You’ve decided to turn your great start-up idea into reality, congratulations! As you prepare to give yourself over to the life of an entrepreneur, some of the biggest challenges you will need to prepare for are financial. And not just how to get your idea up and running, but how to transform it into a successful company.
As we have seen while running the MBA programme at Tangaza, one of the elements overlooked by the majority of start-ups is the finances of the business. This happens when entrepreneurs get overconfident in the success of their service or product.
But this does not have to happen to you. The key element you need is coaching.
During coaching, the following tips are underlined to help entrepreneurs navigate financial realities.
1. Curb your spending
It’s easy to overspend or spend cash on the wrong things, especially in the beginning. During this time, every penny counts and running out of capital can spell the end of your dream, or would force your investors to take over and give you the boot. Every time you’re about to spend company money, ask yourself if it is going to directly benefit the business. Spend wisely to give your business a fighting chance.
2. Learn about cash flow
Entrepreneurs can get so caught up in the creation of a product or the marketing of a service, and lose sight of the finer financial details of the company.
Even if financial matters aren’t necessarily your cup of tea, it is definitely in the best interests of your company that you know a few basic things about your cash flow. Primarily, you have to know your expenses, revenues, break-even point and at least have three-to-five-year financial projections.
3. Get a pay cheque
As the owner of a start-up, it is important to show investors, lenders and employees that your primary interest is the survival of the company. This is often done by sacrificing salary and other benefits as you build up the company. While this is part of what comes with founding a business, you must also remember to pay yourself so that you don’t burn out or get frustrated.
You still have bills to pay and food to buy, so make sure you are taking home a salary, even if it is small. Having a regular salary can do a lot for you psychologically; you’ll be able to feel rewarded that you are making a living running your own business, even if you are not making enough yet.
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