“As an entrepreneur you should be aware of small expenses as they have the potential to drain your business in the sea of losses”
If you have started a business venture and are wondering about the financial aspect of running a startup, the following are 7 Tried & Tested financial hacks for startups that work!
I have also include some startup tips after every hack which will get your business rolling as early as possible!
The practices are experienced by the founders of the company – PortraitFlip.
How Did PortraitFlip Grow From A Financial Perspective?
PortraitFlip was just an idea of delivering handmade paintings from photos to people who need them until their initial investment from their fellow hostel mates came in.
This sparked the initial fire for PortraitFlip, and the 3 Engineers from VIT created the website – www.portraitflip.com.
After winning the Best Startup Award from VIT Chennai, they knew the small business which they started could be an industry giant one day. So, instead of opening the doors of a job interview room, the trio opened the door of their new office in Pune!
Today, PortraitFlip houses more than 100 artists who dispatch the paintings from PortraitFlip’s galleries to 20+ countries while customers experience Free Worldwide Shipping and 100% Satisfaction Guarantee or a No Questions Asked Refund.
The following are some financial tips that have helped PortraitFlip grow from a company that started with the money of hostel mates to a company which has a turnover of 1 Crore!
- Go Step By Step:
As an entrepreneur, you should have the ability to understand what is necessary and will bring you business and what is not necessary at the current time and will only dig a hole in your pocket, especially in your initial 2-3 years span when you are either in losses, breakeven point or making small profits.
PortraitFlip went step-by-step, it was not an overnight success for the company but a gradual transition which was fuelled by persistent efforts, teamwork and the will to set and achieve goals.
Here is how they did it:
Step 1: Built a website in the college hostel and started getting orders.
Step 2: Analysed the response in the final year and got into the 3rd best city for startups (Pune).
Step 3: After 7 months of working from home, they established an office to attract employees and created an environment to work.
Step 4: Started digital promotions through Google and Facebook ads.
Step 5: Hired more employees, increased systems, and work stations, invested in amenities, etc.
And so on.
Startup Tip #1:
Don’t worry about your wallet; the best entrepreneurs don’t think in terms of how much they make; they consider how much value they can add.
- Asset To Liability Rule:
At any point in the journey of business, especially in the beginning phase invest in things which will get you orders or business, always try to avoid liabilities which are just there and serving a non-monetary purpose.
- You may want to invest in an expensive computer system which will improve the editing game for your online promotions or,
- Hire a highly skilled coder at a higher salary who will improve your website’s performance and get you more orders and save your time.
- Getting a foosball table at the very beginning of your startup is not a great idea, but you can improve employee interactions by paying for team dinners.
- Getting a coffee machine and refreshment snacks is also a great idea to boost productivity and get work done in good quality and quantity.
Startup Tip #2:
In the beginning phase you might be tempted to boss around your whole office but remember your employees are working for the company and not you, so make it a point to appreciate their work and avoid giving informal tasks.
- Cash Flow Monitoring.
Cash flow monitoring simply means to maintain a habit of knowing where each dollar is coming from, and where is it going?
A simple practice to analyze debits and credits of your funds will help you save a lot of money and understand your fixed costs.
Knowing fixed costs is necessary to understand when you are reaching the breakeven point in a month, and by regularly practicing this accounting method, you can analyze your performance over a year and make necessary changes.
Startup Tip #3:
Invest in accounting software to track your cash flow to save time on generating reports and to ease decision making.
- Create Financial Goals & Future Requirements.
It is important for your company that it sets some Financial Milestones to destroy for the coming years!
Like PortraitFlip, who set their financial goal of reaching higher turnover every year and kept on growing.
This not only helped them to grow every year but gave a time limit before which they had to complete a set of goals.
Goals can be anything like:
- A turnover of 20% more for the next year.
- Reaching an order count of X.
- Starting digital marketing before some date.
- Increasing workforce to X.
You should be conscious about the future requirement which would be needed if everything goes according to the plan like:
- You may require a larger office space if your goal is to expand.
- You might require more employees and systems if your goal is to increase
Startup Tip #4:
Goals should be realistic and bound with time or something measurable.
Once you achieve those goals, don’t forget to invite the whole team to celebrate it, which will boost productivity for achieving further goals.
- Time Is Money.
Everyone knows this, but very few understand the real sense of it.
Look at this from here, “Every second you spend doing something unrelated to your business it is time wasted.”
Follow practices of maintaining a diary in which you keep track of your schedule for the coming day or week.
Prioritizing work based on the amount of impact it would bring to your company.
Start your day by either creating the worklist for the day or referring to the list you created before. This way you will save a lot of time and energy.
Startup Tip #5:
Always find ways to keep current employees in the company instead of firing them by solving any problem which they have it might be training, increasing salary, introducing bonus, etc.
By doing this, you are saving a lot of time which would be absorbed in interviewing, hiring, training a new employee.
- Identify Smart Expenses
Toni Ko, founder of NYX Professional Makeup, which featured on the cover of Forbes magazine, reduced the fund allocated to marketing and used these funds to increase the product quality.
This increased sales because the need of the hour for her business was product quality and not marketing which in turn was a Smart Decision.
Analyze such opportunities in your business and beat the competitors at their own game!
Startup Tip #6:
Make sure you are asking your customers what they don’t like about your product or what needs improvement, this is free data but a lot of worth.
- Emergency Fund.
After the end of every month, some pre-defined money should go into the emergency fund only when you have started making decent amounts of profits.
These funds will help you during expanding or during a financial crisis.
Emergency funds don’t necessarily mean saving in an account, you can also invest small proportions of money in debt funds, other high promising startup funds, SIP’s, etc. this will ensure high returns after 2 – 3 years.
Startup Tip #7:
When investing the company funds, distribute the total money in different funds to decrease the risk of losses.
That was the last one!