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July 16, 2019   Entrepreneurs, Start-ups, Small Businesses, FinTech and Alternative Finance, Fintech Opinions, Innovation and Resources   No comments

Managing Finances in a New Startup

NCFA Guest Post | July 16, 2019

Managing finances in a new startup - Managing Finances in a New Startup

Every day, new startups are launched and another entrepreneur decides to begin building a business. One of the challenges that startups often face is managing their money effectively. Managing business finances can differ from personal finances as one mistake could trigger several issues in your business. Being as meticulous and accurate as possible is one of many ways to grow finances in a healthy way. It’s also imperative that you keep your expenses low which can be done in numerous ways. On that note, here is how you can manage your finances if you happen to have a new startup.

 

Create a Budget

Every business that wants to effectively manage its finances needs a budget. This will give you an accurate idea of what your income and expenses look like so that you’re able to spend wisely and plan effectively. Below, you’ll find a couple of tips for creating a budget.

Income: Firstly, you’ll need to write down every source of income that your business has. In the case that you don’t have any income yet, create a financial forecast and estimate how much you think you’ll make. Your goal will be to eventually make sure your income is higher than your output.

Expenses: During the incipient stages of starting a business, you are likely to spend more than you make. Separate your expenses into fixed costs, variable expenses and one-time spends. Fixed costs could be recurring bills while variable expenses may not be the same amount every month. It’s still important to make a note of such expenses because it will determine your profits at the end of the month. In regards to one-time expenses, when you finalize your budget, you’ll see how much you can afford to dedicate to such spends.

Bring it Together: The final step in creating a budget is to subtract your expenses from your income. This will tell you how much profit your business is making once all expenses are deducted. It could also give you hints regarding areas you need to cut costs or improve sales.

See:  5 Deal-Breaking Mistakes to Avoid When Pitching for Money

Educate Yourself

Education is a major part of managing your finances in a startup. You should know as much as possible about finances and how it works within a business setting. Think about getting an accounting masters as this could equip you with a competitive edge financially. Seeing as you’re likely going to be busy, the good news is that you can do the degree online with Suffolk University.

Aside from getting a higher education, you could also read quality content from credible sources online and take short finance courses.

 

Avoid Expensive Credit

It is normal for a business to take out credit, especially when using it as a means to scale up or grow. However, borrowing responsibly is essential if you don’t want to find yourself in debt and out of business. Avoid expensive credit meaning credit that has high interest rates or an unfavorable repayment plan. Overall, managing your business debt and having a strong repayment plan should help you keep your finances healthy.

 

Master Bargaining

Learning how to bargain could make a significant difference in how much your business saves. Seeing as you’re likely to be working with suppliers and contractors, being able to barter a good deal is a must. If you need a few tips on bargaining, see them below.

Be Discreet: When bargaining with a sales person, you should do so as discreetly as possible. This means not doing it in front of others so that there are no outside influences.

Provide an Incentive: Another tip would be to provide the supplier with an incentive. For example, you could offer to buy six months of supplies upfront or ensure them you’ll bring repeat business. If you give them a good reason to, they’re more likely to offer you a better deal.

Research: Doing your research is another useful tip for bargaining. You want to know what rate competitors are offering the same products or services at so you have a bargaining chip.  It will also help you avoid asking for a price that is both too high or too low.

See:  4 Ways To Finance Your Business Venture

Get Insurance

Getting business insurance may seem like an unnecessary expense, but it could actually save you money in the long-term. You can never predict when an unexpected event could happen such as an accident or a lawsuit. However, when you’re covered with the right insurance you could save yourself from the financial implications of such events. Business liability insurance is ideal if you want coverage in case your property is damaged or something happens to your employees.

 

NCFA Jan 2018 resize - Managing Finances in a New Startup The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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