3 out of 4 startups fail. That’s estimated 3 out of 4 businesses will close within the next 3 years. For 2023, the projected global startup success rate is only 10% which means 90% will close doors. In industries like tech and software production, this rate is possible due to a very competitive market and very fast-paced.
The relatively high startup failure rates are due to various reasons. According to a study, a significant reason they heard from startups was “Nobody buys my product” which means it doesn't (yet) have a product-market fit. Apart from that there isn’t a solid marketing strategy in place, poor implementation, and cash flow problems. Most startup founders who launch with insufficient funding and unrealistic sales expectations are those who fail and end up with bad finances.
While building a startup can be challenging and low-chance of success rate, a lot of founders push through. In the US alone, there have been recorded 30.2 million new startups and small businesses in 2022. This can be attributed to a tiring corporate system, work-life balance, or the desire to leave the rat race. Aside from that, tech today like no-code development is making it easy for solopreneurs to just go with it and bootstrap along the way. In this quick read, we note the best ways to manage your business’ finances and have a fighting chance of being successful
Financial management within a startup is more difficult than in a corporate setup. While it can make faster decisions due to its size and minimal paperwork, they also have to deal with limited resources such as cash, staff, operations, and tools. Even experienced entrepreneurs cannot really secure a business’ future. However, you can create safety nets and also know what pitfalls you might encounter on the way to success.
Finances might not sound like the most exciting part of the business growth but it is one of the foundations of it. Here are some quick tips on what to check when managing your financial health.
By setting up a realistic budget for your startup, you have a clear understanding of how much you really have and what are your limits. This list needs to include all costs such as overhead expenses, operational mandatories, salaries, rent, utilities, marketing, and equipment.
As much as possible overbudget and avoid undervaluing some thing since you want to have that wiggle room in case sharp price increases happen that can affect your business.
Be hands-on with your startup’s cash flow by regularly checking your income and expenses. By doing this, you will have a clear picture of how much money you have available, which channels are doing good, and help you make informed financial decisions. This will also give you an idea of which departments are costing the most money in case you need to trim expenses.
This extra fund is your backup money to help you cover unexpected expenses. Even if it's a limited time, this will give you some security and help you avoid getting cash from budgets that are not supposed to be cashed out.’
Extra funds are a financial safety net especially if funds suddenly stopped coming in for any reason. Just like in real life, having a nest egg can cushion the blow of a major liability that can affect the business.
Consider using software to help you automate processes and streamline operations. Tools like no-code are known to help businesses digitize at a fraction of the cost of regular coding. You can build business websites or apps for customers and even accessible portals for employees. Getting a no-code agency can also assist you with the best features and platforms you can use for your business.
Here are some of the things you can do with no-code to help your business
DO NOT take on unnecessary debt and focus on paying off any debt you do have as soon as possible. This can help you avert high-interest charges and improve your credit score for higher loans. Here are quick and simple ways to minimize debt while running your startup:
Negotiate with your suppliers to get the best possible prices for the products and services you need. This can help you save money and improve your profit margins. It’s important to develop and maintain a good relationship with them/ This can ensure good quality of output or items from them so you can prevent business disruption.
Finances might be a hindrance to some founders when they have a vision that they want to develop. However, good finance management is a smart way for businesses to survive even at a rocky start. These are just some of the tips but it’s also important to get the best team to help you with it. As you re building your business, you need good finance managers and staff to help you build a solid financial foundation.
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