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Thursday, July 18, 2024

Money Tips for First-Time Entrepreneurs

 

According to a study cited by Small Business Trends, around 82% of business failures can be attributed to poor cash management. This highlights just how crucial it is for first-time entrepreneurs to not just be well versed in managing people and operations, but also in making sound financial decisions. With that in mind, here are four money tips that every new business owner should know:

Start with proper planning

Most of the time, startups are not able to bounce back from financial challenges because they don’t have a clear business plan. If you want your business to be a success, it only makes sense to have a thorough and well thought of plan that outlines how you intend to realise your business idea. Business First details how the chances of getting funds is way higher for startups that have a clear business plan.

The same report notes how 36% of businesses that do curate business plans receive investment capital, 36% obtain bank loans, while 64% successfully turn their ideas into profitable organisations. On the other hand, only 18% of startups without a business plan get loan approval, 18% get capital funding, and only 40% actually succeed.

Get the right funding

These days, more and more organisations geared towards helping specific kinds of entrepreneurs are on the rise. For instance, there is Fund Her North, an investment collective that aims to invest in female-founded organisations across the North of England. Another example of such a collective is the CRACK IT Challenges, which supports businesses that work with educational organisations to solve business and scientific challenges.

Apart from tapping organisations like these, you would also want to connect with angel investors and venture capitalists. There are many ways this can be done. You can join angel investor networks or directly contact venture capitalists. To increase your chances of getting funding from these kinds of investors, polish your “elevator pitch” and improve your pitch deck. This way, you’ll be able to effectively pique their interests and get good funding for your startup.

Don’t forget yourself

For many, having a business is a lifelong dream. And this fact, in combination with the great responsibility a business entails, makes it all too easy for new entrepreneurs to neglect their own wellbeing. Indeed, EQi points out that self-employed workers, in particular, are often left behind when it comes to retirement savings because many don’t set up a private pension. This can put you at risk in the future, so it is important to take the time to set up a Self-Invested Personal Pension on top of short-term savings for emergencies and slow months for your business.

This way, you can rest easy knowing you have a cushion. Aside from focusing on your financial wellbeing, it would also be a good idea to take steps that will ensure you are physically, mentally, and emotionally well. Financial stress can be especially taxing, so make sure to exercise, meditate, sleep well, and eat a balanced diet. When you are in tip-top shape, you will be a much more effective leader for the business you are trying to build.

Have up-to-date accounting records

Most of the time, budding businesses operate with limited resources. This means that every single penny should be efficiently utilised. To ensure that every expense is worthwhile, make it a habit to keep up-to-date accounting records. An updated record-keeping system can help you track expenses, debts, and creditors. It could even help you easily apply for additional funding, as well as save time and accountancy costs. Additionally, implementing an efficient record-keeping system is crucial for self-employed individuals, as it enables meticulous tracking of self-employed allowable expenses, ensuring accurate financial reporting and potentially maximizing tax deductions.

In most cases, businesses could take a few years to get to that point where they can have a chance at making profits. Unsurprisingly, those years require funds and resources. To make sure that your business is able to get to that point, do have a solid plan, connect with the right organisations and people that can fund your business, don’t forget about yourself, and keep up-to-date records.

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