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10 top finance tips for new start-ups November 15, 2018

10 top finance tips for new start-ups

10 top finance tips for new start-ups

A start-up company is at the beginning of its life. These companies are usually small and financed by a handful of founders or an individual. A start-up company usually looks at a gap in the market or something that is poorly made previously.

In the early stages, start-up companies can have high expenses that can put a strain on their business, they often require financing. The start-up might be funded by a traditional small business loan from the bank or they might have a grant from a non-profit organisation. It is important that staffs are aware of financial accounting techniques to increase their cash flow on a daily basis. The finance team will require extensive finance training to help them to understand the different aspects of a company.

Here are some financial tips for new start-ups:

  1. When you have a new business you might be tempted to spend a lot of time in meetings or meeting different people but make sure you don’t get sucked in. Time is money so it is important to get your priorities in order; there are most likely other things that would require your time.
  1. You will need to implement an accounting system, you don’t need one that is extensive at this stage but you need a system that will grow with you. You might want to use something that is on a rolling contract so you can access your business on a monthly basis to see whether you need something more extensive.
  1. For a start-up you need to make sure that you focus on how to maximise your cash flow. You need to set up an accounts payable system, this will help you to consider all your expenses and think how you are going to cover them. You can work with a professional that have undertaken some financial accounting courses to help you identify your best system. After this you can create a schedule of bills that need to be paid.
  1. You need to establish how to collect your receivables, there should be a list of all the open invoices and balances. Policies and collection timelines should be established before you start collecting your payments. Incentives can be made so clients can pay before their bills beforehand.
  1. Building a budget is very important, you will need to calculate your expenses and your revenue to see your true profit. Managing working capital is critical because liquidity is a huge concern at this stage.
  1. When you are building a team you need to hire staff for positions that you actually need. You may need to depend on contract staff, part time employees and freelancers. It is important to clearly outline confidentiality, termination clauses and hiring documentation.
  1. Be sure to understand tax obligations, this may not be at the top of your list but this should be made into a priority. Hiring a tax professional is the best way to make sure that you stay on top of the taxes.
  1. Customers are at the heart of the business so if there are no customers there is no business. You need to keep an eye on your customers to see the trends of whether they find your products appealing. You can offer them discounts to ensure they feel that they are valued.
  1. You need to make sure that you listen to the shareholders and investors, it can be easy to not keep them in the loop as this might not be a priority with all the day to day. You can set up fortnightly meetings to talk through the numbers.
  1. Always look different avenues of funding, you may have a business loan at the moment but it is important to look elsewhere. There are government funded grants and loans that can help your company.

Need help with your financial management? Find out more about the financial accounting courses we can offer you at London TFE.

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