Becoming a successful entrepreneur is not merely a cakewalk. It indeed will be a roller coaster ride. But the person sitting on the roller coaster is the one who decides whether he is going to enjoy the ride or lose hope and confidence along with the money paid. The financial hacks below might help if you want to become an entrepreneur.
1. Financial planning & Budgeting
“The best way to predict the future is to create it.”
Before anything else, building a financial plan becomes important to scale up your venture. You can start planning by preparing a financial budget. Have your budget clear in every aspect such as operating budget, cash budget, labor budget, and performance budget. Set your short-term, mid-term, and long-term goals. Having a time period or deadline is very important.
Always categorize every goal that you would like to achieve. For example, let us consider the time period for short-term goals to be one year. Now categorize that into monthly or quarterly goals and achieve them. This way you will never lose track of achieving your goal after one whole year. Prioritize every financial goal you have- work on the urgently needed goal followed by a must-needed one and want. Saving is more important to achieve your financial goal. Strategic planning of finance to know exactly where to spend and where not to determine the entrepreneur’s financial success.
2. Talent Acquisition
Recruiting human talent is necessary for every business. In the initial days of business, you would need to spend a lot of time and money in finding the best fit for your company. This can be a tedious process for new entrepreneurs. Instead of putting so much effort and time into talent acquisition, the company can outsource people for different tasks. You can have a core team of your own and the rest of your team can be freelancers. This will help the new company in cost-cutting as there will be no need for them to hire and train employees. You can hire freelancers for different types of work. There are high chances for freelancers to be experts in their respective fields. Being an expert they can deliver productive results within a short period. Time-consuming work can be given to more than one person (freelancer) to get the job done quicker.
“The best teamwork comes from people who are working independently towards one goal in unison.”
One of the major advantages of outsourcing is that the company need not worry about monitoring its employees for getting good results. There is no need for spending on employee benefits, maintenance costs, etc. It is a professional relationship and once the contract is completed there is no more additional cost needed to be spent.
An entrepreneur may have vast practical knowledge across different domains. But it doesn’t mean that every decision he makes will be absolutely correct. He is also an everyday learner through his experience. He might come to a point where he finds it difficult to make financial decisions. If that decision to be made becomes more important, there are chances for him to get confused. In such cases, it is important that he or she must get the help of professional financial advisors. There may be instances of raising funds for the company. You can take the professional advisory services in such cases to decide what kind of investment would be best suitable for the company. These financial advisors will give you a clear idea after considering different aspects such as the company’s financial position, its goals, etc.
“Risk comes from not knowing what you are doing.”
The most essential part of a company to sustain is the cash for its operations. Managing your cash flow from the early stage is very important. After spending the cash during the initial stage as per the budget, many new entrepreneurs lack the cash flow after a few months of running the business. This makes the company struggle for cash in its daily operations. Keeping track of cash flow should help. Secondly, giving credit to the clients for more than a reasonable period of time and not following up on payments will also affect the company’s cash flow.
Next comes the taxation expenses. Not paying small amounts of tax from the beginning might add up as a large sum and may even result in bankruptcy. As corporate business taxpayers, at least 35 percent of the income should be kept aside for taxes. Following up on tax payments and paying them currently will also help in managing the cash flow. Consulting qualified CAs and auditors to discuss tax concessions and reductions should help too.
Investments play a vital role in any business. It can be brought in through bootstrapping, equities or debts. If the entrepreneur has a big pocket he himself would fund the venture. However, most businesses rely on outside sources for funds. It is generally advisable to raise funds through equities as they come with many advantages. Debt is also an option but less preferred as debt funds are repayable. Before raising the funds it is necessary to find which might be suitable for your company. It is better to approach a financial advisor in such cases for clarity.
“The most important investment you can make is in yourself.”
When you have decided to raise funds through equities like issuing shares, through VCs, and angel investors it should be noted that a part of the ownership should be transferred in exchange for their investment. As a new entrepreneur, one should be cautious while receiving such investments for the first time. There are possibilities that the investor might pitch more money in exchange for the majority of the shares if they find that your idea has very high growth potential. When the entrepreneur’s share is diluted then he might lose the ownership of the company.