Research states that start-ups are prone to spending more than they anticipated during the first year of their business journey. From overspending on specific areas to creating flawed forecasts, making key missteps are the primary reason for this over-expenditure.
Here are some tips to know for new start-up owners and budding entrepreneurs, so you will be more prepared and avoid making the same errors.
1. Create a proper financial plan
Though this sounds obvious, many start-up owners tend to forego the creation of a financial plan for their business. As such, they lose the ability to oversee their business’ financial health, the state of their progress, and the potential to grow. On the other hand, having a solid financial plan provides entrepreneurs with some much-needed advantages and gives them a clear view of their financial goals for the company.
Here are a couple of advantages that financial planning provides:
- Reveals the difference between forecasted numbers and actual results
If results were less than ideal, this revelation could allow for a quick change in strategy, allowing business owners to react on time and keep their progress on track.
- Know when to rein in expenditures during low revenue periods
Having a financial plan reveals when it’s inappropriate to spend needlessly, so start-ups can adequately manage their finances and retain their cash cushion for emergencies or opportunities.
All in all, a financial plan is crucial not only during the first year of the business but also in the following years to come. That’s because having constant awareness allows owners to manage operations on the daily and keep the bigger picture in mind. On top of that, the capability of measuring their slow yet steady progress provides much-needed encouragement and motivation to keep pushing forward.
2. Don’t skip on product research and validation
If your start-up plans to manufacture your goods, then validating your product first is the one step you shouldn’t neglect in the process. That’s because no matter how exemplary the product idea may be, it might not meet what the target audience is looking for.
In today’s interconnected age, there is a myriad of options that business owners can choose to reach out to future customers and ascertain how well the product will be received. From sending out online surveys to engaging communities in online forums, you can gauge people’s interest in your product and discover its actual value to them. By conducting ample product research and validating its value during the first year, start-ups can save a ton of time, effort, and money.
3. Be prudent in your marketing and closely track metrics
Marketing is, no doubt, an essential aspect of every business venture. But for start-ups, it’s advisable to follow the rule of thumb of spending only 5%-8% of your start-up’s total budget during the first year.
Before diving into marketing your products, it’s best to take care of a few factors that can help in your marketing efforts. These factors include, but are not limited to, the following:
- Optimising the company website for sales
- Choosing the best social networking channels for the brand
- Increasing the business’ email list
Lastly, it’s essential to track the performance of your employed marketing campaigns to discover where you may be falling short. For instance, you can leverage online tools to track your website’s performance.
4. Stay on top of your taxes
There is a need to be stringent and careful in tax filing to avoid penalties and fines. There are also tax incentives that companies should be aware of to maximise their savings. Given that corporate tax laws are rather complex, navigating the government’s numerous regulations without expert knowledge can be pretty tricky for some.
To ensure that you fulfil your tax obligations, it’s better to rely on professionals that have the expertise and experience to manage all compliance and regulation matters. Our team at Ackenting Group provides tax and accounting services in Singapore to help in your tax planning and provide sound advice on corporate tax incentives for peace of mind during reporting season. We also have a wide range of corporate solutions for all your business needs, including incorporation services for new business owners looking to set up their company.
Starting a new business undoubtedly poses many obstacles and challenges initially, especially when trying to achieve financial stability during the first year. But with the help of the advice above, business owners shall hopefully be more prepared in handling their cash flow and financial management.
If you require any assistance on accounting services, feel free to drop us an email at firstname.lastname@example.org or contact us at +65-66358767. At Ackenting Group, we offer a complimentary 30 minutes online consultation for us to better understand your business requirements.