Do you have a great unique startup idea, have a budget or have you already found an investor? So there is one very important thing to do – learn to properly manage your finances!
Financial management – what is it?
Own business consists of various stages and you should be prepared for their volatility.
At each stage, the approach to budgeting and spending should be different.
The first stage – prototyping.
This is an early stage, so it’s worth spending more money on the product rather than on marketing and advertising. It is also a good idea to start with a maximum budget plan in order not to spend more money than expected.
The second stage – the improvement of the prototype.
The first customers appear, it’s time to start creating a financial plan that breaks down into income and expenses. Income should include expected income, and expenses should include office rental, marketing and advertising, salaries, and so on.
The third stage – reacting to the situation on an ongoing basis.
Running your own business is often unpredictable. Sometimes you expect high income and get nothing but losses. So it’s worth putting money aside for a rainy day so as not to quickly go bankrupt.
Expenses – Avoid It!
Some expenses can just ruin your startup.
Renting an office, not to mention buying it, is not an urgent matter. After all, everyone knows that the most successful startups were created in garages or student dormitory rooms. So you can work from home first, coordinating the project via instant messaging. As for discussions and brainstorming with the team – you can take advantage of inexpensive coworking spaces.
Renting or buying an office makes sense when the product already brings more profits.
Conferences are a field for saving your budget. First, try to establish a partnership with the organizer of the conference you would like to attend. For example, you can offer an event announcement free of charge on your website in exchange for conference tickets. Secondly, if the organizers are not interested in cooperation, you can invite the speakers you are most interested in for a coffee. As a rule, these people are open to new acquaintances, and will also be happy to share their experience and get to know yours.
The more money you save in the beginning, the better your chances of making faster profits from selling your product. In most cases, a startup can be started without additional costs, such as renting an office, purchasing computers and unnecessary advertising.