Protecting your finances is vital at every stage of running a business. However, it can feel even more significant during the early phases when revenue is quite low.
So, how can you be sure that your financial health will be maintained as a startup owner? Focus on the five steps below, and you won’t go far wrong.
1- Get Legal Advice
When starting your business, you’ll probably try to take care of many aspects yourself. After all, hiring experts is another cost. However, the benefits of having a solid lawyer are clear. It will help you avoid potentially costly mistakes. Even setting your business up as the right type of entity can make a huge difference. So, having an accountant on your side will be vital too. Not least because they can teach you where to actively cut costs.
Going it alone may seem like the cost-effective solution. In truth, though, learning to accept the right help will make a world of difference.
2- Save Money When Meeting Clients
As a startup, you are likely to visit clients fairly often. This is especially true when operating from home or running a B2B venture. When doing this, though, you will want to keep the costs down. Booking economy flights can be a great starting point. Likewise, choosing serviced apartments can be a better choice than hotels. The fact that they are more comfortable and allow you to prepare for meetings in peace is a bonus.
Meanwhile, making the most of video conferencing can be useful in many situations. Aside from the direct financial savings, it’ll help you return to work far sooner.
3- Improve Your Marketing Strategies
When done well, marketing efforts should generate 5x what you spend. However, ineffective marketing strategies will cost you dearly. Aside from spending more money, it will stop you from generating sales. Using affiliate marketing can be particularly useful as you only pay people after a sale is made. Meanwhile, you should focus on low-cost strategies that you could quickly modify if required.
Influencer marketing, PPC, and SEO marketing are all good options. Opting for monthly services is often smarter for cash flow purposes.
4- Avoid Defaulted Accounts
When starting your business, it may be necessary to let clients use repayment plans. It means that you can gain sales from a far larger audience. However, you must take care to prevent the risk of defaulted payments. The best way to do this is to run credit checks on prospective clients. You may lose a few genuine sales in this way, but it’ll save you a lot of money from bad debt in the long run.
On a side note, offering payment plans may cause cash flow issues. Invoice financing and other forms of borrowing can help you overcome this issue.
5- Get insurance
Regardless of the precautions that you put in place, unforeseen situations may occur. The best way to protect yourself against this is to put the right insurance coverage in place. This could mean insurance against theft, personal injury insurance, or cyber protection. Without it, an unexpected problem could cause financial disaster. Conversely, the right protection will limit your financial exposure.
Aside from the direct financial influence, it is a move that will allow you to implement a quick response. So, you can get back to business ASAP.