Being an entrepreneur isn’t an easy task. Running a startup is much more difficult than anyone can possibly imagine. Only the people who are actually into this, would understand the kind of difficulties they face and how their struggle would have been easier if they only knew about so and so thing.
Knowledge is never enough especially for an entrepreneur. As an entrepreneur or a startup owner, you need to know more than you think. Don’t worry. Keep reading!
Today I am going to mention 5 tips that can help you manage your finances while running a startup.
1. Keep your personal accounts and business accounts separate
When you’re working on your passion, you never think of money. In fact, you get so much indulged in your work that you forget to differentiate between your personal account and business account. This is a big blunder!
To efficiently manage your finances, it is important that you behave like you get a salary for your work and keep both the accounts separate. If you don’t do that, you would end up with a big loss and you won’t even figure that out until it is too late.
2. Track all the expenses in written form
With this point, you would understand how the first point is even more important than it seemed to be. Why do you need to track the expenses? How would you know which client has payed you and which didn’t? How would you know how much money you owe to people? How would you know how much profit are you making? How would you file tax returns efficiently?
All this may seem to be unnecessary talks but when you would be in a tough situation that would arise out of your ignorance with tracking your expenses, you would wish someone had told you. In order to manage your finances efficiently, you just need to write them down. Start doing it!
3. Hire a financial advisor
Many startup owners talk of how they fired their financial advisor because the person wasn’t adding anything to their business. I recommend you not to do that unless you’re yourself from a financial background.
A financial advisor can help you cut costs, reduce the debt and reduce the amount of tax you need to pay. A good financial advisor is an asset. Find one and don’t let him go.
4. Do regular reviews of your account
Monthly reviews? No. Do weekly reviews of your business accounts to see the cash flow. It would show you where you’re spending money and where you’re earning from. Regular weekly reviews would help prevent big issues that can lead to a loss of big amount of money.
Make sure you personally review the accounts to avoid any kind of discrepancy. Consider using an accounting software for efficiency in the entire financial management process.
5. Don’t risk it all
At last, I would really suggest you to keep an emergency fund. Maybe your startup got a million dollar funding and you’re so sure about its success that you plan to spend every single penny you’ve got but that’s not the right way.
Having an emergency fund would help you get up when you get knocked down. Your startup might not always face the light. An emergency fund would act like a torch and bring you back to light from the darker times.
I hope these simple tips would be remembered by you and it would be good for you if you implement them. Give it a thought!