Having assisted numerous start-ups, we can provide sound financial advice to assist you with realising your business potential. Unfortunately, money-related matters spell the downfall of nearly every start-up that fails. Here’s some of the best financial advice for start-ups:
Engage rather than employ
The advice and skills you need today may well be different in three months time so avoid locking yourself into salaries when you can outsource to handpicked specialists and use as much of their skills as you need or can afford.
Curb your spending
If you’re starting a business or launching a new product, you don’t need to start with the grandiose office or spend years developing a finalised product or service before you launch. Instead, test your vision by launching a more rudimentary form of your concept to gain interest and feedback. Fine-tune and develop your product or service on the fly learning from actual test setups and actual customers.
Every time you’re about to spend the company money, ask yourself if the money you’re about to spend is going to directly benefit the business. As Americas Cup Team New Zealand would say, “will it make the boat go faster”.
Preserve your equity
If you find yourself in a position of needing funds to operate or expand your business, you have a few options. Giving equity to investors is an easy method, but in the start-up phase it can be costly. This has everything to do with the present value of your company and little to do with its potential. Consider the other benefits investors could bring to your business but also look to preserve your equity.
Another option is going into debt with a loan from the bank. Paying back a loan might feel like a burden in the beginning, but you’ll maintain all ownership of your business.
Line up Capital
Most small business owners should consider accessing capital for three reasons:
- Expanding your business by buying another company, launching new products or services or hiring new employees.
- Refinancing any old debt at today’s lower interest rates.
- Establishing a line of credit for a rainy day. You may need the liquidity of an overdraft facility to occasionally meet day-to-day business obligations like payroll or temporary cash needs.