The Daily Financial Activities of a Startup Business
Once your new business is up and running, you must ensure that attention is paid to the management of your financial aspects. This can be difficult during the first few months of the business launch, as so many other areas will require your time. For example, organizing your workforce, training, advertising / promotions, starting to establish your customer base, etc. In today’s article I will offer you some tips on how you can go about your daily financial activities more efficiently and effectively at the start-up phase of your business venture.
Smart Inventory Management
Effective stock control and stock management is essential for newly started up businesses, this goes especially for manufacturing firms, retail businesses, and supply firms. A key piece of advice for start-up businesses when it comes to managing inventories is to not bite off more than you can chew. You may be offered bulk buying discounts, but what you need to bear in mind is that you are a brand new business. You should not buy into a large amount of stock just to take advantage of associated discounts. You do not have loyal customers yet, and it is likely that you are going to be facing heavy competition from rival firms.
Basically, if you buy in too much stock then you are going to end up with cash tied up in your inventories, hence less working capital available for a safe cash flow and less cash available to take advantage of last minute investment opportunities. Another downside would be that your stock becomes obsolete or out of date, especially where food stock and fashion clothing are concerned. Finally, storing a large amount of stock for a long period of time means expensive holding costs, which you can really do without at the start-up phase of your business when cash may be tight.
Accurate Accounting & Financial Statements
During the course of the running of your business, you will need to keep your figures, financial position and profitability recorded accurately, so success / failure can be monitored and the appropriate action taken. So if you don’t possess any formal training, qualification or experience of accounting then it might be a good idea to take on a part-time or virtual accountant during the start up phase of the business (cheaper than a full-time accountant), to get things off to a good start. You do not want your accounts and finances getting messed up early on, as this may have a direct negative effect on the accuracy of your figures from then on.
Budgets are a particularly important financial aspect for a start-up business. As you will have various cash outgoings at this stage, it is crucial that your budgets for different areas of the business are both realistic and abided by as strictly as possible. Depending on the type of business you have set up, budgets will vary according to the level of relevance of each area of the business. For example, the sales budget will be need more attention for some types of business. Overall though, it is essential that you keep track of your cash budget. You must make sure that cash is being allocated in an effective manner, and that the areas of the business requiring more cash are given priority.
A Final Thought
A key idea behind mastering the daily financial activities of your business start-up is, firstly, to keep a thorough and accurate record of all of your finances, figures, and investments. Also, you must take care during the start-up phase of your business in terms of cash allocation. You don’t want to fall behind before you’ve even got started!
If anyone has any other tips for start-up businesses please let us know!