While many startup founders have great ideas and business plans, the financial side of running a business can prove to be a struggle.
Failing to keep on top of the finances can lead to serious issues for a business down the line.
1. Know your numbers inside out.
While the basic financials of a business plan are fine, it is important to go a little deeper into analysing your company’s finances on a more micro level.
“It is not just having a three year financial projection,” said Harte. “You need to know the key metrics, how much will you make from each customer, how much will it cost you to acquire a customer and how much will it cost to service them.”
2. Keep an eye on cash flow.
Knowing how much cash your business has on hand and keeping a stringent track on how it is being spent can be vital to keeping a business financially healthy. If your firm loses track of how it is spending its cash, it won’t be long until serious issues arise.
“You need to keep a really close eye on where money is being spent,” said Harte. “It needs to be tracked on a weekly basis. A company should have realistic cash projections for the short term and then compare what has actually happened with the projections. Investors will expect to see that sort of detail. If you are running out of cash you need to realise that months in advance to be prepared if you need to cut back or raise more money.”
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