Having a start-up is a huge step. According to a study by Bloomberg, about 80% of start-ups fail within the first year of their launch. And that’s a pretty huge number. One of the major reasons why these start-ups fail is because of poor financial planning. If you’re just starting your business, then you need to ensure you don’t fall into these stats. Here are working tips to help you beat the odds and manage your businesses’ finances better.
Paying attention to human capital
Here’s something that most start-ups fail to do- delegation. In most cases, the CEO and founder of the start-up does most of the work. They are the janitor, the receptionist, the salesperson and the CEO. Hiring people to do these extra tasks is considered as extra expenses and businesses simply try and absorb all the tasks.
That’s generally a huge mistake. While it’s important to keep your costs low, you need to value human capital. Human capital is what’s going to make your start-up turn to a successful business, so if you spend too much time away from the actual idea, then you’re slowly killing your start-up.
No matter how much faith you’ve got in your business, the beginning is not the time to get all that fancy equipment you’ve always dreamed of, or go for expensive business trips. You need to cut as many costs off your list as possible.
Think about the investment you’re making rather than simply spending. Before using a coin, think of the potential returns it’ll bring back. If the purchase would logically lead to increased profits over a period of time, then it’s worth spending money on it. Also, try and look for affordable options.
Secure some start-up funds
You need to have a pretty good idea of how you’ll get the funds for your business, and practice caution. You may have angel investors interested in your start-up but you should be aware that they’ll have a stake in your company. Bank loans are an effective option. However, you’ll need to have a credible standing when it comes to your credit score. There are other options such as personal loans from friends and relatives or even doorstep loans that could further boost your financial situation. Whatever source you choose, you need to be well aware of the effects they’ll have.