Although rewarding, starting a new business can be scary, and the road to success is almost always full of twists, turns, and potholes. Aside from landing clients, managing your finances in a way that gets you positive cash flow as soon as possible is one of the toughest aspects of launching a new venture. That’s why we’ve put together this list of financial factors all new business owners need to address to help you get the best start possible.
Before you even think about anything else, the first thing you need to cover is your initial expenses. Depending on the type of business you’re looking to pursue, these costs can range from a couple of hundred dollars right into the tens of thousands.
It may be unrealistic to expect that you’ll have the funds upfront. However, if you develop a solid business plan and are serious about putting in the work, business finance is a safe, and highly beneficial, option. After all, you have to spend money to make money, and if you can’t source stock or manufacture your products, you’re not going to be able to sell.
It goes without saying that you’re going to need a dedicated place to do business from. Whether that’s your home office if you’re going it solo, a warehousing facility if you’re looking at manufacturing, or an office space if you need room for employees, your rent (or mortgage) should be the first thing you deduct from your profit forecasts.
If this seems like too large of a pill to swallow, consider cutting costs where you can. Do you really need such a large warehouse to start with? Could you have a serviced office instead of paying rent on a permanent location? Alternatively, if you have extra funds, could a virtual office help you build prestige if you’re currently working out of your spare room? Or would a small warehouse or storage unit allow you to expand faster than keeping your stock in the garage?
Unforeseen circumstances don’t get their name because they tap you on the shoulder and announce in advance that they’re going to pop up. Every business needs a solid emergency fund and strong enough cash flow to support itself if hard times come knocking.
Make sure you save enough from your initial investment to have a safety net, and never expand beyond your means, no matter how tempting a deal may be.
Marketing your business is going to be one of your largest costs, especially when you’re just starting out and cash flow is tight. Organic growth is wonderful and provides a far better ROI in the long run, but it takes time to build authority. Add to this the fact that search engines often penalise new websites, and you’re up against some major challenges.
Consider investing in ads on whichever social platform best aligns with your audience. They often cost less than working out an effective strategy for Google Ads and can help provide near-instant results. Promotional products are also low-cost in comparison to the rewards offered. They can provide free flow-on marketing when used by the recipient, so we definitely recommend investing in some if you have the budget.
There are plenty of other miscellaneous expenses that will pop up as your business grows, but these four can seriously get in the way of your success if not managed correctly. Make sure you have plans in place for dealing with the financial factors outlined here, and then jump on in. Good luck!