Deciding to enter the entrepreneurial waters is exciting. However, these moments of happiness are often accompanied by numerous financial worries. You need to secure your funds on time and, most importantly, know how and where to spend those funds. In this guest article, Bizzmark Consultant Keith Coppersmith talks about how you can best manage your finances when starting a business.
Guest Author: Keith Coppersmith, Consultant, Bizzmark
Organizing your startup budget isn't easy -- can can quickly become overwhelming. What's more, the costs of starting a business are constantly rising and to stay on top of them, you first need to organize your budget strategically.
Here are a few tips that may help you.
Build a Solid Budget Plan
When organizing your startup budget, you need to align it with your business plan. Analyze market demands, research your competitors, and segment your target audiences to determine where to allocate most of your budget.
You need to know exactly how many people you will hire, what tools and equipment you will need to get your startup off the ground, and what products and marketing channels resonate with your target audience.
Once you answer these questions, you need to determine what aspects of your business you will prioritize. You need to classify your expenses into essential and nonurgent, fixed and variable, direct and indirect. Of course, your aim is to focus on those costs that are key to your business development.
So, where to spend your initial startup budget?
- Invest in Right Digital Marketing Channels
Investing in the traditional means of marketing may be too expensive for your cash-strapped startup. This is why you should focus on putting your new company on a digital map. Lower costs are not the only reason why digital marketing should be your priority.
Digital channels like your site, content marketing, SEO, or PPC also help you expand your brand reach, target the right audiences, increase brand awareness, and build closer relationships with your customers. Most importantly, they let you track your major KPIs and stay on top of your campaigns’ performance.
Now, some say that digital marketing is almost free. Unfortunately, this is not so. You cannot expect to pay $100 monthly and compete with big brands. Digital marketing requires solid investments in the right tools, marketing teams, and agencies.
Sure, these costs vary based on your budget.
For example, the cost of SEO can reach $10,000. Still, most small businesses and startups pay less than $1,000 per month. You should also keep in mind that SEO is a necessity, but it’s also slow. To get your new site noticed and attract the right audience, you should also invest in PPC services. Paid search is generally more expensive than SEO and small businesses usually allocate about $10,000 monthly to it.
- Protect your Startup with the Right Insurance Coverage
Many small business owners neglect the power of insurance, believing that only companies making serious money should invest in it. However, this is not true. Different problems, from cybersecurity threats to natural disasters, may occur at any time. And, if your business is not protected, they may seriously undermine its growth and reputation.
Now, the average cost of SMB insurance is about $1,281 per year. Sure, there are also different types of insurance policies you should choose according to your industry and its major risk factors. Some of these solutions include: commercial property insurance, general liability insurance, business owners’ policy, workers’ compensation insurance, errors and omissions insurance, and cyber liability insurance.
- Work with Professional Consultants
There are many aspects of your business you’re probably not familiar with, such as bookkeeping, accounting, and different legal issues. This is where you should ask for professional help.
For example, an accountant will help you manage your business’ cash flow better and help you stay on top of customer invoices, taxes, and various state or federal regulations. Working with a reliable lawyer is also important, as they can walk you through different legal aspects of your business and help you avoid the most common legal problems inexperienced businesses face.
Of course, this doesn’t mean you should hire full-stack attorneys or accountants. However, you should consult with them every month (or even on a quarterly basis) to assess your business performance and plan your further business strategy.
Now, the cost of hiring a professional consultant varies based on their hourly rates. However, SCORE emphasizes that small businesses allocate between $1,000 and $5,000 yearly on legal help and accounting services.
- Equip your Employees with the Right Tools
When launching a startup, your goal is to boost your workplace productivity and ensure your company’s uninterrupted growth. Precisely because of that, you need to invest a notable chunk of your startup’s budget to the right equipment for your employees.
Here are a few ideas you may like:
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Project management tools, like Basecamp, Trello, and Asana, you will be able to manage multiple projects and tasks effortlessly, as well as track your employees’ performance.
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Messaging tools like Slack, Google Hangouts, or Skype for Business allow uninterrupted communication between your employees and boost their collaboration.
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Reporting tools let you create personalized client reports automatically.
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CRM software like HubSpot or Salesforce helps you manage customer interactions.
Over to You
When launching a startup, don’t be afraid to be ambitious about your goals. On the other hand, you shouldn’t get carried away, either. A new company is a completely new chapter in your career and you should organize your budget around those aspects of your business that really matter.
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