When it comes to launching your own business, nothing is quite as crucial to your success as prudent money management. Just as in your personal life, high outgoings and scarce income streams mean it can sometimes feel as though you’re not getting anywhere when it comes to budgeting.
But whether it’s ensuring that you pay staff in line with market wages, making sure there are enough new funding streams coming in or simply cutting back on inefficiencies where you can, there are many ways in which you can mitigate this problem.
In this article, we’ll take a look at some top tips for prudent money management within your startup, and help you give your best shot at keeping your finances in good shape.
Cut back on inefficiencies
As entrepreneurs, we often like to think of ourselves as running lean operations with strong finances. But when it comes to finding ways to keep costs down, it’s not always that easy. If you run your business out of a physical office, for example, then it may be a good idea to consider cutting back on costs. That means if you rent in an expensive area, you could consider moving to a less pricey neighborhood or buddying up with another company to save space. Sometimes, though, solutions require real out of the box thinking. When it comes to a big expense such as office rental, you may even need to think about cutting it out altogether and asking your employees to work from home. While remote working may seem counter-intuitive at first, you’ll soon realize it could work for you. With tools like Slack designed to help remote workers communicate as a team, you don’t have to miss out on collaboration.There are plenty of other areas in which inefficiencies can be located and cut out. Do you have any subscriptions to products you don’t really need? Could the supply of printer paper, for example, be scaled down, or a cheaper provider located?
Bring in contractors
Staff are often the most important asset a business can have, but hiring those team members you need to do the job properly can also be an expensive task. That’s where hiring contractors comes into play. By getting a short-term worker on board with a fixed term contract, especially in fields such as IT, you can sometimes end up paying out much less than you would have if you’d hired a full time employee – while also retaining all the benefits of adding a skilled professional to your team. What’s more, by opting for a contractor who is registered with an umbrella company, you can ensure that all the tax affairs of your contractor pay arrangements are above board. As a cash-strapped startup, ensuring you are fully protected against any sort of problem down the line is a prudent move.
Find funding
The best way to save money, of course, is to simply find more of it! That’s where applying for funding comes in, and it’s an integral part of your company’s growth. Depending where you’re located, the government or local authority may be able to provide you with some startup cash. Although funds for budding entrepreneurs in this area are often low, you may be able to find something. In particular, if you’re part of a group that is less likely on the whole to produce entrepreneurs, then there may be more support available to you through grants and loans. Private organizations that provide bursaries and loans may also be helpful. You should set aside some time to find out what’s available to you.Venture capitalists, meanwhile, are another option. By ceding some asset of your growing business – such as equity – these investors will provide you with some much-needed cash to assist you with your startup costs. Finally, while this may not be the option you want to go for, asking friends and family to help is a last resort some people decide to opt for. Even if they don’t help financially, someone you know is likely to have a place you can crash if your own living costs can’t be covered, or they may be able to introduce you to an all-important contact. All these little things can help you save money or lead you into more resources to find funding.
Ultimately, it’s clear that managing money in a startup situation is not something that’s going to be easy. But by preparing, researching and not being afraid to ask, you can give yourself a real fighting chance of achieving financial health within your business. Whatever you do, don’t give up!
