For your startup to succeed, robust financial management is needed to help you clearly pinpoint how much cash you’ll have and need in the future. This will not only create stability, but it will put you in the best position to determine how your startup will achieve its vision, strategic goals and objectives.
Here are a few tips that will boost your startup’s financial health.
1
Don’t start without a strategy and SMART goals
- You need a vision and direction for the whole business. It sets out how you will achieve your goals and what capabilities you need to help you grow.
- A good strategy will guide your investment decisions and tell you where and how you need to spend your money.
- It allows you to look at future risks and develop contingency plans to overcome these obstacles.
2
Every startup needs a business bank account to track business finances
- It will track and help control your business expenses and income, keeping them separate from your personal finances.
- It gives you a centralised source of data to help ensure you meet your tax and reporting obligations.
- You can use it to figure out if you’re eligible for R&D financing and other incentives.
3
Don’t go it alone, there are affordable and effective solutions that can help
- Accounting software will give you an up-to-date view of your cashflow and can be mobile friendly to allow you to manage your finances on-the-go.
- Solutions like Xero and QuickBooks have additional services that can automate tasks like invoicing and reporting and manage admin tasks such as staff leave.
- Most software will sync with third-party apps including bank feeds and may also have access to free resources such as Hubdoc (document management).
4
Cashflow is more important than profit
- Keeping an eye on your cashflow will prevent any financial issues sneaking up on you.
- Develop a realistic cashflow management plan that can track day-to-day operational expenses and give you a runway until the next cash injection is needed.
- Be prepared for the up’s and down’s. Depending on what stage you’re at (rapid growth or development loans) you will see different spikes in your forecast.
5
Be diligent with your financial records and management habits
- This is one of the best ways to show investors and stakeholders how the business is going. Save yourself the headache and make it a daily activity to track your business’ health.
- Clean, reliable records will improve your chances when you apply for grants, government funding or loans.
6
Know what grants and assistance you can access
- Cash is one your most valuable assets and government grants can be a great way of accessing funds without having to give away equity.
- There are various government grants available for a range of different activities, which can be a game-changer for your startup.
- The MVP Grant and R&D Tax Incentive are two of the more popular grants accessed by startups. Ensure you speak to an accountant or advisor in the early stages to avoid missing out.
