Embarking on a new venture is no easy task, let alone as an entrepreneur. Obstacles and mishaps are inevitable, and the most significant impediment of them all is finance. The thought of starting a business can be daunting as well as exciting to many. You’ve spent sleepless nights deciding to turn your passion into a business, worked out business plans, settled on the location, no doubt after a marathon of phone calls. You know what to do and where to start, but that looming question hangs over your head, “how do I start with such little or no capital?”
This question is a perennial one that has plagued all entrepreneurs at the beginning of their venture. But it did not deter them to stop doing what they put their minds to, and many have become successful and wealthy over the years. Here we discuss the financial hurdles face by aspiring entrepreneurs starting a business venture and possible remedial solutions.
You must have come across the different types of funding options that are available for startup businesses during your research; angel money, crowd funding, venture capital, and a traditional bank loan, you might have considered fast working capital for businesses to the rescue. But it is crucial that you clearly understand the terms and conditions of the provider, the time frame, and rate of interest. Consider every possible scenario and its alternatives and asses the risk involved with each option. Availing the monetary benefit is not the same as returning it along with the extra added interest, so you need to understand thoroughly and have a crystal image of your finances. Finalize on a financial funding agency only if you feel confident about the whole transaction.
One of the best business strategies in entrepreneurship is to start with what you have. Instead of plowing through a multitude of paperwork and documents for availing a rather insignificant amount of cash to launch a million dollar business overnight, it is always preferable to start small. Good services have never known to disappoint in the history of the business industry, so it is a right time to concentrate on your existing customers. As you continually but consistently serve your core customers, word will spread through word-of-mouth or social network. Focus on providing good quality to find new ways to integrate ideas, business process, and delegate tasks. You may not be an overnight millionaire, but you don’t have the burden of repaying a loan hanging over your head. If you are adamant about availing a loan, however, hire an attorney to get professional help.
A lifeline of any business is their finance. Having an approximate budget, if not fixed, will mean the difference between survival or a funeral. However, when you first start, this can be tricky because you are not in a position to predict your revenue sources.
It is essential to have a clear idea about what you need for the business to flourish and resist making impulsive decisions. As a young business establishment, you will have the constant urge to buy things you think is necessary to make your business thriving. But your fancy office will not ensure a successful business. Apart from sudden unseen expenditures, monthly expenses remain predictable as they stay more or less the same. So make your budget ironclad and stick to your decision. You do not need to buy that handbag your favorite You Tuber got in the last haul. You need to pay your bills.
A critical but common reason why businesses fail to get past the startup years is due to this reason – running out of cash. It can be deceivingly easy getting caught up in the dynamics of money once it starts trickling in. There is every chance of you feeling relaxed and overspending. But the lackadaisical attitude is what brings about the downfall. It can also be a real challenge when you find yourself struggling to pay the bills while waiting for your customers to pay up.
A strict planning and an uncompromising attitude is a critical element in cash flow management. Keeping a close check of every penny that goes in or out of the register will mean keeping your business alive or not. At the beginning of a company, profit is not the critical thing, cash flow management is. If your business is about providing services, it is wise to have a down payment policy or at least half of it. This step is a smart option and will save you a lot of trouble of waiting for a month to get paid while you drown in bills. If you have a good rapport with supply companies, it helps to ask for an extended date on payables. This way you won’t end up paying the extra late fees on days when you cannot pay on time.These measures also give you a breathing space as you decide on the best possible plans for the success of your business. If you cannot afford to hire a person for this responsibility, use accounting software or cloud technology to effectively help you achieve financial success.
Time is money, said Benjamin Franklin. This idea is especially true for an entrepreneur trying to get his venture off the ground. Investments, loans, credits, are all time-bound decisions. You could have all the attributes of a flourishing financial success under lockdown, but if you cannot manage time efficiently, your business will likely burn to the ground. When you first start your business, this can be a real challenge and can be one of the primary sources of conflicts and stress.
It is in your best interest to prioritize your responsibilities. As an entrepreneur, you must understand which part of the work needs urgent attention and which does not. You obviously cannot push back a meeting with the supplier who requires immediate payment and go out to a birthday party. Maintaining a schedule for activities and keeping up with deadlines is also a good investment in the business. Missed deadlines have been one of the reasons why companies suffer heavy financial loses, without the possibility of ever recovering again. If you know your priorities, you will establish goodwill among your business peers, and goodwill brings good business. Procrastination is a grave mistake, and a wise entrepreneur knows better than to commit it.