Many people have big Business ideas, without the budget to start-up. Or… do they? Many a start-up has launched from the comfort of a garage or a kitchen table. And while getting a cash injection, or at least some know-how and support is essential – a great bank balance might not be.

It can seem like everyone is launching a business these days, and many close too. The most common reason for businesses closing is because they mismanage their Money. And it isn’t always their fault. Although there is a wealth of information available online, there are also a lot of places that will sell you the dream. And while it is essential to dream big, and takes risks, they should be calculated and with a lot of information behind you.

Cash Flow Management

This is when many start-ups crumble. Because running out of money hits hard. If you have suppliers and buyers, and there is too long a period between paying your invoices and getting paid, that is the danger zone. You need to plan your budget and your incomings and outgoing with precisions. One late payment is all it takes. 

Photo by Kelly Sikkema on Unsplash

Accounting & Taxes

Yes, you can, of course, hire a bookkeeper or accountant, but for those early days, it is better that you use software instead. People cost money that you probably don’t have – and they need to be paid. When you grow, and your accounting becomes less manageable for you, then you should seek someone to take over. You need to make sure that you are registered with all the appropriate bodies for when it comes to tax time, so PTIN registration is something you need to look into. 

Rainy Day

In the first year of business, there will be a few rainy days. These are the days where a supplier isn’t able to fulfill an order, or a buyer is late on their invoice. Having some backup cash ready to use is essential. So when you put your budget together, then you need to have a % of money heading straight into a savings account – for the business. Cash reserves can save you in a time of crisis. 

Pay Yourself

If you aren’t paying yourself, then you don’t truly see what your business is making. Which means when you do start taking a wage, your balance isn’t going to look so healthy. You need to factor in what you need to live on as a minimum. 

Goals

The quickest way to achieve something is to make it a goal. The fastest way to reach a goal is by breaking it down into smaller goals. And, rather than setting goals that are long-term only, set short term ones too. They need to be measurable. If you want to make a million, what do you need to make monthly or weekly to make that happen? You can also break this down into services and products selling 60 of X product + 90 of Y product = X amount. 

If you see you are about to hit the rocks, get in touch with suppliers and buyers early, look at what you have saved and the bridge, you can make but try to avoid making rash-decisions that will lead to closure or a lot of debt. Take care of the pennies and the pounds.

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