The early days of a company are buzzing with potential. New ideas flow, possibilities abound, and imaginations run wild about what the future might hold. This energy is electric — and essential for working long hours on tough problems in a company’s fledgling days.
Despite the promise of a company’s founding, this season is also one of high risk for its financial standing. Capital investments are essential in the leanest of enterprises. Even if you’ve taken a cue from successful founders and opened up shop in a garage, spending is unavoidable. That’s why managing your expenses against your income and growth plans is essential for long-term success.
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1. Create a Cash Flow Plan
Tightly managed accounting may not sound like the most exciting part of your new enterprise, but think again. Just as in your personal life, a well-managed budget opens up opportunities to say “yes” to your business. When your cash flow is solid, it’s easier to invest in game-changing productivity software or hire an employee.
Create a cash flow plan for your business spanning both the near and short term. Accounting for startups can be tricky, as many run on a shoestring budget and even borrowed resources. Generally, an annual budget is a good place to start, as numerous expenses and investments are cyclical.
An external accounting partner can help make sense of variable cash flow and can add value at a fair rate. Contract accounting lets you get the well-versed support you need without over-investing in a full-time bookkeeper. Instead, you can focus your resources on the core of your business.
Establish rules for expenses and approvals, setting limits on extras to reduce excessive spending. Review your monthly invoice process to ensure it’s running efficiently. If you’ve slipped on billing clients in a timely fashion, you’re likely receiving payments off-cycle, too. Identify opportunities to flatten costs for subscriptions and fees, which can create a more consistent budget.
2. Leverage Resources Available to New Enterprises
Competition for economic development has communities fighting for your presence. The healthier a city’s business climate is, the greater likelihood that other enterprises will follow. Your startup can take advantage of this desire for entrepreneurs, even if you aren’t bankrolled for a major investment.
State and local economic development commissions and chambers of commerce have programs specifically for entrepreneurs. Solo shops, tech startups, and traditional companies can get business coaching, grants, and loans to help them grow. Frequently, this type of support also comes with relationship building, access to data, and advocacy otherwise difficult to obtain.
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Take advantage of this special access only available to new businesses, leaning into the free support and leverage offered. Frequently, you’ll be shoulder-to-shoulder with potential new clients when attending programming. Make your pitch directly to the source and grow your client list without having to jump through hoops.
Meet with business coaches to learn about the latest tax advantages, local and federal tax credits, and grants you qualify for. Coaches may assist with applications, providing free guidance that can increase your odds of success. Get customized support and access free of charge, which can be a net positive to your business’s bottom line.
3. Establish a Multi-Year Growth Strategy
A goal without a plan is just a dream, and as nice as dreams are, they don’t often reach fruition. Honor your new company’s potential by developing a multi-year growth strategy to serve as your guiding document.
A growth plan doesn’t have to be reminiscent of stodgy corporate plans — your multi-year plan should align with your enterprise’s principles. A fashion brand’s growth plan might focus on fostering brand loyalty and excitement. An emerging tech firm might focus on establishing its value proposition to market standards. Whatever your company is, it’s essential to map out how you grow.
Keeping your expenses in mind, growth doesn’t have to mean spending. In a technology-first world, many growth strategies are democratized. Take social media, for example. Paid ads are commonplace, but they’re no replacement for authentic brand-building and community engagement. Use the resources you have available now to set the foundation for future income.
Quantify your goals across tangible and intangible components of your business. Goods and services sold, deals in the pipeline, and social media reach can be key markers of potential market share. Reputation, media coverage, and relationship building are also paths to growth that are worth pursuing. Combine these factors to create a full-scale strategy that you and your team can use for inspiration. Everything you do should bring you closer to achieving these goals, which in turn will protect your finances.
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Solid Financials Pave the Way for Success
A world-changing idea or concept can’t outrun lagging financials. To be successful, founders must balance the financial requirements of the business with the conceptual demands of a new enterprise. Software and equipment must be bought to bring ideas to life, and taxes, fees, and salaries are inevitable.
Fortunately, founders don’t have to go it alone. Gather the right team of contractors, colleagues, and mentors to keep you on track. By managing your new company’s financial standing, you can ensure your dreams can reach their fullest potential.
Source: Cosmo Politian