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3 Cash Flow Management Tips for Every Startup
Managing a startup company can be both exciting and daunting. That adrenaline rush you get as one thing happens after another is simply exhilarating! At some point, you get to thinking, “how long can we sustain this before we make a profit?” It’s in those times where you need to look closely at your company’s cash flow and how to take care of it.
For startups, not paying attention to their cash flow is one of the biggest pitfalls one might encounter, as that’s when things start to go downhill! Even those Fortune 500 companies end up shooting themselves in the foot if they’re not careful with how they spend their money.
To make sure you don’t fall down the same hole, here are a few good tips on effectively managing your cash flow:
Keep Your Priorities Straight
Before even thinking about making a profit, a startup company should focus mainly on cash flow and spending. A lot of new businesses and tech startups fixate on making a profit early on in their operations, which is never a good idea.
Knowing your company’s needs is of the utmost importance. Yes, it’s nice to have the latest iPhone or Android device for all of your employees, and maybe you can put up a gaming room so you and your teammates can hang out and chill. However, if you want success for your startup, you need to forget all the bells and whistles for now! You can have all that once you’ve made a dent on the market.
Make Your Startup Storm-Proof
In the event that money stops coming in for your company, what’s keeping you from going bankrupt and shutting it all down? What you need is a reserve fund or what is known in the industry as “rainy-day reserves.” Having a cash reserve will help you stay afloat and buy more time for you to bounce back and continue to operate your business.
At some point in any business venture, a “rainy day” will come where income is disrupted, and you’ll be happy to have a contingency plan in place. Having cash reserves enough to ensure operations for the next 3 – 6 months would be in the best interest of the company.
Cashflow Video Guide
Learn the simple steps to prepare cash flow projections to improve your business cash flows.
Manage Cash Flow Efficiently
Most startup founders are usually the ones that end up managing the money that goes in and out of the company. There’s nothing inherently wrong with that, but it involves too much work. Managing cash flow usually takes up a lot of time that the founders could have spent in developing their products or actually growing the company.
A good solution is to streamline the process of managing it. Instead of getting buried in a mountain of paperwork and Excel spreadsheets, you can rely on technology to help you out. From accounting and bookkeeping to supplier management, apps for automation are there to help you get on top of things. Instead of focusing 80 percent of your time managing the money, you let the robots do the work for you—and you’ll still have the option to check if everything is under control when you have free time.
Conclusion
Managing the cash flow of your startup should always be a top priority if you aim to become a successful business venture. It helps to keep everything in check by streamlining your process and making sure you don’t overspend on unnecessary luxuries.
To make things a bit easier for your startup, we recommend getting help from someone you can rely on. FiBrick is a people-centric accounting firm that stands as the perfect partner for startups. We offer a suite of services to help you manage your cash flow effectively. Contact us today to get started!
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