

Good money management

Taking the time to carefully plan, having a safety net, and always being aware of exactly what you have are simple ways to give a new business its best chance of succeeding. As common-sense as some of these tips seem, they are worth bearing in mind as you go forward with your start-up.