Key Financial Considerations For Entrepreneurs

According to the latest Startup Ecosystem Rankings Report 2019, Australia has become increasingly attractive for founding and running a startup, now taking the fifth position of the most startup-friendly countries in the world, right after the US, the UK, Canada, and Israel. 

Nevertheless, a positive startup climate is not going to grant you a successful business venture, if you fail to address crucial issues before you’ve even started your entrepreneurial venture. The fact is that most, or to be more precise 82% of startups, fail during the first year of doing business due to their poor cash flow management. 

If you want to avoid such a worst-case scenario, here are a few key financial issues every entrepreneur needs to consider.

Make your calculations right

For the successful launching of your business, and increasing the odds of surviving the critical first year, you need to make sure you’ve done your calculations right. The best way to ensure you won’t be having bigger cash-flow issues is by making financial estimations a part of your business plan and trying to stick to them. Having put your projections on the paper, you will be able to make important business decisions and find a way to minimize your costs. For example, you can reduce your costs by using shared office space during the early stages of your venture or outsource some of your business tasks instead of hiring employees for certain positions.

How to get the cash?

When you’ve figured out how much money you will need for starting and running your business for the first year, you will have to consider how to get that money. Research claims that just one source - personal savings, is used by more than 50% of startups in Australia. Most new companies don’t rely much on famous “3F” for funding  - family, friends, and fools, and angel and venture investments are almost non-existent. Only a minority uses a bank loan as a resource for funding. Still, for decisions of such kind, good financial and accounting skills are needed, so, if you are not very educated in this regard, the help of a financial expert will come in handy.

Track your cash flow

In order to keep your finances balanced, you will need to keep track of them properly and have a clear insight into where your money is coming from, as well as how you spend it. It’s essential to make a decision on how to stay on the top of your finances, so think about whether you’ll hire an accountant, outsource the bookkeeping or invest in high-quality software to handle your accounts.

Value your time

When thinking about getting into the entrepreneurial waters, you need to learn how to best value your resources, and the one which is the most scarce is your time. Your every minute counts, so keep that in mind when making your daily activities schedule, and choose your priorities. Learn to analyze the alternatives from the early days of running your business, so, when deciding on how to fund and register a business in Australia, you can choose to respect your own time and do it effortlessly through an online application. 

Set clear financial objectives

If you find your financial goals sound a lot like Del Boy's  ”this time next year we’ll be millionaires”, you may be in trouble. It’s important to set clear objectives and make them easier to reach and measure. Setting weekly and monthly goals is a must, not only for a startup, but for everyone who wants their business to continue to grow. This way, you will be able to make inevitable adjustments whenever you realize your goals are not being met, or are being overachieved, and be sure you're doing your best to keep your business thriving.

Keep reserves

You never know when you will need to provide your business with a financial cushion, so be sure to make both your personal and your business savings account as soon as you are in the position to set some profit aside. Its much better to have some liquid assets available than to have to rely on bank loans and credits for overcoming critical phases which can put your startup business at risk.

To make a successful entrepreneurial venture, you’ll have to make well-informed financial decisions. Make sure to focus on these issues and ensure your startup an outstanding launch.