These days starting a company has probably become easier than ever in history. An open global market, streamlined procedures, and a plethora of affordable digital tools are all there to make sure aspiring young entrepreneurs get off to a good start. However, the fact remains that out of all 305 million startups that are founded each year, as much as 90% eventually need to close their doors forever. So, while getting your gig started is incredibly easy, it looks like only the selected few are capable of surviving for more than 10 years. The reasons behind this situation are numerous, but in most cases, the failed companies were derailed by financial and cash flow obstacles. Let us take a look then at a couple of effective financial tips that should help your startup avoid such destiny and get to the selected 10%.
Start controlling cash flows
This is an absolute must if you ever hope of getting the finances of your newfound company in order. There are very few businesses that have never experienced various phantom expenses, cash flow issues, or high expenses. Your startup will face all these challenges further down the road. You should do your best, however, to be able to easily identify these problems and address them without any delay. So, be sure to establish a clear set of KPIs that will give you an instant look into the financial and cash flow performance of your startup. The more thorough you are, the better equipped you will be to deal with adversities.
Set clear financial objectives
Being able to quickly identify financial issues is great, but if you really want to get the best possible results your way of dealing with these problems should be a bit more proactive. Therefore, you should lay down a long-term financial plan that will take into consideration your company's scale, state of the market, and other objective factors. Once you get that overarching idea of where you want to see your startup in five years or so, break it down into more immediate short-term financial objectives and then use the objectives to craft specific financial strategies. This will give your efforts a much better purpose. Maybe contacting with a global employment outsourcing services that would save you time and money along all the processes.
Keep your supply chain going
If you are unable to move the goods, restock your supplies and deliver your products to the end users in a timely manner, these supply chain delays will translate to very severe cash flow problems. With that in mind, we have to admit that global trade can often be bogged down by non-payment deadlocks, currency fluctuations, political instability, and countless other challenges. Fortunately, most of these problems can be solved by trade finance loans that bring a welcome sense of security to this mess. Still, developing long-term and mutually beneficial relationships with suppliers should be one of your top priorities.
Limit the expenses
Tightening the belt was always considered one of the best ways to reach a satisfying level of financial security. Still, your austerity measures should be focused on in a manner that won't discourage the growth of your startup. You should start by reviewing your expenses and simply stop buying the things you are not using. The ones that are used only part-time could be rented for a more affordable price. It is also highly recommended that you gradually move to the cloud that effectively operates on a subscription-based or pay-as-you-go model that allows a much greater level of efficiency and, if necessary, scalability.
Diversify income flows
You can look at this measure as building a safety net keeping your cash flow alive and well if you face challenges at other ends. That is why you should consider expanding your operations to a related field like providing consulting services, handling local logistics (if you own a business fleet), or renting human or corporate resources. In some instances, you can also expand the already existing operations to the point where they start generating revenue. If you are, for instance, planning to implement recycling practices, invest in the equipment capable of tackling wider areas and start a dedicated sub-brand.
Prioritize existing customers
Of course, keeping in mind you are just starting out establishing that core customer pool will take a lot of time and effort. But, as soon as you breach the intended market you should always remember the recent survey in which 61% of SMBs declared that more than half of their revenue comes from repeat business. That is why, while you are trying to reach new clients, you should put a great effort into building a top-tier CS and retention infrastructure that will keep the clients who made the purchase coming for more. Creating a comprehensive referral and reward program can only help these wider efforts.
We hope these few examples gave you a general idea about the effective strategies you can use to ensure the financial stability of your startup or even helped you to come up with a couple of unique approaches of your own. The most important thing to remember, though, is that these days, starting a company is very easy. Growing it to maturity is nothing like and most problems you will face along the way will be of financial nature. Every step you take to improve the startup's finances will be a step in the right direction.
