explain role if the guardians of trade and commerce
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Working with startups and being a startup ourselves, we know too well that one of the main reasons businesses fold is because they run out of cash. We’ve seen it all around us, startups overextend themselves and because they are not tracking their money at all times, they wake up one day and realise their year-long runway has been reduced to a week. The stories are out there to be read and headed, but startups can avoid failure by getting smart about how they spend their startup capital.
“Despite the fact that cash is the lifeblood of a business – the fuel that keeps the engine running – most business owners don’t truly have a handle on their cash flow,” says Philip Campbell, a CPA, and former CFO, author of Never Run Out of Cash. “Poor cash-flow management is causing more business failures today than ever before.”
Trying to run a business without meticulously managing cash flow can land even the richest round raisers in trouble. You’re effectively shooting yourself in the foot and undoing all the great work you’ve managed in terms of proof of concept, investment, and R&D.
Here are 10 essential tips to help put your startup firmly on the path to successful growth.
#1 Your First Priority Should Be Spend Control
Yes, all businesses aim to make a profit and become a successful commercial entity. But before you can run, you need to walk – crawl even. When you set up a business, especially if you have raised capital, your main focus needs to be on cash-flow and spending.
You can start by tracking things in a spreadsheet if you need to but do investigate software that can do the tracking for you. Any good spend control platform should bring automation, cyber security and remove human error from the spend control equation.
“Every month isn’t enough,” says Derek Flanzraich of Greatist. “Nearly every week I’m checking both my personal and business finances.” We think it should be every day and in real time.
#2 Rainy Day Reserves Are Always A Good Idea
The unpredictable nature of a business is just that, unpredictable. A solid cash reserve for any unforeseen circumstances or emergency pivoting will make trying times less hectic and will help cushion any blows. Having a reserve will also allow you to stay calm and keep focused on growing the business, steadying the ship across any turbulent waters.
#3 Get Help Managing Money
So here’s the main problem a lot of startups have. The founders manage the money – tracking, handling, making payments. This should not happen. Managing the money is a time consuming, complex task and it will take up 80% of your time. Most founders think they are much more efficient than they actually are, by the way. If you are truly honest with yourself, you are managing money 80% of the time which only leaves 20% for growing and flying the flag for the business. That’s not a good formula.
Hiring a CFO or an accountancy company to do this for you is a must. No matter how great you are with money, your attention and time are constantly in demand and this means you will drop the ball. Trust us, we’ve seen it happen.
Controlling cash can also be streamlined by bringing in technology to help with anything from accounting reconciliation to cross-currency purchase control and supplier management. Having a solution in place that can offer a real-time view on company money at all times will allow you to focus on important things whilst knowing you can always check everything is under control without having to trawl through versions of Excel spreadsheets.
#4 Keep Your Spend Priorities Straight
Being able to prioritise spend is a crucial and knowing what’s necessary vs. “nice to have” can make the difference between success and going bust. iPads for the whole team, free yoga classes for everyone and a swanky office are not essential to your operation. Keep these luxuries for when you’re profitable.
Minimizing spend on everything from office space to the number of software subscriptions your team forgot to cancel
“Despite the fact that cash is the lifeblood of a business – the fuel that keeps the engine running – most business owners don’t truly have a handle on their cash flow,” says Philip Campbell, a CPA, and former CFO, author of Never Run Out of Cash. “Poor cash-flow management is causing more business failures today than ever before.”
Trying to run a business without meticulously managing cash flow can land even the richest round raisers in trouble. You’re effectively shooting yourself in the foot and undoing all the great work you’ve managed in terms of proof of concept, investment, and R&D.
Here are 10 essential tips to help put your startup firmly on the path to successful growth.
#1 Your First Priority Should Be Spend Control
Yes, all businesses aim to make a profit and become a successful commercial entity. But before you can run, you need to walk – crawl even. When you set up a business, especially if you have raised capital, your main focus needs to be on cash-flow and spending.
You can start by tracking things in a spreadsheet if you need to but do investigate software that can do the tracking for you. Any good spend control platform should bring automation, cyber security and remove human error from the spend control equation.
“Every month isn’t enough,” says Derek Flanzraich of Greatist. “Nearly every week I’m checking both my personal and business finances.” We think it should be every day and in real time.
#2 Rainy Day Reserves Are Always A Good Idea
The unpredictable nature of a business is just that, unpredictable. A solid cash reserve for any unforeseen circumstances or emergency pivoting will make trying times less hectic and will help cushion any blows. Having a reserve will also allow you to stay calm and keep focused on growing the business, steadying the ship across any turbulent waters.
#3 Get Help Managing Money
So here’s the main problem a lot of startups have. The founders manage the money – tracking, handling, making payments. This should not happen. Managing the money is a time consuming, complex task and it will take up 80% of your time. Most founders think they are much more efficient than they actually are, by the way. If you are truly honest with yourself, you are managing money 80% of the time which only leaves 20% for growing and flying the flag for the business. That’s not a good formula.
Hiring a CFO or an accountancy company to do this for you is a must. No matter how great you are with money, your attention and time are constantly in demand and this means you will drop the ball. Trust us, we’ve seen it happen.
Controlling cash can also be streamlined by bringing in technology to help with anything from accounting reconciliation to cross-currency purchase control and supplier management. Having a solution in place that can offer a real-time view on company money at all times will allow you to focus on important things whilst knowing you can always check everything is under control without having to trawl through versions of Excel spreadsheets.
#4 Keep Your Spend Priorities Straight
Being able to prioritise spend is a crucial and knowing what’s necessary vs. “nice to have” can make the difference between success and going bust. iPads for the whole team, free yoga classes for everyone and a swanky office are not essential to your operation. Keep these luxuries for when you’re profitable.
Minimizing spend on everything from office space to the number of software subscriptions your team forgot to cancel
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